Roots of airport contract cheating reach back to county hall
Written by Michael Lewis on September 10, 2014
In a dirty game, many of 400 to 500 firms holding contracts at Miami International Airport routinely underpay the county by as much as $3 million apiece.
Now that Commissioner Dennis Moss has unveiled it in a meeting that Miami Today reported last week, commissioners should fix it. If they probe deep enough, they’ll confront the nasty truth that some blame rests on them.
What auditors, inspectors and airport officials told commissioners is that 40% to 60% of airport concessionaires and other contract holders share a culture that until they’re caught they’ll never pay in full the percentage of their airport receipts that they owe government. About 10%, commissioners were told, commit outright fraud.
Commissioners were promised soon a tighter estimate of how much the county is due but never gets.
There’s no incentive to pay in full, auditors and inspectors told commissioners, because there’s no penalty. If caught, firms just pay what they hid.
Financial penalties in contracts, the officials said, aren’t enforced. Nor are concessionaires ejected for not paying. Criminal action is rare. It’s business as usual until you’re caught. Then it’s business as usual again.
The county lacks manpower to audit all concessionaires so it triages – high, medium or low risk. Even high-risk companies get audited only once each three to five years.
None of this appears to be laxity. It’s a combination of too few staff to dig into every single concessionaire and the sad fact that when cheaters are caught, they aren’t penalized.
The county wants to do more. Both the Inspector General and the Audit and Management Services Department have fulltime teams digging at the airport, at a cost of $840,000 a year. The airport itself just hired a second fraud specialist to oversee a handful of management firms.
Commissioners asked those involved if they needed more workers to ferret out cheats. They were told that the most cost-effective things the county can do is to crack down when cheaters are caught.
Nobody directly laid the problem at the commission’s doorstep – after all, the probers all work for the county – but they made clear that in the end it all comes back to the commission.
They talked about the county-owned airport hotel, where auditors found serious problems back in 2002. The auditors recommended that the management firm be terminated right then, said Cathy Jackson, who heads the Audit and Management Services Department.
“Why it was not terminated I don’t know,” she told the commission committee without further comment.
The fact is, aviation directors have all tried to oust that operator where the county lost money to fraud. Yet each time they brought the matter before commissioners they were rebuffed.
Now, Assistant Aviation Director Ken Pyatt told the committee last week, a new request for a hotel operator sits on the desk of Mayor Carlos Gimenez, just a dozen years after the trouble was uncovered. Will we finally change management by year 13?
One reason bad-apple firms feel comfortable is that their lobbyists get commissioners to keep them at the airport, underpayments or fraud notwithstanding.
Asked how to stop the corrupt cycle of underpay until you’re caught and do it again, Ms. Jackson said the county must firmly enforce penalties already in contracts and stop doing business with those who cheat.
“We need your support a little bit more in that area in terms of not just allowing them to have that lobbyist come and try to present a different case,” she said with about as much candor as a county employee can show to commissioners to tell them where the answer sits: on their doorstep.
Commissioners can set a policy that will not tolerate cheating. If they stick with it the county will indeed see revenues grow – and not just at the airport, if they broaden the policy to all with county concessions. The airport is today’s problem but others exist.
But as long as the commission has the last word on contracts and concessions, pressures will continue from those who both lobby for companies and fundraise for commissioners’ campaigns. Those pressures can keep a hotel operator on the job a dozen years after professionals decided to find a new operator.
For many reasons, it’s better to leave contracts to county professionals, not $6,000-a-year commissioners who might lack the expertise to dig into contracts but sure know who their friends and supporters are.
It’s not that commissioners want the county to lose money any more than the folks on the payroll do. It’s just that they face more pressure to skew their judgments.
Getting commissioners out of the contract game is a long-term fight. In the meantime, Mr. Moss’s committee will bore further into the issue. They should find simple steps to take now to limit airport losses.
First, get the estimate Ms. Jackson promised of how many companies underpay the airport by how much. That will make it clear whether the county can add profit by hiring more auditors and investigators to get look at more concessionaires.
Second, listen to Ms. Jackson, who suggested that delinquents pay in addition to what they shortchanged the airport an added 1% per month for every unpaid month. Since top risks are audited every three to five years, that could be 36% to 60% penalties for underreporting. To add teeth, compound the fine monthly. The airport says it collects every penny it bills, so it could bring in this extra cash.
Third, boot out firms that hide what they owe. Commissioner Bruno Barreiro said he’d give them one free pass after they pay up. But if underreporting is intentional, why keep a cheat around for a second try?
Fourth, prosecute true fraudsters. Go after them whether they have lobbyists or not.
If you audit more companies, make those who hide receipts pay, charge interest, boot out deliberate cheaters and prosecute lawbreakers, it’s a sure thing fewer will cheat, the “catch me if you can” culture will crumble and our growing airport will have more funds to meet its needs.
But to achieve all that, the spectacle of commissioners guided by lobbyists keeping bad actors on the airport’s stage must end. No employee will tell commissioners precisely that, but Ms. Jackson came close enough.
Commissioners, you have employees who want to do right by taxpayers. To paraphrase Winston Churchill, give them the tools to collect county bills and they’ll finish the job, to everyone’s benefit.