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Despite the efforts of Miami-Dade Aviation director Angela Gittens to reform Miami International Airport, the brewing set-to over a prepaid phone card vending contract shows that it's business as usual at MIA. Contracts get awarded to individuals with the most political juice; prominent among the rewardees is big-time lawyer/lobbyist Chris Korge.
The millionaire Korge is well known in political circles, raising campaign cash for the Democratic National Party and local politicians, including county Mayor Alex Penelas and former (and recently indicted) county Commissioner Miriam Alonso. And Korge, who did not return phone calls seeking comment, is a veritable renaissance man when it comes to getting a piece of the action from public contracts awarded at MIA.
Over the past decade, Korge has assisted major corporations and local firms in winning lucrative airport contracts. He, along with lobbyists Rodney Barreto and Eli Feinberg, represents Dade Aviation Consultants, a consortium of private engineering firms paid $15 million a year by the county to oversee MIA's massive $5 billion construction program. Korge and his partners have received roughly $1.3 million in lobbying fees from the consortium to simply curry favor with county commissioners and bureaucrats.
Another noteworthy Korge client is Host Marriott, a national company that operates 70 percent of the food and beverage concessions at MIA, which generate an estimated $40 million in sales. Korge's reward for helping Host win and maintain the contract: ten percent of the company's profits from the MIA concessions. State and federal investigators are examining Korge's role in the agreement to determine if he and Host skirted federal laws on minority hiring at airports.
Now Korge is leading a foray into telecommunications; he's teaming up with client Ed Meegan, principal of WTN Inc., a company based in Richmond Hill, New York, to sell prepaid phone cards in MIA's terminal and concourses. Under a three-way partnership called WTN/Blackstar LLC/CKOR Vending, Korge and Meegan won a new contract to be the sole prepaid phone card providers at the airport, pending county commission approval. The third partner is John Oxendine, a black TV and radio station venture capitalist who is accused by the competition -- Latin American Enterprises, or LAE, and Communitel, two rival Miami-based telecommunications firms -- of being a minority front for Korge and Meegan. The two firms accuse the county's aviation department of unduly favoring WTN et al. because of Korge's influence. Korge, Meegan, and Oxendine would have won the new contract outright last month if not for strong objections by LAE and Communitel. "Their decision to award the prepaid phone card business to WTN once again demonstrates the serious problems afflicting Miami International Airport," growled Pedro Pelaez, owner of Communitel, which placed third behind WTN and LAE in a competitive bid process called an Invitation to Bid, or ITB. "The whole process is a joke!" A bid protest hearing, in which the county conducts an internal review of the ITB, was scheduled for February 12. After that, the matter goes to the county commission for approval.
An ITB is a competition for public contracts based solely on the best price offered by a bidder. WTN offered the county a guarantee of $1,089,312; LAE offered $1,081,495; and Communitel offered $1,080,000. But in order to qualify for the ITB, companies are asked to submit crucial information. WTN was allowed to circumvent some of those criteria.
For example, Pelaez and Miguel de Grandy, the lawyer-lobbyist representing LAE and its owner, Argentine businessman Juan José Pino, complain that airport staff did not disqualify WTN, as required, after the partnership refused to submit an audited financial statement; the statement would have determined whether Korge and his colleagues had the financial wherewithal to run their business.
According to public records, Korge informed airport staff that WTN "cannot justify the inordinate cost [$15,000 for LAE] of preparing audited financial statements, [and as such] WTN will not provide such statements." Assistant county attorney Abigail Price Williams determined on November 8, 2002, four months after bids were submitted, that WTN should not be disqualified for refusing to produce its audited financials. "This creates the appearance of favoritism for WTN that my client didn't have," asserted de Grandy, LAE's lawyer. Communitel and LAE did provide the required statements.
WTN's proposal also should have been disqualified based on Korge's decision not to list his other business interests (the food and beverage deal and the construction contract) at the airport. Under the bid rules, companies are asked to detail their involvement, directly or indirectly, in any other airport contracts.
But apparently this doesn't apply to Korge, who put down "not applicable" in WTN's proposal. In another show of favoritism, Pelaez claimed, the Miami-Dade County Aviation Department extended the deadline for bidders to submit their proposals from July 10, 2002 to July 17, 2002. Coincidentally, Korge did not incorporate CKOR Vending until July 10. Pelaez asserts the deadline was obviously extended to accommodate Korge.
Regarding the accusations about John Oxendine, Pelaez and de Grandy allege that the county's Department of Business Development ignored its own procedures in certifying Oxendine's firm, Blackstar LLC, as a disadvantaged business enterprise (DBE), a program used to set aside portions of county contracts for minority firms. In order to qualify as a DBE, firms must offer proof that they are conducting business. They must provide the county with executed contracts and utility bills, and demonstrate that they are fulfilling a "commercially useful function." When Blackstar was certified as a DBE in May, Oxendine had not provided any of the required information. In fact Oxendine listed his residential condominium in West Palm Beach as his business address and had not set up a business phone line for Blackstar. He got the certification nonetheless. Yet the county continues to deny certification to other businesses that fail to submit the proper documentation, according to public records. "It is obvious that Mr. Oxendine is a front," Pelaez complained. "The same day Oxendine [got] the DBE certification was the day he incorporated Blackstar," de Grandy chimed in. "It's a total perversion of the county's minority program."
Reached at home, Oxendine, who has made millions of dollars financing TV and radio stations across the country, affirmed that he only recently formed Blackstar to participate in WTN's bid. "I am a strategic partner," Oxendine explained. "I don't think it takes rocket science to sell prepaid phone cards. I view this as an entry-level opportunity to participate in economic development in Miami-Dade County."
Yet Pelaez doesn't have kind words for LAE or its owner, Juan José Pino, either. Pelaez, a politically connected Cuban-born businessman whose company placed third in the ITB, needs to undercut LAE in order to get the contract. During an interview at Communitel's office near Florida International University's University Park campus, Pelaez attacked Pino's allegedly unsavory past. Pelaez is known to go on the offensive when his business interests are in peril. In fact, three years ago he used his friend and political ally Alex Penelas to veto an airport contract that Pelaez had lost. The county commission, however, overturned the mayor's veto and awarded the contract to Pelaez's competitor, Secure Wrap of Miami.
Pelaez, sitting near a picture of himself posing with former President George H.W. Bush and his wife Barbara, pointed to an article in El Nuevo Heraldlast September that detailed allegations implicating Pino in the Argentine criminal probe of former president Carlos Menem's administration. The article published accusations that Pino may have laundered money for Ramon Hernandez, Menem's confidant and private secretary. The article also reported, and court records verified, that Pino was held in contempt of court for refusing to disclose his bank records to his ex-wife, Claudia Rasso, who was suing Pino for not paying her $500,000 in alimony. Pelaez additionally accused Pino of not being overly forthright with airport officials about the sale of LAE three years ago to Ursus Telecom, a now-bankrupt telecommunications firm; ditto Pino's subsequent repurchase of LAE from Ursus during the company's bankruptcy proceedings last year. (LAE, for its part, did disclose the information in its bid proposal.) "These are serious problems going on at the airport and no one is doing anything about it," Pelaez moaned. "Who the hell is minding the store?"
De Grandy, a former state prosecutor and former state representative, refused to comment on Pelaez's allegations. "What does any of that have to do with this bid?" de Grandy asked incredulously. "Whether the man was in an acrimonious divorce or whatever has nothing to do with this bid process. It's all rumor and innuendo. And you know what? No one has the balls to stand in front of the podium at the county commission and try to prove it."
Meanwhile, as his competitors duke it out, Korge, along with Meegan, recently approached assistant aviation director Steven Baker for another favor. According to a January 15 letter from Baker to Meegan, they asked Baker to remove discount long-distance pay phones from the airport. Meegan and Korge reasoned that the phones would prevent WTN from meeting their guarantee to the airport. Baker, however, balked and informed Meegan that the airport was keeping the discount phones. If WTN can't meet the guarantee, Baker said, the partnership could either modify its price or withdraw its bid.
Of course, it's highly unlikely that renaissance man Korge is going to allow that to happen.