Is This Any Way to Run an Airport?
By all accounts, Joaquin Avi*o and Rick Elder never worked well together. The county manager had always resented the way Elder, as Dade County aviation director, insisted on working outside the normal chain of command. Avi*o didn't mind a certain degree of independence among his key employees, but he was the boss, the undisputed overlord of the three-billion-dollar enterprise that is Metro-Dade government. All county departments answered to his office. And he had a staff of highly paid assistant managers assigned to supervise individual department heads.
Elder, though, was different. Almost from the day he had been appointed to take over the immense aviation department, Elder refused to adhere to protocol. Instead of consulting with the manager's office, he dealt almost exclusively with elected county commissioners. He responded directly to their inquiries, catered to their needs, met with them privately, established his own special lines of communication with them. As far as Elder was concerned, it seemed, Joaquin Avi*o was barely relevant to the operation of the aviation department, in particular to its most important asset: Miami International Airport.
Avi*o, however, waited patiently. He had the authority to fire Elder at any time, but to do so while the aviation director enjoyed support among a majority of commissioners would be politically dangerous. So he would bide his time until Elder slipped up or otherwise exhausted the protection offered by his patrons on the commission.
It took nearly four years, but Avi*o's day finally arrived this past January 26, when Elder suffered the most humiliating defeat of his career. Over Elder's heated and vehement objections, the county commission had voted to approve American Airlines's long-sought plans for an ambitious expansion at the airport. Elder was no match for the corporate giant, with its phalanx of lobbyists, its alluring promise of new jobs, and the unspoken threat of political retribution should it be denied.
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Only Elder's old friend, Commissioner Larry Hawkins, voted in favor of the aviation director's version of the expansion plan. After the vote, Mayor Steve Clark unexpectedly brought back to the podium Ted Tedesco, one of American's vice presidents. Clark then asked the executive if he felt his company, after months of contentious negotiations with Elder, could still work with the aviation director. Tedesco bluntly replied no. Elder's fate was sealed. Power politics had been the rule at Miami International Airport since Elder took over in 1989. And in the end, power politics finished him.
The next day, January 27, Elder rode the elevator to the 29th floor of the Metro-Dade Government Center. He had a 3:30 p.m. appointment with Joaquin Avi*o, and he had come prepared: he brought along his personal attorney, Barry Blaxberg. Avi*o was caught off guard, but he responded quickly, and in kind. He called down to the county attorney's office and had them send up a lawyer to sit by his side.
The men met for about an hour, but the atmosphere grew heated and tense. So the two groups separated, no longer willing to talk face-to-face. Elder and Blaxberg moved to a nearby conference room, while 40 feet away Avi*o and his county attorney plotted their strategy from the manager's office.
Ferrying messages between the two rooms was Gary Dellapa, the assistant county manager who, nominally at least, was Elder's supervisor. "Rick was upset," Dellapa recalls. "It was a pretty emotional time given what had just happened with the commission vote on American. Rick knew he was in a difficult position." The negotiations dragged on for five long hours before a settlement was finally reached. Elder would resign as director of the aviation department, but he would stay on the payroll through May as executive director of the county's World Trade Center. His salary, which Avi*o had not raised in three years, would remain unchanged until his departure: $95,000. Gary Dellapa was named acting aviation director. For the patient Avi*o, it was payback time.
The general public might be forgiven for thinking this episode was nothing more than an insignificant mutation of the vast county bureaucracy. After all, the incident didn't garner banner headlines the next day. And for some people working within county government, it may have seemed that Elder's resignation would bring a quick end to the unwanted turbulence that had been buffeting the aviation department, especially Miami International Airport, which had been beset by minor scandals in recent years.
But others knew that would not be true.
Dark clouds have been forming over MIA, and more tumult is inevitable. Information gathered over the past several months indicates that the Dade County Aviation Department A with its lucrative outside contracts and its multimillion-dollar bond deals A is at the center of a far-reaching criminal investigation that threatens to engulf county government.
State and federal prosecutors, working together with FBI agents and specially assigned detectives from the Metro-Dade Police Department, have been exploring allegations of corruption and collecting evidence that county officials, including commissioners, may have illegally steered airport-related business to friends, political cronies, and campaign contributors; and that individual commissioners have exerted improper influence over decisions made by the county's professional staff.
Those familiar with such investigations note the quandary of successfully prosecuting corruption cases that rely heavily on proving a public official's intent, especially when hard evidence such as payoffs or kickbacks is difficult to produce. But sources familiar with the ongoing airport probe say federal authorities are steadily building their case.
No criminal indictments appear imminent, however. Although investigators have been accumulating information and interviewing potential witnesses for nearly two years, only within the last three months have they begun issuing grand jury subpoenas for county records. In fact, boxes of material requested from the airport have been sitting for weeks, waiting to be retrieved by federal agents.
That is not to say those agents haven't been busy. One evening in early March, for example, they launched an assault on county commissioners' garbage. Javier Suarez, assistant building manager for the Metro-Dade Government Center, says federal investigators made an unannounced visit to the building and gathered up all the trash bags that cleaning crews had collected that day from the wastebaskets of the commission offices.
A week later agents swarmed down on a custodian who was moving a dozen file boxes from Commissioner Joe Gersten's office to a storage area. "He didn't even make it to the elevator," Suarez recalls. "They must have been watching the offices." The agents carted away the boxes.
Indeed, among those current and former commissioners whose activities are being scrutinized by prosecutors, Gersten has figured most prominently and most publicly. The corruption investigation only came to light after it was reported last year that the individuals accused of stealing Gersten's Mercedes had been interviewed by the FBI.
Further, when Gersten's former attorney, William Richey, met with prosecutors last May to discuss a plea-bargain in the auto theft case, he was told that any deal would require Gersten's "100 percent cooperation," which, in the parlance of investigators, meant Gersten would be required to do whatever they asked, up to and including acting as an undercover informant, wearing a hidden microphone, and setting up sting operations against other commissioners, county officials, and lobbyists.
According to one knowledgeable source, such demands revealed that the investigation has not been narrowly concentrated on Gersten. "Clearly [prosecutors] think something dirty is going on down there at the commission," says the source, who requested anonymity. "That's the underlying current for why they would go so far with all this bullshit surrounding the theft of Gersten's Mercedes. They wanted to squeeze him."
Richey says his negotiations with prosecutors were cut short by Gersten's refusal to cooperate, and thus no specific plans were discussed regarding Gersten's potential role as an informant. But he agrees that the zealousness with which prosecutors have pursued the stolen-Mercedes case indicates something much larger is being developed.
Gersten and Richey have steadfastly maintained that prosecutors want to take a sworn statement from Gersten regarding the theft of his car so they can then attempt to charge him with perjury or with filing a false police report. And that, says Richey, would benefit them if federal corruption charges are later brought against Gersten. "Joe Gersten is a lawyer, he's a powerful public speaker, he's a politician, and if he were indicted on corruption charges, at his trial he would have a lot to say in his own behalf," Richey explains. "But if you can develop a strategy before you even charge him to keep him off the stand, then that's a tremendous victory. If they can get Joe Gersten charged with perjury or with filing a false police report, it would be very difficult for him to take the stand to defend himself in a federal [corruption] case, because they can impeach him [as a liar].
"That's why they are doing all this," Richey adds. "It is very complex. It is very smart. It is very well done, and my hat's off to Dick [Gregorie, one of the prosecutors investigating Gersten]. It's a great tactic."
Complex legal tactics, grand jury subpoenas for voluminous documents from Miami International Airport and the county's finance committee, federal agents interviewing witnesses and rummaging through commissioners' garbage A all of this is beginning to make many county officials uneasy, especially those who have been associated with the Dade County Aviation Department.
During the past four years, no other county agency has so captivated commissioners. And if the aviation department generally has beckoned as an enchanting treasure, its crown jewel is Miami International Airport.
MIA is like an autonomous city, and in fact its 3200 acres make it geographically larger than eleven Dade municipalities. More than 30,000 people work there every day.
It is the eighth busiest airport in the nation. One hundred airline companies use its runways for 1350 daily departures to 92 cities around the world. On any given weekday, nearly 80,000 passengers travel through its terminal. On a Saturday the number jumps to 100,000; near Christmas and Thanks-giving it climbs to 120,000.
A 260-room hotel operates inside the airport terminal, complete with swimming pool, racquetball court, sauna, and weight room, all of which are available to the public. Scattered throughout the horseshoe-shaped terminal are 29 restaurants, sixteen cocktail lounges, and dozens of shops, including hair salons, pharmacies, and a sports clothing store.
The airport's annual operating budget is $215 million. Nearly $700 million in business transactions are conducted at the airport each year, and that doesn't even count sales of airline tickets. Aviation department officials estimate MIA pumps nine billion dollars annually into the local economy. No other governmental department in Dade County makes more money.
So it should come as no surprise that commissioners have developed such an appetite for MIA's affairs. There is so much money rising from the airport it's a wonder the planes can navigate through it.
If you own a business and would like to grab a piece of that action, no matter how small, you first must be awarded a contract. Your business wants to provide fuel to the thousands of aircraft? You need a contract. Want to sell T-shirts? A contract. Croissants? Contract. You've got a van service that wants to pick up passengers at their homes and deliver them to the airport terminal? You'll need a contract.
And if you really want a contract, hire a lobbyist A preferably one who has a close relationship with a commissioner. Better still if that commissioner is a member of the community affairs committee, which oversees the airport.
Lobbying came into vogue at Miami International Airport immediately following the 1988 county commission elections. A new crop of commissioners, including Joe Gersten and Larry Hawkins, arrived with their own agendas for change. Topping the list was the airport, which had previously been unfriendly territory for lobbyists seeking business for their clients.
Immediately after the election, Aviation Director Dick Judy was targeted by Gersten and forced to resign in early 1989 amid criticisms that he misused airport funds and funneled contracts to friends. Judy had been aviation director for seventeen years, during which time he transformed the aviation department into a notoriously impenetrable fiefdom. "When he built the empire, he made sure you couldn't get inside the castle," recalls Assistant County Manager Anthony Clemente, whose duties included overseeing the aviation department from 1989 to 1991.
"Let's face the realities," Judy responds from Hong Kong, where he is working as a consultant during the construction of a new international airport. "I was called the czar of the airport because I wouldn't let any of the lobbyists or the business-interest groups interfere with the running of the airport."
Judy's departure marked the dawn of a new era at MIA. With the drawbridge at last lowered across his legendary moat and the keys to the kingdom up for grabs, commissioners dashed in and quickly immersed themselves in airport business. They opened doors that for years had been tightly shut. But in opening them, commissioners created the business equivalent of a land rush: suddenly lobbyists were everywhere. "Lobbyists were more and more involved in the process," says Clemente. "They had more influence on the system. No question."
Some commissioners strongly defend the radical changes despite the explosion of lobbyists. "I think after 1988 the aviation department became much more accountable," argues Larry Hawkins. "I think with many of the new commissioners came a sense of responsibility that when we made [airport] policy, we needed to know about it rather than be a rubber stamp."
Crucial to this desire to be involved A and exert influence A was the matter of Judy's successor. The last thing commissioners wanted was another autocratic aviation director who might lock them out. What they needed was someone who would respect their power, someone who would answer to them, not rebuff them. They found their man in Rick Elder, a deputy aviation director under Judy who was the department's liaison to the commission.
Elder, whose girlfriend worked as Hawkins's secretary, was named aviation director in 1989 after having financially contributed to and worked as a volunteer on Hawkins's successful campaign to win election to the commission. "I didn't have any input on the county manager's decision [to hire Elder], other than I think it was fairly well known that Rick was a good friend of mine," Hawkins says. Elder, he stresses, was more than qualified: "We're not talking about a schlumpf here."
Joe Gersten had cultivated his own relationship with Elder. As the commissioner principally responsible for Judy's ouster, Gersten had cleared the way for Elder's rise A a fact the commissioner would not soon let Elder forget. In 1990 for instance, Elder privately met with Gersten many times, including more than a dozen breakfast meetings at the Sheraton Hotel on Brickell Avenue, according to a review of Elder's appointment books.
Assistant County Manager Anthony Clemente attended many of the breakfast conclaves. "The meetings were in two parts," he explains. "There would be a part where I was there with them, and then there was a part where Gersten and Elder met by themselves." Clemente would brief Gersten on what airport-related matters were coming up at the next county commission meeting, usually being held later that day. Then, Clemente says, he would leave. He's not certain what Gersten and Elder would discuss by themselves, though he assumes the subjects concerned upcoming projects and other matters pending at the airport. (Neither Gersten nor Elder would comment for this story.)
These meetings were not widely publicized. In fact, former commissioner Jorge Valdes, who was then chairman of the community affairs committee overseeing the airport, was unaware of them. "I didn't know about these private meetings," Valdes says today. "Did they really meet that often?"
Gersten certainly wasn't alone in spending quality time with Elder. When Valdes lost his commission seat to Alex Penelas in September 1990, Penelas took charge of the community affairs committee and immediately began meeting privately with Elder. "The Saturday after my election I was out at the airport being briefed by Rick Elder and members of his staff," Penelas recalls. "We had a very, very close relationship, really to the point of meeting every week to go over items and go through the committee agenda. And that really has continued now. I need to have a lot of time with these people because I chair the committee. I'm the chairman, I set the agenda."
Commissioner Arthur Teele was elected in 1990 as well, and he, too, joined the community affairs committee. Like Gersten and Penelas, he met regularly with Elder. The entries marked on Elder's calendar for January 30, 1991, were typical: 8:30 a.m. Gersten; 2:00 p.m. Teele; 3:30 p.m. Penelas.
"It's the old saying, 'Knowledge is power,'" observes Assistant County Manager Clemente. "There was some power politics and some one-upmanship going on. They were out to know as much as they could on various issues. It became like a vicious circle. Each wanted to know more than the other."
For what purpose Clemente won't speculate. But one thing is clear: when commissioners meet privately with a department head, or any other county employee, they are treading at the edge of the law. According to the Dade County Code (the laws governing the conduct of county business), "The Board [of County Commissioners] and its members shall deal with the administrative service solely through the manager, and neither the Board nor any members thereof shall give orders to any subordinates of the manager, either publicly or privately." Any violation by a commissioner, the code continues, "shall be grounds for his removal from office by an action brought in the Circuit Court by the State Attorney of this county."
Why would these new commissioners risk violation of the law by becoming so intimately involved in airport administration? One reason may be that they felt they could act with impunity. A spokesman for the State Attorney's Office says that, to the best of his knowledge, no Dade commissioner has ever been formally accused of interfering with the work of county employees.
Anthony Clemente offers another explanation: "Remember in 1989 the new commissioners came in with the criticism that county government was not responsive. So when Joe Citizen comes in wanting funding for some event or an ordinance passed, all he has to do is walk into a commissioner's office, talk to him for ten minutes, and if the commissioner agrees, all he has to do is get a resolution drafted and it's on the agenda in two weeks. The public demanded the commissioners become more responsive."
But it wasn't only Joe Citizen finding his way into commissioners' offices. Businesspeople, along with their lobbyists, began trooping to the Metro-Dade Government Center's second floor like never before. And they were looking for deals, especially deals that could tap them into the county's biggest flow of cash: Miami International Airport.
The two MIA business contracts described below are among those being examined by investigators. No one involved in the transactions has been accused of wrongdoing, and no evidence of illegal activity has been made public by law enforcement officials. But they illustrate a pattern of behavior that has prompted the federal probe.
AIR TERMINALING, INC.
More than 2.5 million gallons of aviation fuel are pumped into aircraft every day at MIA. In 1991 the majority of that fuel was being transferred through a series of tanks (known as a "fuel farm") owned and operated by Pan American World Airways. The airline, however, went bankrupt in December of that year. Loss of Pan Am's storage facilities could have wreaked havoc at the airport, but not a drop of fuel was affected because all of Pan Am's fuel-farm employees immediately went to work for a company called Air Terminaling, Inc.
Aviation Director Rick Elder made the decision to turn over the fuel-farm operations to Air Terminaling, a newly formed subsidiary of International Recovery Corporation, a Miami-based company that also owns Advance Petroleum and World Fuel Services of Florida. The president and chairman of the board of Advance Petroleum and World Fuel, both of which provide fuel to the airport, is a man named Phillip Bradley. Bradley is a member of the board of directors of International Recovery, and as such has lobbied on behalf of Air Terminaling before the county commission's community affairs committee.
Bradley is also a friend of Elder. "Phil had mentioned to me that he knew Rick and that Rick and he were friends," recalls Rich Raymond, an aviation department engineer who is overseeing the selection of a permanent fuel-farm manager. Elder has stayed at Bradley's condominium on Key Largo. "I thought it was a nice gesture," Bradley says of the night he allowed Elder to use his condo. "We were casual acquaintances. I had no relationship with Rick Elder."
Federal investigators have issued grand jury subpoenas for all county documents relating to the airport's fuel-farm contracts. They also demanded records from Air Terminaling, Advance Petroleum, World Fuel Services, and International Recovery. "What I told those idiots at the FBI is that they don't need any subpoenas," Bradley says. "If they want to know something, all they have to do is ask me. There is nothing there. I don't know why they're making a big thing about Rick and I supposedly being friends. I never ask anyone for any favors. I don't need any favors."
A review of the subpoenaed county records, as well as interviews with a half-dozen current and former airport employees involved with the fuel farm (several of whom also have been interviewed by the FBI), reveal that Elder did not follow normal county procedures with the fuel-farm agreement and that as a result, Air Terminaling has reaped substantial financial benefits. (Howard Goldman, a spokesman for International Recovery Corporation, says the company has complied with all requests for documents made by the federal grand jury, adding, "We do not believe there have been any improprieties.")
On December 17, 1991, two weeks after Elder selected Air Terminaling and the company began operating the fuel farm, the county commission without debate ratified the emergency month-to-month contract. At that same meeting commissioners also approved a "request for proposals" (RFP) to find a permanent long-term manager not only for Pan Am's fuel farm but for the airport's other fuel storage facilities controlled by the county.
Normally, following commission approval of an RFP, the request is advertised and bids are received. But the RFP for a fuel-storage management company was never advertised and no bids have ever been taken.
Shortly after the commission approved the RFP, says one airport official, Elder began having "second thoughts" about the bid process. He repeatedly ordered reviews and changes to the RFP, delaying any advertising of the contract. "It seemed like it went back and forth, time and time again," says the airport official, who was knowledgeable about the process and who requested anonymity. "Some of the changes were legitimate, but others seemed like bullshit."
Aviation department engineer Rich Raymond says he doesn't want to comment regarding the necessity of the changes Elder ordered. "He did keep sending me back to do more of this and more of that," Raymond explains, "but he was the boss and I was the messenger."
One result of these delays is that Air Terminaling has been allowed to continue operating the fuel farm under an unusually profitable contract. According to aviation officials familiar with the fuel industry, Air Terminaling is estimated to be making profits of between two and three million dollars per year. (Air Terminaling refused to divulge its profit figures for this article.) But a company operating the fuel farm under the terms of a new management agreement (such as the one Elder delayed) would make far less profit, as little as $250,000 per year, according to the same aviation officials. If that is the case, Air Terminaling may have made more money this past year alone than it would have under ten years of the proposed management agreement.
Air Terminaling saw another advantage in keeping its emergency month-to-month arrangement: the terms of the proposed long-term agreement would have prohibited it from even bidding for the contract.
In drafting the qualifications for potential bidders, aviation department staffers sought to avoid conflicts of interest; they did not want one oil company or fuel importer or airline to control the vital tank farm, which could give that firm a powerful weapon over competitors. And so the proposed agreement excluded oil-refining companies, fuel suppliers, and airlines. The proposed agreement went even further by restricting any subsidiary of such companies, for fear subsidiaries would simply follow the orders of their parent firm or pass along confidential information about competitors. Air Terminaling was therefore barred from consideration because its affiliates, Advance Petroleum and World Fuel Services, were fuel suppliers.
In early 1992, Elder ordered a slight change in the wording of the proposed long-term agreement, a change that made it possible for fuel suppliers, as well as their affiliates and subsidiaries, to bid on the contract. And with that, Air Terminaling was now qualified to bid.
This caused a small uproar within the fuel industry, as companies decried what they saw as a double standard. Why should fuel suppliers now be allowed to compete while oil refiners and airlines were still excluded? Dan Hill, chairman and chief executive officer of the oil-refining company Coastal Fuel, wrote to Elder: "The exclusionary description crafted to limit qualified bidders in the way yours does is unfair and, in our view, highly suspect from the legal perspective."
Elder responded with an indignant letter of his own: "We recognize and respect your right to disagree, and in fact expect that you would disagree, but do not respect the tone of your letter, which has degenerated in an obvious attempt by Coastal to cast doubt and aspersion on the fairness of the process or the intent of the county staff."
Did Elder's alteration of the proposed agreement serve the best interests of the county? Not according to acting Aviation Director Gary Dellapa. One of his first acts upon taking charge of Miami International Airport was to rescind Elder's changes and reinsert the conflict-of-interest restrictions.
Dellapa's action, however, did not put an end to the controversy. The matter flared again two weeks ago, this time before the commission's community affairs committee. Phillip Bradley appeared before the committee on behalf of Air Terminaling to argue against Dellapa's decision. Bradley asserted that the bidding process should be open to all interested companies, regardless of potential conflicts, and that commissioners themselves should decide who will run the airport's fuel farm. Alex Penelas, the only commissioner attending the meeting, said he tended to agree with Bradley, adding that perhaps the contract should be open to all qualified parties, regardless of their affiliations.
That was Penelas's last meeting as chairman of the community affairs committee. This past Thursday his committee assignment was changed and Commissioner Pedro Reboredo was made chairman of a new aviation committee, which will deal exclusively with the airport. The recently expanded county commission was scheduled to meet Tuesday, April 27, to decide what qualifications will be required of companies wishing to submit bids for the fuel-farm contract.
Although Sirgany Enterprises has been doing business at Miami International Airport since the 1950s, only in the last four years have the company's fortunes soared. Prior to 1989 the Miami-based firm ran six gift shops at MIA and generated about six million dollars per year in sales. Today Sirgany manages 26 retail outlets at the airport, and in the coming year it is expected to amass sales of more than $32 million.
Sirgany operates the airport's three so-called Florida shops, which sell gifts unique to the state, such as crates of oranges and stone crabs packed in dry ice. The company also manages six regular gift shops, including a sports clothing store and a high-priced novelty emporium. Most important, though, Sirgany runs MIA's seventeen newsstands.
The newsstand management agreement, which Sirgany won this past October, was the company's greatest coup, a virtually risk-free opportunity to make money. Dade County owns the newsstands (which produce about $20 million per year in sales); pays for their maintenance and utilities; and purchases and stores all the books, publications, and souvenirs that line their shelves. The county even pays the salaries of the workers who man the cash registers. (Those wages, however, are set by Sirgany.) Sirgany is required only to order the inventory and supervise the newsstands and work staff. For this the county pays the company a flat fee of $300,000 annually. In addition the firm is allowed to keep a fraction of gross sales, which generates another estimated $225,000 annually. Over the span of Sirgany's ten-year contract, the company is expected to reap nearly six million dollars, a hefty percentage of that being profit.
The highly lucrative MIA newsstand contract represented a comeback of sorts for Sirgany. Just a year earlier, in an effort to expand its newsstand operations at Orlando International Airport, the firm had attempted to qualify as a minority-owned company by entering into a partnership with a black educator. But when the black partner admitted to the Orlando Sentinel that Sirgany officials were providing all of the money and that he wasn't involved in preparing the bid or any of the decisions about merchandise and display, Sirgany was disqualified from bidding.
The company suffered a further defeat just three months later, when it lost a bid to continue operating its two news and gift shops at the airport. "It's inconceivable that old-timers like us were not given some special consideration," Sirgany's president, Raymond Kayal, told the Sentinel.
After its ignominious departure from Orlando, Sirgany concentrated its efforts on Miami, in particular on winning the newsstand management contract, which was soon to be awarded. Sirgany's local contacts were solid. Besides having a long-running if unspectacular history at Miami International Airport, the company employed Christopher Korge as its attorney and lobbyist. Korge, a prominent Miami lawyer, is a confidant of Commissioner Alex Penelas and was active in his successful 1990 election campaign. He also is a friend of Commissioner Larry Hawkins, who once appointed him to the county's charter review committee. Moreover, Hawkins is well acquainted with the founder of Sirgany Enterprises, Mitchell Sirgany. "Mitchell Sirgany has been [at Miami International Airport] since 1953 and is probably one of the most fun guys to listen to about airport lore and history in Dade County," says Hawkins, adding that he and Sirgany have never discussed business during any of their meetings.
If Sirgany faced an obstacle in winning the MIA newsstand agreement, it arose from the qualifications requirements. The original proposal demanded that bidders have a minimum of four years newsstand experience with gross sales of at least five million dollars in any one year. Sirgany qualified on both counts, but just barely in the sales category. In addition, the company operated only two newsstand/gift shops in Orlando A not a very impressive resume. (And not to mention that Sirgany would soon lose those contracts.)
But by late 1991, when MIA's newsstand proposal went to the county commission for final approval, the minimum qualifications had been subtly altered in a way that boosted Sirgany's chances. Instead of limiting business experience to newsstands alone, the new language permitted either newsstand experience or comparable gift-shop experience. Now Sirgany could say its qualifications included the two Orlando operations and the six gift shops it ran at Miami International Airport. In addition, its gross sales figures now ran comfortably above the five-million-dollar minimum.
Rick Elder ordered the change. "I received a call from Mr. Elder and was told to change it so that the people who were in the business of gifts could also qualify," recalls airport staffer John Van Wezel, who drafted the management agreement for the aviation department.
With the new qualifications in place, the proposed contract was advertised in late 1991. Within a few months, the aviation department received bids from three qualified companies:
* Benjamin Books, a 100-percent minority-owned firm that had been in business for more than twenty years and operates newsstands in eleven airports around the nation, including New York's La Guardia and Dulles in Washington, D.C.
* Terminal Newsstands, Inc., which had been running the newsstand operations at Miami International Airport for more than two decades and whose parent company, ARA, is one of the largest distributors of magazines and books in the world.
* Sirgany/Century, a newly created Sirgany Enterprises subsidiary formed exclusively to bid on the newsstand agreement. The new company represented a partnership between Sirgany and Sergio Pino, president of Century Plumbing Wholesale. Pino at that time was also president of the powerful Latin Builder's Association and a major campaign contributor to several commissioners, including Gersten, Penelas, and Hawkins.
A selection committee, composed of professional staff from the airport and other county departments, spent several weeks reviewing written proposals from the three companies and hearing oral presentations from each bidder. The committee concluded that any of the firms could manage the contract, but it found Benjamin Books would do the best job, followed closely by Terminal Newsstands. Based on a point system the committee had established, Sirgany/Century finished a distant third.
Next the committee took into consideration how much money each company sought as a flat fee to run the airport newsstands. Benjamin Books wanted the most A $375,000 annually. Sirgany/Century was next, asking for $300,000. The lowest bid came from Terminal Newsstands, which requested $198,000.
After weighing the costs and the abilities of each company, the committee decided in favor of the existing operator, Terminal Newsstands. In a report dated March 6, 1992, the selection committee wrote: "Although the committee was very favorably impressed with Benjamin Books as being ranked highest in quality, it determined that the much lower monetary proposal of Terminal Newsstands outweighed the difference in the quality ranking of these two proposers."
Normally the county manager would promptly forward such a recommendation to commissioners for their consideration. However, Joaquin Avi*o refused to do so. Instead, according to his appointment calendar, he met privately with Sirgany president Raymond Kayal, Sergio Pino, and Sirgany's lobbyist Christopher Korge to discuss the selection committee's choice. Following that meeting in early April, Avi*o asked the selection committee to reconsider its decision. The committee met again and reaffirmed its choice of Terminal Newsstands. (Avi*o did not return repeated messages for comment.)
Three more months passed before Avi*o finally sent the selection committee's recommendation to the commission for consideration at its October 13, 1992 meeting. But Avi*o, who earns $150,000 per year to make decisions and advise the commission, would do neither in this case. He told commissioners he had no opinion about the proposed agreement or which company should get it.
Avi*o may have declined to offer an opinion, but lobbyist Korge was not so reticent. Earlier Korge had met privately with most of the commissioners to lobby for Sirgany/Century. Now at this decisive meeting he spoke publicly A and solemnly. "The question," he intoned, "is what is in the best interest of the county." Korge also urged commissioners to consider the amount of money each company estimated it could return to the county as profit. By that measure, Sirgany/Century's estimate for the first year of operation was second only to Benjamin Books and nearly $700,000 higher than Terminal Newsstands.
Several airport officials, including Elder, rose to warn commissioners that it was dangerous to base a decision on such estimates due to their speculative nature. But commissioners rejected their professional staff's advice. Commissioner Alex Penelas led the debate by repeatedly asking questions that emphasized Sirgany/Century's high profit estimate (though curiously ignoring Benjamin Books's even higher estimate). "What I think I established," Korge concluded, "is that Sirgany/Century would produce approximately a $670,000 higher net operating income return to the county.
"It's a close call," Penelas hedged. "Sirgany/Century is a local company. I'll move them." Commissioner Hawkins immediately seconded the motion, as did Commissioner Mary Collins, who reiterated Penelas's point that Sirgany was a local company.
Were commissioners about to award the contract based on a special consideration that was not part of the process? County Attorney Robert Ginsburg clearly thought so, and stopped commissioners from voting. "Please do not base your judgment on that criterion," Ginsburg implored, shaking his head and sensing legal trouble. "That [being a local firm] was not one of the criteria we put out in our specifications."
Hawkins carefully set the record straight: "What I know I heard from Commissioner Penelas, although it might not have completely been recorded, is that in his best judgment, even though Sirgany/Century happened to be a local company, he felt they were the best one and that's why I seconded it."
The commission then voted unanimously to award the contract to Sirgany/Century.
"The reality is that if they didn't use the [profit estimates] to approve Sirgany," argues an embittered airport official, "then the commission would have used some other excuse to award them the contract."
Ron Dennis, who was Terminal Newsstands's general manager in Miami, agrees. "I felt the decision was made long before I arrived," he sighs. "My God, what do you have to do? We played by the rules, our proposal was chosen by the selection committee A twice A and we still lost. I'll never be able to prove why, but obviously Sirgany is very well-connected politically with that commission."
Several members of the aviation department who were involved in the selection process echo Dennis's dismay. "You work your ass off and make recommendations, and they just throw them out the window," says one airport official. "And you might not mind so much if they were changing things for the right reasons. But they're not. It's not what you do right, it's what you do politically that makes things move out here."
Former aviation director Dick Judy says such strong feelings and resentment are to be expected. "What business is it of a commissioner, anyway, who gets a restaurant or a concessions agreement?" he asks. "They should establish policy, but the decisions about who gets which contract should be done in an atmosphere of impartiality and fairness. When commissioners become so directly involved, that leads to all forms of corruption."
Today neither Penelas nor Hawkins says they remember the issues or details surrounding the newsstand agreement. And each says he can't even remember for whom he voted. "There have been a thousand airport deals since I've been a commissioner," Hawkins shrugs.
Penelas bristles at the suggestion that his friendship with Christopher Korge may have affected his selection of Sirgany. "I know Chris Korge very well. That's something I've never denied," he says. "And I've voted against Chris Korge on many occasions. I guess you can pick any decision and claim that it was politically motivated. And the public has the right to assume whatever it wants. But politics doesn't play a role in any of my decisions. I try to make the best decision I can based on the circumstances."
As for Sirgany/Century, only time will tell if its selection will indeed be a good deal for the citizens of Dade County. It certainly hasn't been a blessing for the people who work the newsstands. While Sirgany/Century did maintain all of Terminal Newsstands's employees, the company slashed wages and required newly hired workers to contribute more for the same medical benefits.
And what about those big profits Sirgany/Century said it would return to the county? Commissioner Penelas and the others shouldn't count on them. County officials are projecting that in the company's first full year of operation, it will fall short of its county-profit estimate by half a million dollars.
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