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With Friends Like These

Alex Penelas has a problem. An image problem. After rising to power as a reformer, Penelas is now seeing his reputation challenged. Ironically (some might say fittingly), this attack comes not from the mayor's enemies but from some of his oldest allies, the very people who helped put him in power.

The public phase of this struggle began earlier this month, after Penelas fired County Manager Armando Vidal. The mayor said the manager -- the man he handpicked to be the county's top administrator -- was wildly incompetent. Vidal countered by claiming he was fired because he wasn't willing to do favors for the mayor's supporters, including a small cadre of lobbyists. The squabble offered the public a rare, insider's view of how business is conducted on the 29th floor of county hall. The State Attorney's Office is now investigating Vidal's allegations.

But another legal skirmish could further sully Penelas's noble facade. Church & Tower, the company owned by the family of the late Jorge Mas Canosa, last November filed a lawsuit against the county after Penelas terminated its $58 million paving contract. The mayor's action was prompted by critical stories published in the Miami Daily Business Review and a subsequent Miami Herald investigation that found the county had been billed nearly a million dollars for work that was never done.

In its lawsuit, Church & Tower posits that Penelas canceled the contract not because he believed the company had done anything wrong, but rather because the mayor was worried about how he would look if he didn't lash out at the firm.

The company may be right.
Depositions taken in the case over the past two months offer a glimpse into Penelas's administration. The most telling statements to date have come from Brian May, the mayor's chief of staff. (Penelas has fought efforts by Church & Tower's attorneys to take his deposition, but earlier this month a judge ruled that the mayor will have to comply with the company's request.) In February, over the span of two days, May was questioned under oath by a lawyer for Church & Tower.

Attorney Mitchell Bloomberg, of Adorno &Zeder, attempted to establish that the mayor's actions were driven by the fact that County Commissioner Miguel Diaz de la Portilla had become an outspoken critic of the Church & Tower contract.

Q: Have you heard anybody say that Commissioner Diaz de la Portilla is a potential candidate for mayor against Mayor Penelas in the next mayoral election?

A: Yes.
Q: As a political adviser to the mayor, is that something that you are at least watching?

A: It's something that would be on my radar screen.
Q: You are concerned about it?
A: Not concerned about. Something I would be aware of.

Bloomberg moved on to a meeting held November 1 in the lounge of the Hotel Sofitel near Miami International Airport. Former Latin Builders Association president Sergio Pino arranged the private tete-a-tete. The participants included Penelas, May, Pino, Jorge Mas, Jr., and Juan Carlos Mas.

Q: How did the meeting start? Tell me as best as you can recall how it started, who said what.

A: Mr. Mas Jr. started the meeting and he looked at the mayor and he said oye, Alex, what you have here, and he pointed to Mr. Pino and he went like this [pointing to others], what you have here is the greatest political force in the State of Florida, and this is a team and we need to stick together and we shouldn't let Mr. Diaz de la Portilla make an issue of this paving contract. In essence, that's how it started.

...
Q: Did Mr. Mas at the meeting make mention of the fact that Church & Tower would like to continue doing the work?

A: Yes.
Q: So you recall that comment being made?
A: Yes. Obviously, that's what the mayor was responding to. He was saying -- when Mr. Mas made his comments early on about, you know, we have the political force, the greatest political force in the State of Florida, in essence what he was saying was we shouldn't be messing with this political force because it was very, very powerful. That was what came across.

Q: That's how you took it?
A: I believe that's the way the mayor had taken it, too, because he mentioned it to me afterwards.

Q: But Mr. Mas didn't say we shouldn't mess with this political force; that's the way you took it?

A: Yes, that's true. But he did say that the reason he was saying that and that he was making the point, this is a very powerful force and that he would get Mr. Diaz de la Portilla at the appropriate time.

Q: Mr. Mas said he would?
A: Mr. Mas said he would take care of Mr. Diaz de la Portilla at the appropriate time electorally. In other words, they would run someone against him and go after him and defeat him. That's what he was saying.

...
Q: Did Mayor Penelas at the meeting talk about the political ramifications of allowing Church & Tower to continue doing the work?

A: Yes.
Q: What did he say?
A: He said that he thought that the entire incident surrounding the contract was an embarrassment to both the county and the company and the subcontractors, and that his interest was to see that the taxpayers got their money back, and that he agreed with the manager that the work should not continue under the contract. And he also mentioned that Church & Tower should have agreed voluntarily to the [inspector general] when it was brought up, that this kind of snowballing effect is what led this incident to become as controversial as it was.

Q: Let me go back to the question I asked. Did the mayor talk about the [political] ramifications of allowing Church & Tower to continue doing the work?

A: Yes. He said he thought that it would be an embarrassment to the county to allow them to continue doing work.

Q: Did he say whether it would be politically bad for him or not?
A: I believe when he was speaking of the county he was speaking of himself as well.

Q: Did the mayor make mention of the fact that allowing Church & Tower to continue doing the work would provide political ammunition to Commissioner Diaz de la Portilla; did he say that at the meeting?

A: I don't recall specifically, but he may have made reference to that.

Typically during depositions, attorneys commonly tell their clients to answer questions as directly and as succinctly as possible and not to volunteer information. If May was given such advice, he obviously ignored it. Several times during his deposition, May -- who has a reputation as a political street fighter -- tried to throw a little mud on the Mas family for the embarrassment this lawsuit was causing him and Penelas. Indeed he went out of his way to put on the record comments Mas Jr. allegedly made about the Dade State Attorney's Office.

A: Mr. Mas Jr. made mention at that [November 1] meeting that the state attorney overseeing the investigation was no accident. He had implied that he had talked to the state attorney about actually taking that out of the county's hands.

Q: You said he implied. What did he say?
A: He said exactly that, that the fact that the state attorney has agreed to oversee the county's audit was no accident, that he had influenced that to happen.

Q: Did he say he had influenced that?
A: No, those weren't the exact words, but that's a paraphrase of what he said.

Q: Tell me as best you can what the words he said were.
A: That it was no accident.... I can't recall specifically the words that he used in his description other than he said it was no accident, and that he, and I believe he referenced Mr. [Hank] Adorno as well, had had discussions with the state attorney about overseeing the audit.

The State Attorney's Office and Hank Adorno deny May's assertion. "We didn't have any contact with the State Attorney's Office about taking over the investigation," Adorno says.

May also recounted another meeting, this one on November 18 in his office with Juan Carlos Mas and Adorno. The day before this meeting Penelas issued a memo rejecting all of the bids for a new paving contract Church & Tower was in line to win.

A: Mr. Mas was apoplectic I guess would be the best description.
Q: What is that?
A: Very upset, very emotional.
Q: What did he say?

A: He said that if the mayor did not turn this around, that he was going to go to Cuban radio and tell everybody that the county was corrupt all the way up to the mayor, including the mayor, and added that, whether it was true or not, he was going to go to the radio and say that, if the mayor did not reverse these actions.

Q: What did you say?
A: I felt a little bit intimidated by the conversation.
Q: Why?

A: The threat of a lawsuit being one and the tone and tenor of Mr. Mas's comments were a bit upsetting to me. I felt uncomfortable that he would be saying those things to me.

Brian May might have been uncomfortable, but that didn't prevent him from nearly reaching an agreement with Adorno the next day. Adorno argued that the problems uncovered by the Herald were the result of collusion -- possibly involving bribes or kickbacks -- between one of Church & Tower's subcontractors and a supervisor in the county's Water and Sewer Department. The supervisor not only handed the subcontractor phony orders for street repairs but signed off as an inspector that the work had been completed when it hadn't. (Depositions recently taken in the suit bolster this theory considerably.)

Adorno told May that Church & Tower had done nothing wrong and was being unfairly punished. On November 19 Adorno met with May and said the company would be willing to immediately reimburse the county for the million dollars it was apparently overcharged and to place another five million dollars in an escrow account to settle any new discrepancies uncovered during the audit by the State Attorney's Office. Adorno's only requirement was that Church & Tower be allowed to continue working under its county contract, known as W-755.

May told Adorno it was a fair compromise.
Penelas wasn't so sure. Before the mayor would decide whether to accept the Adorno/May proposal, Penelas -- forever image-conscious -- wanted to know how the public might respond.

Within 48 hours Penelas called together a group of his political advisers to review the proposed settlement. Included in the discussion, which took place in the mayor's conference room, were Jose Cancela, general manager of WSCV-TV (Channel 51); Raul Pozo, an insurance broker; Manolo Reboso, a former Miami city commissioner; and Sergio Pino. In his deposition, May was asked why the mayor wanted to meet with the men.

A: I think there were two reasons. One, he trusted their opinions as not being biased, that he would get good straight answers from them and opinions, and the second was that they were not directly involved in this. Although Mr. Pino, I believe, had been talking to the Mases and was present at the Sofitel meeting.... And the others, Reboso, Pozo, and Cancela, were invited because they were not involved and there were no opinions formed.

Q: And they were, I believe as we discussed at the earlier session of your deposition, you classified them as sometime political advisers to the mayor?

A: Yes. And I think certainly the mayor was sensitive to the politics of settling this situation, that there would be some public opinion as to whether this was the right thing, wrong thing to do from the county's perspective, and that inherent in seeking the opinions from them was also a recognition that that was a factor, a dynamic in all of this.

Q: So you presented the so-called Adorno/May proposal?
A: Yes.
Q: And did you make a recommendation to the assembled group?
A: Absolutely. I recommended that we should pursue settlement.
Q: Along the lines of the Adorno/May proposal?
A: Yes.
Q: And what did each of these individuals say, do you recall?

A: Well, let me clarify how I expressed that to them. I laid out the proposal and put out on the table that there was one issue that was still problematic from my perspective and the mayor's perspective and the manager's perspective, which was continuing work under W-755. But I thought what was put on the table was a fair and reasonable proposal and maybe there were ways that we could work through that issue; in other words, that it wasn't like a final -- this wasn't final and maybe there was some way we could do it. But I also explained that Mr. Adorno was just as adamant that it was this or forget it. Could you restate your question?

Q: What did each of the people who was present say?
A: Mr. Pozo and Mr. Reboso were against settling. They thought that the community at large would not accept the proposal, that they would view it as some inside negotiation that was taking place for the simple fact to appease the Mas Canosas as a powerful political force and not because it was the right thing to do.

...
Q: And what about Cancela?
A: Mr. Cancela, I believe, was under the impression that we should try to pursue settlement. He recognized that the issue of continuing work was a problem, but the fact that getting the money back and trying to put an end to the whole issue and whole matter was something that was worthwhile, and that the mayor should consider doing it for that reason.

Q: What about Pino?
A: Pretty much along the same lines as Cancela.
...
Q: How did the meeting break up?

A: The mayor basically, after hearing everybody, offered his opinion, which was that he felt that continuing work under the contract in light of all that was going on, and he recognized that Church & Tower would be putting forth considerable amounts of money, things that were in dispute and in question, but that continuing work under the contract, even with some of the disputed amounts in hand while an independent investigation was being conducted, would be problematic. And he thought that the public would not accept the fact that we were trying to resolve the issue before the state attorney's investigation had concluded and made its findings, and that, really, he thought, and he thought the public would agree, that that investigation and audit should take place and be concluded before continuing any work or resolving monetary issues with them.

In his own deposition, Sergio Pino recounted that after the meeting, Cancela spoke to Penelas privately and reportedly asked the mayor, "Are you doing this for a political reason or are you doing this because you feel Church & Tower has done something wrong?" Not surprisingly, the mayor denied he was being guided by politics. But the mere fact that a friend and ally of Penelas would have enough doubts about the mayor's motivation to pose such a question is itself revealing.

May, in his deposition, disclosed for the first time that lobbyist Rodney Barreto was brought in by the Mas family in an effort to push the settlement agreement. Barreto, however, is not registered to lobby on behalf of Church & Tower. His involvement will confirm the view, held by many, that Penelas allows lobbyists such as Barreto and Christopher Korge to play a larger role than they should in the behind-the-scenes affairs of county government.

May also discussed a meeting between Cuban American National Foundation president Pepe Hernandez and the mayor shortly before Jorge Mas Canosa's death.

Q: What did [the mayor] tell you about his meeting with Mr. Hernandez?
A: He told me that Mr. Hernandez had come to his house, the mayor's house, and had pleaded with the mayor that Mr. Mas Canosa, Sr., who was very ill at the time, had sent Mr. Hernandez to plead with the mayor to please allow the matter to be resolved. I believe all of that took place subsequent to my meeting with Mr. Adorno.

Q: And did the mayor tell you what he said to Mr. Hernandez?
A: Not specifically. The only thing he mentioned was something to the effect that he had indicated to Mr. Hernandez that he didn't have any intention of changing his position.


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