Carmen's Follies

After seventeen years of duty as director of the Port of Miami, Carmen Lunetta deserves a testimonial that will stand as a reminder of his managerial skills and his dedication to protecting taxpayers' money. What would be appropriate?

A plaque? Too meager.
A bust? We'll let the FBI take care of that.
Lunetta deserves something big and bold -- maybe a building named in his honor. Better yet, two buildings should be dedicated to his memory. The twin towers of Carmen. I have the perfect pair in mind: Terminal 8 and Terminal 9.

In addition to being a $25 million gift Lunetta rammed through for his good friends at Carnival Cruise Lines, those seaport passenger terminals were constructed without proper building permits.

And now more good news. A county audit expected to be made public this week suggests that millions of dollars may be missing or may have been misspent during that construction project. One of the auditors' conclusions, contained in a confidential draft report, states, "Based on the foregoing, particularly the allegations of impropriety, we recommend referral of this matter to the Office of the United States Attorney and the Office of the State Attorney for further investigation."

County Manager Armando Vidal confirmed Friday that he has notified state and federal prosecutors of the discrepancies uncovered by the audit and has asked that they launch their own inquiry.

Carnival spokesman Tim Gallagher said last week that he could not comment on the specifics of the audit because Carnival officials have not seen a copy. "If there are any discrepancies, and we are not aware that there are, the county and the contractor have to resolve them themselves," Gallagher declared. "We lived up to all of the terms of the agreement and we expect to be reimbursed."

In February 1995 Carnival and the county devised a plan to have terminals 8 and 9 expanded and renovated as quickly as possible to accommodate a new ship, Destiny. The county waived competitive bidding and selected G.C. Chase Construction as the general contractor. Rather than waiting to fund the project through bond financing, Carnival offered to pay all construction costs up-front -- estimated at approximately $25 million -- with the understanding that the county would later reimburse the company. In 1996 the agreement was amended and the cost was raised to $27.5 million.

To date Carnival has submitted $25.8 million in expenses for county reimbursement. Before he resigned, Lunetta was prepared to pay the company in full, according to Vidal, who added that the seaport's engineering consultant, Bermello Ajamil & Partners, claimed to have reviewed the bills and found them to be in order.

But Vidal says he withheld all money from Carnival after county officials received an anonymous tip that approximately three million dollars in construction costs could not be accounted for and should not be paid. The manager then asked county auditors to review the billing records and make their own assessment.

A September 25 draft of that report documents a number of serious problems. For example, as of this past January Chase Construction had been paid $23.1 million by Carnival, yet county auditors could identify only $18.2 million in actual costs. The difference -- nearly five million dollars -- was being claimed by Chase as overhead and profit, a figure auditors believed to be exceptionally high based on the contractor's original estimates.

As county auditors continued to question the charges, Chase, according to the report, unexpectedly submitted a new round of bills totalling $1.3 million for what it called additional work. Auditors described this request as "suspect" because both Chase and the seaport's consultant Bermello Ajamil & Partners had certified that the job was 98 percent complete when Chase handed in its original $23.1 million bill last January. (Officials from Chase Construction did not return phone calls last week seeking comment.)

Auditors also found that Chase had billed the county (through Carnival) $118,000 for a surety bond that the company never actually bought. In addition, the audit uncovered nearly one million dollars in salaries and fringe benefits for "fourteen unidentified individuals," including $95,000 in executive Christmas bonuses, which county regulations deem inappropriate. "Thus the Christmas bonuses should be recovered and other salary costs disallowed pending receipt of substantive proof," the report states.

Vidal says he is still trying to determine why Bermello Ajamil & Partners not only failed to notice the many problems outlined in the audit but certified Chase's bills as legitimate expenses for reimbursement. (Name partner Luis Ajamil was out of the country last week and could not be reached for comment.)

In addition, auditors were amazed to discover that there had never been a written construction contract between Chase and Carnival. "The former seaport director, along with representatives from Chase and Carnival, stated that an agreement ... was never reduced to writing," the report notes. "In essence, the work was performed under oral agreements, which is prohibited when public funds are at risk. The absence of a written contract between Chase and Carnival, specifically embodying the safeguards designed to control costs, assure accountability of funds, and promote adherence to performance standards, has put taxpayers' funds at risk and left the county with little recourse.

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Jim DeFede
Contact: Jim DeFede