City Hall corruption sweep begins
84 busts today target brake-tag, taxicab officials Corruption pervades government, Nagin says
07/22/02
By Gordon Russell
Staff writer/The Times-Picayune
In predawn raids, police this morning were scheduled to fan out across New Orleans to arrest 84 city bureaucrats, brake-tag inspectors and illegally licensed cab drivers on charges of public bribery and malfeasance, an opening salvo by the Nagin administration in what bodes to be the biggest crackdown on municipal corruption in the modern history of the city.
Today's arrests will include at least one high-level city manager , as well as some brake-tag station workers and dozens of taxi drivers. Additional probes are exploring a continuum of alleged wrongdoing that ranges from outright criminal activity to questionable multimillion-dollar contracts, some of which could implicate key officials of former Mayor Marc Morial's administration, Mayor Ray Nagin said.
The focus on New Orleans' three brake-tag stations followed findings by investigators that city inspectors routinely approved substandard cars after accepting bribes. So commonplace was the profiteering that one employee was caught selling the stickers out of her home, investigators said.
The city's Taxicab Bureau came under scrutiny after investigators developed evidence showing that various department officials, including a top administrator, had collaborated to falsify and illegally sell more than 100 driver permits for amounts ranging from $200 to $1,000, among other crimes.
The corruption in the taxi bureau is thought to be so pervasive that Nagin is considering a variety of options for overhauling the Utilities Department, of which the bureau is a part, including farming out its functions to other departments.
Though today's crackdown will center on the Utilities Department, the corruption at City Hall does not stop there, Nagin said. In fact, city corruption is so institutionalized that an atmosphere of "complicity and tolerance" pervades New Orleans' government from its lowest levels to its highest, Nagin said.
Nagin said he believes most of the city's employees are honest. Once his administration indicated its willingness to investigate malfeasance, many city workers and some department heads have been emboldened to come forward with additional evidence of wrongdoing, administration officials said.
Early clues
Nagin, who was inaugurated in May, said his first clear whiff of how corrupt City Hall's business practices could be came a couple of months earlier, when a man seeking government work approached him in a restroom. The man, whom Nagin refused to name, said he wanted to give more than the legal limit he had already donated to the campaign and tried to stuff a wad of cash into Nagin's pocket. Nagin said the implication clearly was that this is how the man thought contracts routinely were secured at City Hall. The gift was refused.
Soon after Nagin took office, his staff began receiving information about various kinds of corruption. During her first week on the job, Chief Administrative Officer Kimberly Williamson found an anonymous tape recording -- which sounded like it was made by an insider -- alleging that $1.8 million in bond proceeds had been misspent. The tape has been turned over to the FBI.
The leads have since continued to pour in, Nagin said, and a squad of New Orleans Police Department detectives led by 8th District commander Capt. Louis Dabdoub and directed by Williamson has been assigned to root out problems at City Hall.
Nagin described the group's task in sweeping terms, saying the goal is to remake both the image and the reality of a city long known for lax morality, palm-greasing and other traits that have bedeviled local residents and businesses and discouraged investment by major corporations.
"This is a battle," Nagin said. "This is a battle for the soul of New Orleans, as far as I'm concerned."
Williamson said the widespread corruption has had a noxious effect on the morale of honest city workers, and she believes it to be a key factor in stunting the city's economic growth.
The Metropolitan Crime Commission, a private watchdog group, often tangled with the Morial administration but has worked with the Nagin administration on the probes. Rafael Goyeneche, the group's president and a former prosecutor, compared the mayor's tough stance at City Hall to the take-no-prisoners attitude of Richard Pennington upon taking charge of a troubled Police Department eight years ago.
"I consider the state of City Hall to be in a similar condition to the Police Department in 1990 to 1992," Goyeneche said. "I think the culture of corruption and unethical activity is so ingrained within that building that it has impeded the city's ability to operate efficiently and compete with other cities in the South. The only way that New Orleans is going to change the old way of doing business is to reform City Hall from a cultural standpoint, from the top to the bottom.
"I go back to 1980," Goyeneche said. "I can't remember a mayor ever initiating the types of investigations that Mayor Nagin is behind right now. In the past it's sort of been an unwritten rule that you just don't embarrass the previous administration by conducting these types of investigations. What we're seeing here is really unprecedented in my experience."
Problems festered
Though handcuffing city employees and administrators may be a new tack, blaming a predecessor for leaving a stain on City Hall is not new. Morial and his staff rode into office wearing pins shaped like shovels, saying it would take a tool larger than a broom to clean up the mess they had inherited.
Nagin stopped short of saying Morial is responsible for the corruption that Nagin's staff and police investigators have uncovered. But he noted evidence that suggests that Morial and top aides, including his longtime chief administrative officer, Councilman Marlin Gusman -- the current spearhead of council opposition to the Nagin agenda -- were made aware of corruption in the taxi bureau at least four years ago and did little, if anything, to stop it.
In fact, several of the employees who attempted to blow the whistle on the wrongdoing were either fired, disciplined or transferred to other departments.
Shortly before he was fired in 1998, an administrator in the taxi bureau wrote a seven-page memo addressed to Civil Service Director Mike Doyle and copied to Morial, Gusman and other officials. Among other things, the employee said he was being directed by his superiors to ignore bribery at inspection stations and turn a blind eye to improperly credentialed taxi drivers.
"Investigators are stressed out and not writing tickets because they are afraid what happened to me will happen to them if they fail to obey an unlawful order," the memo said. "The Taxicab Bureau has become a rudderless ship filled with cannon holes of corruption, malfeasance and a director who terrorizes the crew."
Another whistle-blower wrote to Gusman and Utilities Department Director Lilliam Regan in 1999 to complain that many drivers had illegal permits and that her supervisors at the taxicab inspection station were waiving fines and fees for favored drivers and cab companies. Her letter, sent to Morial and the City Council, alleged that Regan -- who last fall took a leave of absence from her post to work for Morial's unsuccessful third-term initiative -- advocated leniency for cab companies that donated consistently to Morial's campaigns.
Several other current and former employees have told The Times-Picayune of other problems at the taxi bureau, including widespread payroll fraud that has let workers collect double or triple their salaries. One employee said he was often ordered to punch the time cards of workers who did not come to work. Police said they are looking into the matter.
In addition, cabbies speaking on the condition of anonymity say fleet owners often visit the inspection station shortly before the cabs they control arrive to be checked out. They bribe the inspector, who also receives $10 "tips" from each cabbie who passes through -- a system that helps to explain the sorry condition of many city cabs.
"I see cars on the street that I drove 12 or 13 years ago," said Steven Willey, a former cab owner and longtime critic of the Taxicab Bureau. "And they weren't in very good shape when I drove them."
Officials from the crime commission received similar complaints, and they too were rebuffed when they tried to persuade the Morial administration to look into problems at the taxi bureau.
"We didn't have much access to the administration," Goyeneche said. He said his agency took many of its complaints to the city's Office of Municipal Investigation, but that office often referred the crime commission's complaints to the taxi bureau itself -- whose administrators were part of the problem, in Goyeneche's view.
In the crime commission's view, the Morial administration essentially emasculated the Office of Municipal Investigation, he said, slashing its staff and softening any critical reports it attempted to issue. Tony Radosti, vice president of the crime commission, called it "demolition by neglect."
"They had a lot of problems in getting the support they needed from the government," Goyeneche said. "And even then, their reports were perpetually edited and watered down to the point where the conclusions were virtually meaningless."
Once the Nagin administration decided to investigate the taxicab bureau, police were able in just a few weeks to uncover evidence that the problems were as endemic as the whistle-blowers had said.
Top to bottom
Nagin said the City Hall investigators are already examining other schemes, such as alleged palm-greasing that often accompanies permit applications or building inspections. But the scrutiny is not limited to malfeasance by low-level workers.
Everything out of the ordinary -- from unaccounted-for money to contracts that reek of cronyism -- is being examined, Nagin said. In some cases, the administration is conducting audits to try to locate missing money, such as $300,000 in economic-development financing whose whereabouts are unknown.
In another case, Nagin said, the Police Department has paid a firm $300,000 that has yet to do any work. The contract to create a "paperless reporting" system calls for payments totaling $800,000. Nagin said his chief technology officer, Greg Meffert, thinks the work could be done for less than $100,000.
Nagin reeled off a list of other contracts he sees as questionable -- for instance, a health-care plan Morial signed just before leaving office that contained a substantial commission for a close associate. Williamson has said the deal will throw the city budget $17 million into the red.
Other contracts, Nagin said, are problematic because they will encumber the city's money far into the future. Morial signed a 20-year energy-saving contract, for example, that contains a huge buyout clause should a future mayor want to opt out. The administration has yet to analyze the merits of the contract.
Taxi mess
Most of the arrests police will make today stem from an inquiry into the taxicab bureau begun just days after Nagin took office, and a handful of arrests were even made before this morning's sweep.
The probe started after Regan disclosed evidence that at least two drivers had received driver permits without having completed the requirements: paying a $40 fee and passing a drug test, a criminal background check and a written test on city geography.
On May 13, New Orleans police booked Freddie Sims, a longtime supervisor at the department, with theft after finding evidence that he had sold the two permits. The inquiry expanded, and officials soon discovered that permits had been sold at an astonishing clip.
A source inside the taxi department told The Times-Picayune that at least 130 bogus permits have been seized so far, although many observers think illegally licensed cabbies have been lying low since the probe began. New Orleans has about 1,600 taxis and perhaps 2,000 licensed cabbies.
Some taxi drivers believe administrators designed the written taxi-driver's test, a prerequisite for a permit, with bribery in mind. The exam is so hard, they said, that few people are able to pass -- especially if English is not their first language, increasingly the case with cabdrivers.
"That was the hardest test I've ever taken in my life," said one college-educated cabbie who requested anonymity. "I felt that the reason was that if English was your second language, you weren't going to pass."
Whether or not the test was designed to create a high failure rate, a healthy market for illegal permits clearly existed, given the number seized so far. And police soon uncovered evidence that other city employees were in on the fix.
Joy Williams, a clerical worker in the bureau, told police she often issued permits even when a driver's application was incomplete, according to police reports.
Williams told police she did so at Sims' direction, or in some cases on the orders of Brian Cain, the deputy director of the Utilities Department, who served as director when Regan went on leave. Williams, who has been booked with public bribery, denied receiving money for such favors, although she said Cain "may have treated us to lunch" from time to time.
The statement given to police by cabdriver Ismail Khan, who was booked with public bribery June 21, attests to the brazenness of the scam.
Khan, a longtime taxi driver, first in his native India and more recently in Chicago, said he arrived in New Orleans about five months ago. On March 4, he went to City Hall and said he wanted a permit to drive a taxi.
Sims walked over and said: "I give to you a break, you good man. You come here," according to the written statement investigators took from Khan. "You give me $600 and I give it to you. No test. You pass. I give immediately you permit."
Khan said he eventually bargained Sims down to $200, $150 of which he slipped him in the department's restroom. He returned with the other $50 later in the day. Khan was issued a permit that same day without taking a single test.
Khan told investigators that other cabbies he knows also bought permits from Sims or other taxi bureau employees for varying amounts.
"Somebody say I pay $800, somebody say I pay $750, somebody say $300, you know," Khan told investigators, according to their report. "A lot of the people Indian, Pakistani, Ethiopians. A lot of people is saying . . . 'I can't be paying this. It ain't right in the United States. You pay, maybe somebody see you going direct to jail.' "
How far will it go?
Nagin said in a recent interview that he expects several busts to follow in the coming weeks and months, and a detective involved in the investigations said the initial probes have spun off "tentacles" that appear promising.
But how far and wide the probe will spread is not yet clear to the administration.
"We're taking some baby steps," Goyeneche said. "What's happening Monday is not the crowning jewel. It's the first steps of the marathon. I've seen where you take care of some of the little things, and the bigger things take care of themselves."
Williamson echoed that view. She said she expects today's actions to send a message to city employees that monkey business won't be tolerated, but she's unsure whether that message will be taken to heart by everyone.
She emphasized that the administration is not on a "witch hunt." But she said all reports of corruption will be investigated, and punishment will be swift when warranted.
"My guess is that some (corruption) will cease immediately, and other activities won't change," she said. "I think it will die down. It's possible that nothing else may happen. This may stop it."
. . . . . . .
Staff writer Stephanie Grace contributed to this report. Gordon Russell can be reached at grussell@timespicayune.com or (504) 826-3347.
07/22/02