Port balked at every step, say auditors

Two national consultants who spent months investigating the Port of Seattle's management of construction contracts described the organization as among the least cooperative they've ever encountered.

David Cotton and Patti Jones, who head separate firms hired by State Auditor Brian Sonntag to conduct the performance audit released this week, said Friday they were dismayed by the actions senior Port managers took to stymie their work.

"No one likes being audited. A lot of times organizations can be a little less than forthcoming. However, in the Port's circumstance that we encountered, it was more than just a little," said Jones, president of CDR Consultants, a construction-management firm with offices in Seattle and Carlsbad, Calif.

The audit released Thursday said the Port's shoddy management of construction contracts had wasted more than $97 million and left taxpayers vulnerable to fraud and abuse.

Port CEO Tay Yoshitani said he would adopt many of the audit's recommendations, but that most of the mistakes identified in the report were unintentional.

Auditors said Port staff stonewalled them by delaying or blocking access to information, and in some cases altered records before turning them over. When auditors pointed out poor record-keeping and no-bid contracts that violated Port policies or state law, Port managers continued to defend their actions, Jones said.

"No organization was so purposely blind to their own deficiencies as I found the Port of Seattle to be," said Jones, who founded her consulting company in 2000.

One of the prime examples of the Port's attitude, according to the audit, was the refusal of 13 Port managers to sign statements sought by auditors. The statements were meant to confirm that information provided by the Port was accurate.

"The fact that so many people refused to cooperate is sort of a red flag," said Cotton, chairman of Cotton & Co., a Virginia-based auditing and accounting firm.

Several of the managers, including seaport division director Charlie Sheldon and airport director Mark Reis, declined to comment Friday, referring questions to a Port spokeswoman and general counsel.

Instead of signing the statements requested by auditors, the managers provided statements edited by the Port's general counsel, Craig Watson. But those statements left out some of the assurances auditors sought — including, for example, assurances that the managers knew of no illegal activity associated with construction contracts.

Watson said he advised Port employees not to sign the auditor's letters as written because they were overly broad and ambiguous. Watson said the auditor essentially asked employees to say they were not aware of any mistakes or improper transactions in Port construction management. And while he and employees might believe that, Watson said they lacked information "one way or another to say that."

"I was worried someone would sign a statement that was not accurate," said Watson, who also declined to sign the statement requested by auditors.

The Port's private attorneys at K&L Gates said the auditor's letters are not standard practice in performance audits. The U.S. Government Accountability Office does not require such letters in performance audits, nor does Washington state, the attorneys said in a memo to Watson.

The Port's attorneys went on to say such letters have created controversy in other performance audits conducted by Cotton. When other entities, including Cornell University and the District of Columbia Public Schools Authority, refused to sign such letters, Cotton also labeled them uncooperative, the attorneys said.

Cotton said he's been in the audit business for 30 years and that the letters, known as "representations," are commonly used and are based on widely accepted audit standards.

"I can think of no legitimate reason that people with nothing to hide would hesitate to provide such representations," Cotton said.

One of the 13 Port managers cited in the audit report quit before the audit was concluded and did not provide a representation letter, according to the audit report and a Port spokeswoman.

Michael Mequet, described in the audit as the Port's official in charge of all construction management, took a job with Heery International, working on a project at the Miami Dade International Airport, according to Port spokeswoman Charla Skaggs. She said his departure had nothing to do with the state audit.

Because Mequet had left the Port, he was never asked by Port officials to sign the letter sought by auditors, Skaggs said.

Heery International also has contracts with the Port of Seattle, but Skaggs said Mequet did not serve on any of the selection panels that chose Heery and that he did not sign or administer any of the contracts. Mequet could not be reached for comment Friday night.

Staff reporter Bob Young contributed to this report. Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com