2 Port of Seattle officials quit over fraud report

Two high-ranking managers resigned, four top officials were suspended and three others received written reprimands as the Port of Seattle responded to a scathing report that detailed fraud at the agency.

Port Chief Executive Officer Tay Yoshitani said Tuesday that he has accepted the resignations of John Rothnie, who managed the third runway expansion at Seattle-Tacoma International Airport; and Larry McFadden, port construction services general manager.

In his response to the independent investigation that found the staff steered contracts to preferred bidders, Yoshitani also announced a three-week suspension without pay for a chief engineer and one-week suspensions without pay for three senior managers. Three other officials received letters of reprimand.

In an interview with the Seattle Post-Intelligencer, Rothnie said he told investigators that some of his actions showed "extremely poor judgment on my part." But he told the newspaper he was unfairly targeted and was following orders and legal guidance from his superiors at the port.

"It is amazing how I was portrayed as running off on my own when I was ordered to do these things," said Rothnie, who resigned last week. "I am in the middle of the organization, just a soldier."

Former U.S. Attorney Mike McKay was hired by the port earlier this year to look into its contracting practices, following a state audit that found them lax and vulnerable to fraud.

In a 57-page report released last week, McKay said his team's $1.4 million, 10-month investigation did not uncover instances of embezzlement or personal gain by port employees. No criminal charges have been filed.

The McKay report, however, did find 10 instances of fraud, including a port employee's decision to provide a potential bidder with internal cost estimates for a project related to the Sea-Tac third runway, which opened last month. The runway cost more than $1 billion, nearly five times the original estimate.

Rothnie and McFadden could not immediately be reached by telephone for comment by the Associated Press on Tuesday.

The incidents described in the McKay report largely took place between 2001 and 2006, before Yoshitani took over as port CEO in January 2007, succeeding Mic Dinsmore.

Yoshitani said he has "zero tolerance" for fraud. He added that he's implementing recommendations to make sure contracts are awarded through fair and open competition, including a better whistleblower policy that will make it easier for employees to report concerns.

Other policy changes include disclosure of financial conflicts of interest between port employees and contractors.

"Mr. McKay's report reflects a 'get it done at all costs' culture - that day is over," Yoshitani said in a statement. "We have tough competitors and big projects, but we have to deliver those projects with fair and open competition."

John Creighton, president of the port commission that oversees port operations, said that while he supports Yoshitani's "first steps" in response to the fraud investigation, he thinks the commission and public would benefit "from more clarity as to what exactly a zero tolerance policy means.

"If it does not mean immediate termination for employees found to have committed fraud, what exactly does it mean?" Creighton asked.

The U.S. attorney's office in Seattle launched its own investigation of the port following the state auditor's report. That investigation is ongoing.

Yoshitani will take more disciplinary action if the federal investigation finds any further wrongdoing, port spokeswoman Charla Skaggs said.