Ex-Port official alleges "smear"

A Port of Seattle manager who resigned under pressure said he was unfairly singled out for fraudulent contracting practices his superiors approved and directed.

John Rothnie, project manager for the new third runway at Seattle-Tacoma International Airport, said he was "smeared" by a Port investigation that tied him to four cases of fraud. In an interview Wednesday, Rothnie acknowledged one major mistake, but said he was not colluding with a contractor — as the investigation suggested — and insisted "there's more to the story than has been portrayed."

A 19-year Port employee, Rothnie resigned last week after he was told he'd likely be fired for his role in four instances of fraud identified in a $1.4 million investigation by former U.S. Attorney Mike McKay. Larry McFadden, general manager of Port Construction Services, also resigned after being accused of improprieties unrelated to Rothnie's case. McFadden declined to comment Wednesday.

"It's just ridiculous," Rothnie said of the blame Port CEO Tay Yoshitani and McKay heaped on him, "because I was clearly following direction of others."

Yoshitani defended his decision to give seven Port managers lesser punishment for their role in a $125 million third-runway contract.

McKay's investigation found Rothnie gave sensitive Port documents to TTI Constructors, the sole bidder on the $125 million runway job; negotiated $9.4 million in purported bid reductions with TTI that turned out to be largely cosmetic; made prepayments to TTI before money was owed the company; and played a key role in a memo that deceived elected Port commissioners about the high cost of TTI's bid.

Dinsmore blamed

Yoshitani blamed much of the third-runway fraud on then-Port CEO Mic Dinsmore, saying "he set the tone" and made decisions that drove Rothnie's actions. But he said Rothnie was the other "central figure" in the case because he understood the deal better than anyone and signed off on the misleading memo.

"His collective actions are the most offensive we found," McKay said about Rothnie.

Rothnie said he quit because "the cards were stacked against" him and didn't want a termination on his record.

In recounting events behind the TTI contract, he argued that several of his Port superiors knew as much as he did about improprieties.

Rothnie said he met with Gary Merlino, a TTI owner, because he was directed to by Dinsmore. He said when he went to Merlino's office, the contractor gave him a remnant from a meeting with Dinsmore and airport director Mark Reis at a steakhouse near Sea-Tac the previous day. It was a napkin with a dollar figure on it and Dinsmore's cellphone number.

Rothnie said he called Dinsmore, who explained that he wanted TTI to lower its bid by $9.4 million so it would not exceed the Port's cost estimate by more than 10 percent. If the bid exceeded that limit, the commission had to be alerted and Dinsmore feared that might delay the project.

Rothnie came up with several options, including the one eventually chosen, he said, by his superiors. That called for reductions largely contingent on a projected decrease in fuel prices and building materials that did not materialize. As a result, $9.4 million in savings dropped to only $2 million.

He said high-ranking airport managers approved of his idea, including contract services manager Paul Powell, chief engineer Ray Rawe, airport capital improvement director Robert Riley and deputy aviation director David Soike. "Then they said they needed to notify the commission and went off to craft the now-famous notification" memo, he said. "To say I'm standing by myself here and I pulled the wool over their eyes is ridiculous. These are very smart, skeptical people."

Rothnie provided a copy of an e-mail sent to Rawe, Riley, Soike, Reis, Dinsmore and others that appears to explain that the TTI bid reductions were contingent on a drop in fuel prices and other factors.

Rothnie did admit to a mistake in sending TTI the Port's detailed cost estimate for the project before they bid.

"I'm not excusing that. It was very poor judgment. I never did that before," he said.

Rothnie said the TTI project manager was needling him, saying the company was going to be the only bidder and would charge the Port whatever it wanted.

"A stupid moment"

"I discussed that with him heatedly and in a stupid moment sent the estimate to him. I don't know what I was doing except trying to say 'We are not going to get ripped off.' But in no way was there collusion," he said.

Yoshitani announced Tuesday disciplinary measures against seven Port managers for their roles in the TTI contract and memo. He suspended Rawe for three weeks without pay. Powell, Riley and Soike were each suspended one week without pay. Reis, Deputy CEO Linda Strout and General Counsel Craig Watson will receive letters of reprimand.

Yoshitani said Rawe, the memo's author, was in a position to point out the memo's misrepresentation but didn't.

He said Reis, Strout and Watson should have reviewed the memo and made sure it was accurate.

And he said Powell, Riley and Soike should have understood the flimsy nature of the bid reductions in the memo. But they didn't.

"I talked to them and it was like an 'aha' moment. They didn't understand that memo was a misrepresentation ... They should've connected the dots but they didn't," Yoshitani said.

Rothnie disagrees. "If wrong was done, it was done by a lot of people, not just me," he said.

Bob Young: 206-464-2174