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Port of Oakland audit raises questions Phillip Matier and Andrew Ross Updated 10:10 p.m., Tuesday, November 13, 2012 An in-house audit at the Port of Oakland suggests that executives at the public agency racked up $400,000 to $800,000 in travel and other expenses that were either improper or of a questionable nature, according to a source who was briefed on the report. So far, port officials have declined to make the months-old report public, first citing legal concerns, then saying it was incomplete. "I'm as frustrated as anyone else about all of this, but we felt we needed to expand the report and ask more questions," said Gilda Gonzales, president of the Port Commission board. Port Executive Director Omar Benjamin was the first to fall as a result of questionable spending. He "retired" Monday after it became public that he had attended a $4,500 party in 2008 at a Houston strip club that the port paid for. "He's disappointed, but understands as executive director that the buck stops with him," Benjamin's attorney, Rod Divelbiss, said Tuesday. By retiring, the 51-year-old Benjamin gave up any right to a severance payment. But Benjamin, who made $257,508 a year and spent 14 years with the port, is still entitled to a pension. Divelbiss declined to discuss details pending negotiations with the port's outside lawyer. The Houston strip-club party wasn't the only time port officials mixed finances with fun. A review of port officials' credit card receipts in recent years indicates that high-ticket golfing, liquor and massages are all part of the port's business culture. Maritime Director James Kwon, whose name appeared on the credit card bill for the strip-club outing, also billed the port for a $324 pair of golf shoes, $400 in haircuts and hundreds more for cologne, silk ties, Godiva chocolate and bottles of Chivas Regal. He's now on paid leave. Kwon's attorney, former Port Commissioner Kenneth Katzoff, told us Tuesday that the golf, massages and gifts were all part of the job. "Taking key executives of our terminals and shipping companies to play a round of golf, and then have a foot massage or back massage and dinner afterward, you get 5 1/2 hours of building a relationship," he said. "It resulted in Evergreen (Marine Corp. of Taiwan) investing $40 million in three cranes at the Port of Oakland, which also results in millions more in revenue ... and creates jobs," Katzoff said. As for the strip-club caper, Katzoff said Kwon drank only sodas and "didn't partake in any adult entertainment." The port has brought in the outside law firm Arnold and Porter to investigate the agency's spending practices, and has also hired the high-powered PR firm of Burson-Marsteller to help manage the crisis. Arnold and Porter is charging $495 an hour for its line attorneys and $695 for any work performed by its partners. Burson-Marsteller is billing the port as much as $395 an hour, with an initial $25,000 cap. Ironically, just days before the strip-club story broke, Benjamin issued a memo to his senior staffers warning them to "be extremely discerning" in their travel and entertainment expenses. "We should focus on key customers and decision makers," Benjamin wrote. "But we need to do so in a manner that demonstrates that we are using the port's dollars in the most prudent and cost-effective manner." SNIP San Francisco Chronicle columnists Phillip Matier and Andrew Ross appear Sundays, Mondays and Wednesdays. Matier can be seen on the KPIX-TV morning and evening news. He can also be heard on KCBS radio Monday through Friday at 7:50 a.m. and 5:50 p.m. Got a tip? Call (415) 777-8815, or e-mail matierandross@sfchronicle.com. |