Port of Seattle Spends to Defend Itself

Published September 1, 2008

The Port of Seattle’s legal bills have topped $1 million for three law firms hired in response to its recent performance audit and the launch of a criminal investigation by the U.S. Department of Justice.

The audit, released in December 2007, found the port wasted nearly $100 million in taxpayer dollars and violated numerous state laws on projects from January 2004 through March 2007.

The audit’s findings revealed “no controls were in place to deter, prevent, or detect bribery, kickbacks, illegal gratuity, or bid-rigging schemes.” In addition, auditors found the port frequently circumvents competitive bidding requirements and fails to enforce basic contract provisions, “resulting in delays, extra costs, and an inability to defend against claims.”

No Firings or Discipline

So far, no port employees have been fired or disciplined as a result of the audit findings. No criminal charges have been filed in the matter.

As of press time, attorneys from the Seattle law firm Danielson Harrigan Leyh & Tollefson had billed $663,175.35 to the Port of Seattle since being hired in January. The second firm, Yarmuth Wilsdon Calfo, billed $318,893.49 in the same period. Both firms specialize in white-collar criminal defense.

The third firm, McKay Chadwell, headed by former U.S. attorney Mike McKay, has billed $143,047.21, which includes subcontracted services performed by forensic investigators.

The combined legal bills total $1,125,116.05. Invoices were provided by the port in response to a public records request by the Evergreen Freedom Foundation (EFF), a private, nonprofit, public policy research organization in Washington state.

Flimsy Invoice Details

Based on documents EFF has received, it appears the port signed off on more than half-a-million dollars in attorney fees despite having little documentation of what work those attorneys performed.

The billings in question are in the form of one-page summaries instead of standard, itemized attorney invoices. The port did not respond to requests for comment on the unusual invoices.

Other aspects of the port’s arrangement with the three firms are drawing the wrath of government watchdog groups, who believe the port’s excessive legal protection is a strategy to exempt relevant documents from public disclosure.

‘Wide Legal Net’

“Based on the agreement for the scope of work that these firms are performing, it appears the port is paying attorneys up to $500 per hour to conduct information technology work, thus rendering all documents subject to attorney-client privilege. They’re attempting to cast a wide legal net that the public can’t get through,” said Mike Reitz, EFF general counsel.

The port recently commissioned its own audit at a cost of $365,000 to refute the independent auditor’s findings. The port’s audit found “no significant deficiencies nor material weaknesses,” in sharp contrast to the state audit.

Government watchdogs view the port’s behavior as especially distressing in light of its authority to collect taxes and fees without taxpayers’ permission. The 2008 property tax levy for the port will cost property owners $75.8 million.

Unusual Property Tax

EFF President Bob Williams points out the Port of Seattle is the only major port on the West Coast that uses property tax levies as part of its revenue stream. The ports of San Francisco, Portland, and Los Angeles do not.

“Despite the public’s broken trust, an FBI investigation, and a flunked performance audit, the port still has the authority to tax King County residents without voter approval,” Williams noted.

Several bills were introduced in the state legislature this session to repeal the port’s taxing authority, but none passed.

Subject to Contracting Laws

During the most recent legislative session, state Rep. Ross Hunter (D-Bellevue) cosponsored a successful bill making the Port of Seattle subject to the same basic public contracting laws that all other Washington state agencies must observe, such as rules regarding competitive bidding, transparency, and the like.

“There has been a culture at the Port of Seattle that eschews transparency and public accountability,” Hunter said. “I am hopeful that the new management, both at the top and on the Port Commission, will improve the port’s attitude towards both.

“If this fails to improve the situation, perhaps the federal investigation will be more pointed in achieving attitude adjustment,” Hunter said.

Amber Gunn ([email protected]) is director of the Economic Policy Center at the Evergreen Freedom Foundation in Olympia, Washington.