The Public Works Scandal

I have waited for some perspective as well as some additional information before writing about the scandal in the Tulsa Public Works department. By now, you have no doubt read about this in the paper, or seen a story about it on TV. For the basis of this post, I will assume you have at least a 10,000 ft view’s understanding of the public corruption charges of fraud, bribery, conspiracy and money laundering down at Public Works.

As a member of Tulsa Sales Tax Overview Committee, I’m not sure how unique my perspective is, but it has afforded me the ability to access people in the Finance department, as well as the Public Works department. As such, I’ve been exposed to their unique perspective, and I’ll do my best to share that with you.

What about the STOC?
My first reaction was to question the role of the STOC. The natural question is should we have caught this? After all, our roll is to watch third penny sales tax projects and report to the council their progress, their problems and the status of the budget. The answer fortunately, or depending on how you look at it, unfortunately is no. The fraud was perpetrated from the inside, with insider’s knowledge. It was designed in such a way as not to trigger the safeguards that have been put in place to catch fraud, and not to bring attention.

The allegations
With regard to the actual allegations, I’ll share what I know about them. There were two basic components to the corruption as I understand it. The first revolves around the inflation of the final payment to the contractor(s), and the second, around bribes to affect the awarding of contracts.

Final payment inflation
The way this particular fraud worked is somewhat complicated. The reader’s digest version is that the accused would change the billable quantities in the final bill to an amount higher than what they were actually owed. Since any project that goes over the ordinance or the encumbrance amount will raise red flags and causes all kinds of unwanted attention, the changes in the final payment would not go over these amounts. What they would do is soak up what ever was left in the project without causing any suspicion. The real bill would go through the system and get all the proper approvals, and then at the last second, the real bill would be switched for a fake bill. It is the fake bill that would be submitted for payment.

I know that the City is taking steps to re-engineer its payment processes so that this can not happen again.

Money for Contracts
I sat in a meeting with Paul Zachary from Public Works and he said, “We do not award contracts over here, we advertise them from here.” The awarding of contracts happens downtown at City Hall through the City Clerk’s office with representatives from Finance, Legal, and the contract administrators.

In one allegation, there was money taken to influence the awarding of a contract, but the individual who took the money could not have influenced who won the contract. As previously stated, Public Works does not award construction contracts, they only advertise them.

The second allegation regarding bribes for contracts has to do with the professional services selection committee. In that committee, one of the decisions they make regards who will perform the inspection each project once it is complete. It is preferred that the firm that designs a project also performs the inspection. Money was given to influence the PSSC to award the designer of a particular project the inspection job. I asked what would have happened if no money had been exchanged? Would that firm still have gotten the inspection, would anything different have happened? The answer was no because in the preferred process, the designer does the inspection.

If this particular set of indictments did not make any since to you that is probably because it does not make any sense. It was really pretty dumb for money to exchange hands because the person who took the money really did not have the power to make anything happen.

What steps the City needs to take here is a bit unclear. One of the ideas is to give the designers of a project the first right to inspect the final project.

Will we find out about others in the City who were involved?
It is my understanding that the indictments will be added to and amended, but not to add any further City or Public Works staff. Paul Zachary told the STOC in a subcommittee meeting that he was informed by the FBI and attorney’s office that no additional City of Tulsa staff is involved.

Now that the authorities know who was on the inside perpetrating the fraud, they can now work closely with city officials to aid in the investigation. Apparently the FBI had already vetted everyone. Zachary shared with us a bit about what that was like, “They (the FBI) have been following me for over 18 months. They know where my kids are, they know what college my oldest daughter is at. They know what she is doing as well as her finances, my school loans. Just about feeling pretty violated except for being able to sit in that office right across the hall. And told that our reputation precedes ourselves, and we are cleared, so that kind of makes it all worth it.” He also shared with us what it was like to find out that someone he had worked so closely with had been involved in a scheme to defraud the city. “It’s been (like) a death, but in a lot of ways it’s more like a marriage issue where there’s been an infidelity.…Death is somewhat expected in life, you never expect to be betrayed.”

I have mixed emotions when it comes to Public Works. As a Tulsa Blogger, I’ve seen and heard things that give me good cause to be fairly skeptical of this department. However, as a member of the STOC I’ve seen how dedicated the heads of the different departments in Public Works are to completing sewer, storm water, and street projects on time and on budget. I know how seriously they take their jobs, and it has been a pleasure for me to get a glimpse of what goes on in Public Works. I’m very relieved that no one I’ve met or sat in meetings with is a part of this scandal. It is my hope that this scandal will cause changes to Public Works that will make it stronger, and more effective that it was before. I hope that it will not take very long for confidence to return to the Citizens of Tulsa; confidence that their tax dollars are being used wisely, and that the projects that they voted for are being preformed and completed with the highest quality.


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