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Tuesday, December 4, 2007 Airport executives spend
big while fliers pay the tab They ring up thousands wining, dining worldwide BY JENNIFER DIXON The Detroit (MI) Free Press Jack Vogel, a senior vice president at the Wayne County Airport
Authority, left, and the authority's chief executive officer, Lester Robinson. As economic
development director for the Wayne County Airport Authority, Jack Vogel has
spent hundreds of thousands of dollars traveling the world and eating in the
finest restaurants -- all in the name of drumming up business for Detroit Metro
Airport. But most of his entertainment expenses listed coworkers
-- not potential airport clients -- as his dining companions. He treated a half-dozen colleagues to a $1,059 dinner in
Plymouth, for example. And Vogel hosted an $873 lunch for 27 staff members last
December. The spending of public money goes well beyond dinner
bills. Since early last year, Vogel and two other top executives -- including
Chief Executive Officer Lester Robinson -- have spent more than $300,000 on
hotels, restaurants, limos, drinks, rental cars and other travel items with
scant oversight of how the money was spent. And every traveler who flies out of Detroit Metro helps
pay the tab. A review of expense records from the airport authority --
created as an independent agency in 2002 in part to end questionable spending
of public dollars at the airport -- showed that authority executives are
allowed to spend thousands of dollars with little explanation and no clear
limits. Rules such as executives having to list the people they
dine with and the business purpose of the meal are ignored or glossed over. That might explain why Vogel could claim more than $300
in cab fares one day in Paris. Or why he spends $400 a night for hotels. Or why
he sometimes splurges on both: spending $1,790 for five nights at a Hong Kong
hotel last year -- at just under $450 a night -- and another $928 for a limo
driver. Other U.S. airports have stricter policies about expense approval. Sharon Banks, spokeswoman for Wayne County Executive
Robert Ficano, said Ficano is troubled by the questions about excessive
spending. "While we recognize international air service and
trade missions are key to our future development, extravagant and unwarranted
spending is unacceptable and should not be tolerated," Banks said. Ficano has appointed two members to the authority's
seven-member board. Vogel, Robinson and the third executive, Stephen Economy,
a senior vice president, declined to be interviewed for this report. But in a written statement after the Free Press began
raising questions, Robinson said the airport authority is revising its travel
and entertainment policies to include "a more formal review and approval
process." Still, Robinson defended past spending, and said that
under Vogel's leadership the airport's business development office generated
$150 million in new revenue and cut spending by $20.8 million. Michael Conway, the airport's spokesman, said Vogel's efforts
"have led to reasonable airfares and more choices for our customers in
flying to the most popular destinations from Detroit." Why the spending is worth it By any measure, the airport authority is an economic
force. It collected $376 million in revenue last year running Detroit Metro and
Willow Run airports. More than 40% of that income comes from airport
concessions, public parking and other non-airline sources. Another 33% comes
from state and federal grants, interest and a passenger facility charge -- the
$4.50 tacked onto every passenger's ticket for every leg of air travel. The
rest comes from fees paid by the airlines. Vogel's job is to increase revenue: recruiting new
airlines and bolstering concessions, parking and other airport income. Conway said Vogel's team persuaded AirTran Airways,
Frontier Airlines and Air France to fly out of Metro and also is partly
responsible for several new routes, such as Northwest Airlines' flights to the
U.S. Virgin Islands and Düsseldorf, Germany, and Lufthansa's second daily
flight to Frankfurt, Germany. In September, China Southern Airlines announced daily
flights between Beijing and Detroit would start in 2009. And Metro's McNamara
Terminal has won major industry awards for its concessions program. "Jack is going out and getting us business, and he's
a big hitter," Conway said. However, airline officials said that, while they
appreciate a good relationship with Metro officials, the decision to add routes
had little or nothing to do with Vogel's efforts, or that of his staff. Why the spending is not Judy Graham-Weaver, a spokeswoman for AirTran Airways,
said it had eyed Detroit for years before it began flying out of Metro in fall
2005. "We really look at statistics and data, more than
anything," she said. "We enjoy meeting with the people from the
airport, but ultimately it comes down to profitability and the projected
success of the route." Jennifer Urbaniak, a spokeswoman for Lufthansa, said the
airline added a second flight to Frankfurt because of "the demand, of
course. It's one of the most profitable flights. We have huge traffic from the
automotive side going to Germany; the flight has developed so well." Urbaniak said lobbying by airport officials may influence
an airline "looking to launch a new gateway from scratch." But once
an airline is established, adding routes "becomes a business
decision." Doug Marshall, an associate professor at the University
of North Dakota who specializes in aviation management, said airlines make
decisions about starting or adding service at an airport based on complex
statistical analysis and other research that can take years. "I can't imagine an airline executive making a
commitment to initiate service because someone took them out to dinner,"
Marshall said. "That kind of decision would get somebody
fired." A bad track record Metro Airport has a long history of questionable business
practices, which in 2002 prompted the state to take control away from Wayne
County and put the seven-member Wayne County Airport Authority in charge. Lawmakers found the airport failed to competitively bid
contracts and was grossly negligent in overseeing contracts. One company with a no-bid contract was Host Marriott
Services, which had operated airport restaurants and bars without competitive
challenge since 1957. Vogel spent more than 30 years with Host Marriott. He
left in 2000 and set up a company that won a 3-year, $750,000 contract from
Wayne County to oversee airport concessions. He was hired by the authority in 2003 as senior vice
president for business development. His salary is $182,768 a year. In January 2006, Conway said, Robinson stopped reviewing
expense reports for Vogel and other top execs because he trusts them to use
sound judgment, and Robinson's busy schedule didn't allow review of travel
reports "as quickly as may be desired." Robinson also does not require prior approval for travel.
Executives are, however, supposed to explain the business purpose for their
expenses. But Vogel repeatedly justified trips and hundred-dollar meals with
coworkers by listing vague explanations such as "meetings" and
"discuss development issues." He scrawled names of dining companions on receipts --
indecipherably at times -- or didn't name them at all. For example, Vogel had a $271 dinner at Mon Ami Gabi in
Las Vegas in 2005, but provided no explanation. Last year, he returned to Vegas
and spent $325 on a meal at Aureole, a restaurant at the Mandalay Bay Resort
& Casino. His expense report described it as a lunch with two colleagues to
"discuss conference." Vogel, on more than two dozen occasions, has charged the
authority for a rental car between Detroit -- where he works -- and the
Cleveland area, where he has a home. He has rarely given an explanation. Since fall 2003, Vogel has expensed about $60,000 on
meals -- though more than half were with colleagues. Conway said Vogel needs to dine often with coworkers to
"discuss, create and revise strategies, receive briefings of the day's
meetings which he could not attend from staff." He added that when Vogel does entertain outside
executives, he leaves his receipts deliberately vague because their identities
are "proprietary and confidential" material, which the airport does
not want "revealed or leaked to anyone." Conway said the airport authority operates "more as
a business than a unit of government," and Vogel is like the
"director of business development at Masco or Ford." But corporate and public governance experts say even
corporate executives have strict oversight. "In a corporate setting, there are usually all kinds
of layers of review on expense reports," said Charles Elson, a corporate
governance expert and professor at the University of Delaware. Judy Nadler, a senior fellow in government ethics at the
Markkula Center for Applied Ethics at Santa Clara, where she once served as
mayor, said minimal oversight invites abuse. "At a public agency, we know every penny counts and
there has to be a full accounting" to "make sure you're being prudent
and conservative in the way you spend the money, and no one is taking undue
advantage of the deep pockets of the public coffer," Nadler said. Other big spenders Economy, the senior vice president for administration,
has taken 33 trips since the start of 2006, mostly to conferences. In January
2007, he attended a conference on the Hawaiian island of Kauai for about
$6,200. Lester Robinson, his wife, the authority's then-chairman,
Michael Glusac, and Glusac's wife also went. Conway said the men covered their
wives' expenses. Robinson's expenses included a $295 dinner and a $224
dinner -- he did not identify his companions. Top executives at the authority also attend the Detroit
Regional Chamber's annual leadership conference on Mackinac Island. Robinson
spent $1,010 for dinner with unnamed "staff and legislators" last
spring. Conway said he could not say who attended that dinner. Bernard Parker, a member of the authority board, said he
was not aware of the spending by Vogel and others uncovered by the Free Press.
He vowed in October to look into it and "hold Lester Robinson responsible.
... There will be a real overview of all of that." Skimpy on the details In all, Vogel has spent nearly a quarter-million dollars
on travel, food and entertainment since his 2003 hiring. Vogel's overseas
travels in 2006 offer little explanation for his spending. He stayed seven nights in Frankfurt, Munich and London in
July for what he generically described as meetings. Records show that while in London, he had a $331 dinner
with "Simon" from British Airways and Vogel's assistant, Laura
Jackson. He returned to Frankfurt two weeks later, for what he called
"meetings with airport." Records show a $535 dinner Vogel explained in a scrawl
that mentions Lufthansa, but is otherwise difficult to read. Then there was the 9-day journey to Dubai, United Arab
Emirates -- via Paris. That was in September 2006. Vogel, Economy and Jackson
flew to Paris on their way to an airline conference in Dubai. Vogel's records show a "meeting with airport"
in Paris while Economy marked down "business development purposes" --
again with no elaboration. Conway said the trio toured the Paris airport
"researching its concessions" and advertising while "adjusting
to the time difference between Detroit and Dubai." On the first day, Vogel expensed $308 for three cab
fares. That evening, he, Jackson and Economy sat down to a $249 dinner at
historic La Coupole. The next night in Paris, Economy, Vogel and Jackson
knocked off $392 in dinner, dessert and drinks. The travelers were then off to Dubai, arriving Friday for
a conference that was to begin Sunday -- with a golf outing. |
