Phoenix City Manager Frank Fairbanks said "How do you ask someone to pay back tens of thousands of (dollars) when their department head approved it and the deputy city manager approved and said it was OK?"

It would be easy for me to ask that. I would just say "hey your boss has been letting you spend money like a drunk sailor flying around the world drinking and dining something which you probably should have know was illegal and in violation of Phoenix polices and now I am asking you to pay it back". I would also fire the employees - they should have know what they were doing was wrong.

Disputed traveling expenses top $280K Phoenix workers likely won't repay

Ginger D. Richardson The Arizona Republic Feb. 5, 2006 12:00 AM

Phoenix's eight-week inquiry into suspected travel abuses by some employees has uncovered more than $280,000 in questionable charges, and chances are most of that money will never be repaid.

That's because more than 80 percent of the disputed expenses were international airline fares incurred by three aviation department employees who flew business class to Europe, Mexico, Asia and Canada, with the full-knowledge of their supervisors.

The trio has collectively charged more than $237,000 in airfare over the past five years under a well-known, but unwritten, policy that is designed to help support major airlines in hopes of landing new, international flights out of Sky Harbor International Airport.

The policy contradicts another written set of rules that governs all city employees and specifies that workers should fly the cheaper economy class.

Nonetheless, all three had their trips, including the more expensive flight costs, approved by the city before they left.

Now, even City Manager Frank Fairbanks admits that it would be a bit of a stretch to expect those employees to reimburse the city.

"How do you ask someone to pay back tens of thousands of (dollars) when their department head approved it and the deputy city manager approved and said it was OK?" he said.

The findings raise new questions about exactly who is culpable in Phoenix's ongoing travel mess.

More than 100 city workers and seven City Council members have been questioned about their business trips since a Republic investigation uncovered numerous examples of employees questionably spending money while traveling on the city's dime. Disputed council expenses accounted for just over $800 of the $280,000 total.

Phoenix says its inquiry could be wrapped up this week, but while some employees may face discipline, it's clear that the biggest culprits in the travel shake-up were inconsistent policies and poor oversight.

"There are obviously places where you say, 'The system just broke down,' " said Lera Riley, Phoenix's personnel director and member of the specially appointed travel review committee that has been conducting the inquiry. "I think there is a general sense that we should have done some things differently."

The names of the employees being questioned are being withheld by the city pending the outcome of the inquiry. However, three of the employees, who were consistently among the city's biggest spenders, due in no small part to their business-class travel, were identified by the Republic through independent research.

Department employees

The three employees, Deputy Aviation Director Ann Warner, former Assistant Aviation Director David Cavazos, and former marketing and advertising manager Renee Baggot, are being asked to justify tens of thousands of travel related costs.

All were heavily involved in marketing Sky Harbor. In fact, the three have spent more than $400,000 in the past five years on sojourns designed to promote the airport and boost the number of international carriers and non-stop flights out of Phoenix.

Now, the city is questioning more than $250,000 of the $400,000 in charges, saying that they either didn't comply with city regulations or weren't appropriately justified on their reports.

Warner, for example, is being asked to explain roughly $1,700 worth of expenses associated with a trip she took to northern Thailand in May 2001. Records show she spent three nights at the Regent Chiang Mai, a Four Seasons resort that cost $480 a night. The Thai city was never listed as a destination on a "travel authorization request" that was filed with the City Manager's Office before her departure.

The city has also requested that she justify hundreds of dollars in tips, laundry costs and miscellaneous charges.

Warner declined to comment in detail on her travel and the city's investigation.

"I have been approved and re-approved for traveling internationally and have always followed policy," she said in an e-mail response to questions submitted last week.

In total, Warner is being asked to explain about $4,700 in non-airfare-related charges that either did not comply with Phoenix's policies or were not appropriately justified on her expense reports. Altogether, she is being questioned about $105,000 in expenses.

Cavazos' situation is similar.

He has been asked to explain or provide additional documentation for $7,900 worth of non-airfare related expenses. Most are related to meals, hotel or transportation costs.

Cavazos, who is now acting deputy city manager, itemized $200 to $400 lunches and dinners, was reimbursed for participating in a golf tournament at cost of $75 and charged the city more than $800 for transportation costs during a June 2003 trip to Mexico.

Including his business-class airfare, Cavazos is being asked to explain more than $41,000 worth of expenses.

Cavazos said he couldn't comment because of the ongoing investigation, but he asked Phoenix's public information officer, Toni Maccarone, to issue a statement on his behalf.

"The review is confidential and still in progress, but David would be happy to talk . . . once the review is complete," Maccarone said.

Baggot, who left the city last year, was mailed a letter asking her to justify or reimburse the city for about $1,300 worth of charges. The city also asked her about another $103,000 worth of expenses, but all of those were airfare-related. Baggot said Friday that she was not concerned about the letter and didn't anticipate paying the city back.

"There is not anything in there that I am concerned about," she said, adding that she didn't understand why the city was also asking her about laundry and dry cleaning charges.

Phoenix considers both to be personal expenses, and therefore not reimbursable. But Baggot said no one ever told her that.

"No one once ever questioned it," she said. "It's one thing to have the (rules), but it's another to enforce them."

Air-travel policy

The three employees may need to explain the roughly $14,000 that they spent on meals, hotels, transportation and tips. But it's not clear why the city is also questioning them about the airfare.

The policy that allowed them to purchase the more expensive tickets has apparently been in effect since the 1980s, although it is not in writing.

City officials say that they were aware of it and supportive of it, even though it explicitly contradicts Phoenix's administrative regulations. The A.R., as it is called, is a comprehensive set of rules that governs travel and reimbursements for employees.

"The reality is, we all remember this special decision for aviation, but our (regulations) say you are supposed to go economy class," Fairbanks said.

Baggot says she plans to argue the point with the city.

"I am going to write back and say that my trips were approved, both pre- and post, and that I flew business class because I could," Baggot said.

Phoenix says that an exception was made for the airport because its travel budget comes from the fees that it charges to the public that uses the airport. Other city departments send employees on trips using money from Phoenix's General Fund, which the city uses to cover basic services.

The air-travel policy, which increased the cost of every international ticket purchased for Warner, Cavazos and Baggot by thousands of dollars, was apparently put in place because the city was trying to show its support for international airlines like British Airways and Lufthansa. Such carriers make much of their money off business class tickets that can be 10 times more than economy seats.

Whether the efforts were worth the cost is still a matter of some debate.

The city was successful in landing British Airways non-stop service to London, and they also got Lufthansa to operate, for a time, daily flights from Frankfurt, Germany, to Phoenix.

But passenger volume on that route began dropping after the Sept. 11, 2001 terrorist attacks, and in early 2003, the carrier axed the trip.

The city also targeted Mexico and Central America. What was then America West Airlines added flights to Cancun and Costa Rica in 2003, and late last year Aeromexico announced that it would begin flying non-stop service to Mexico City.

From the beginning, Phoenix has defended its aggressive marketing strategy and its policies, although there is no concrete evidence that traveling business class was a factor in the carriers' decision to fly routes out of Sky Harbor.

"Not that you do it all the time, but when you have a route that is that important . . . we woo them and let them know how important they are," Cavazos said in November, when first asked about the overseas travel and the business class airfare policy.

Whenever Warner, Cavazos or Baggot traveled overseas, their trips, including the expected airfare costs, were pre-approved by Aviation Director David Krietor, the City Manager's Office, or both.

Upon their return, their reports were forwarded on to a division of the city's Finance Department and a check was cut, without anyone questioning the discrepancy between the two policies, or the rising tab.

The policy continued until last summer, when Krietor put a stop to it.

He says the airport has since changed its tactics in trying to develop new international routes.

Meanwhile, Fairbanks and others say the three are being questioned about the business class airfare because city auditors were simply told, as part of the internal inquiry, to flag anything that didn't match the administrative regulations.

Wrapping up inquiry

Phoenix plans to wrap up the current phase of its inquiry within the next few days. In total, officials analyzed about 2,500 expense reports, most of which were filed between July 2004 and November 2005.

Some employees have already reimbursed the city for small charges; others have submitted documentation to justify their expenses.

It's likely that most of those cases will be considered closed, the city said.

However, some employees may face varying levels of discipline, ranging from verbal counseling, to letters of reprimand, or even suspension.

"We've done the easy things; now we have to look at the harder ones," Riley said.

Riley and Assistant City Manager Alton Washington, who heads up the travel review team, say they expect to issue a comprehensive report about their findings to Fairbanks this week. The report will likely make recommendations about fixing problematic policies and practices regarding travel and training procedures citywide.. It could also identify patterns of problems unique to departments.

"If nothing else, this whole process has clearly pointed out some weaknesses in the old system," Washington said.

And while the upper echelons of Phoenix's management stopped short of self-recrimination this week, Phoenix Mayor Phil Gordon says they understand that they bear some responsibility. for what's happened.

"I think people have an obligation to follow the rules," Gordon said. "But I think Frank (Fairbanks) has said himself that the ultimate responsibility rests with management, and that's why he was so disappointed that this occurred."

Fairbanks admits that some things should have been done differently. The city, for example, should have done more frequent audits of employees travel records.

The last one, he said, was conducted in 2000.He also believes it would have helped if someone had thought to put the aviation business class airfare policy down on paper.

But as the inquiry winds down, he and others are once again defending the city's managers and their employees.

They believe that their investigation proves that the vast majority of workers were acting with integrity.

"Clearly, we had problems with compliance," Fairbanks said. "But it wasn't a total breakdown of the system."

"In terms of the wheels falling off, I don't think there is evidence of that."

Staff reporter Matt Dempsey contributed to this article.

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