POSTED ON JULY 2, 2008:
Great Plains payoff proves Mayor can act fast when she wants to. But speculation why is rife
While most people who were or are involved in it are eager to put the Great Plains Airlines debacle behind them, the Mayor's swift action in doing so last week raised suspicions among some about the possibility that all of her motives might not have been on the table.
Local talk radio personality Chris Medlock, who was a city councilor at the time the lawsuit was filed, raised questions about a potential conflict of interest on Mayor Kathy Taylor's part for her role in directing the city to pay $7.1 million to the Bank of Oklahoma last week to settle the lawsuit that ensued after the failure of Great Plains Airlines.
In light of Taylor's former membership on the BOk board of directors, Medlock quite vocally questioned the ethical validity of her role in reaching the settlement.
The lawsuit had been filed in 2004 by the Tulsa Industrial Authority against the Tulsa Airport Improvement Authority to recover what remained of a $30 million loan from the Bank of Oklahoma, on which the failed airline defaulted.
Critics of the Mayor's move have pointed out that, when Mayor Bill LaFortune asked the Council's approval to fork over the $7 million in 2005, a city attorney advised that the city of Tulsa was not, in fact, liable for the money. But, had the Council acquiesced, the attorney advised, each councilor would have been personally liable to what's known in legal lingo as a "qui tam" lawsuit from taxpayers, risking removal from office and liability from their personal assets for misappropriation of funds.
That was before last week, though, when the Tulsa Industrial Authority added the City of Tulsa as a defendant on the grounds that Tulsa was "unjustly enriched" through the Great Plains Airline deal.
The city was added as a defendant just one day before Taylor placed a resolution on the City Council's Thursday night agenda.
The Council voted 5-2 to acknowledge that the money was available in the city's sinking fund.
The Council's vote did not amount to approval of the settlement, Councilor John Eagleton pointed out. They only voted to acknowledge that the funds were available, he said, which was a ministerial rather than a discretionary duty.
In other words, it was the Council's duty to rubber stamp what the Mayor had already decided about the settlement.
"If it had been about voting on the settlement, I would have voted 'no.' Settlement is premature. We have defenses under the lawsuit, and I don't believe the 'unjust enrichment' claim to have any merit," Councilor Rick Westcott, who is an attorney, later told UTW.
Westcott, Eagleton and Councilors Eric Gomez, Bill Martinson and David Patrick voted "yes" on the resolution, while Councilors Jack Henderson and Dennis Troyer voted against it.
Councilor G.T. Bynum recused himself from the vote because his grandfather is a member of the Bank of Oklahoma's board of directors.
Councilor Bill Christiansen recused himself because he owns an aviation business.
Had the majority of the Council voted "no" last week, the court could have ordered the city to pay anyway, or the Bank of Oklahoma could have filed another lawsuit against the city, Westcott explained.
So, why is the Council supposed to vote on it at all, if there was no choice anyway?
"I don't know if there is a good, logical reason, other than that the city charter says so," answered Westcott.
While the resolution received the obligatory rubber stamp it needed, its emergency clause did not, falling one vote short of the needed six votes. Without the emergency clause, the city can only pay up 30 days after a legal notice is published about the resolution's passage. However, the settlement called for the city to pay by June 30--four days after the Council's vote.
Medlock acknowledged that the Mayor's former membership on the BOk board isn't exactly a smoking gun, but said, "If she was there when any of these machinations were going on with the bank, when the decision was made to approve that loan, that's a huge ethical violation."
In light of Medlock's suspicions, some of the city councilors were asked if they also thought Taylor's past affiliation constitutes a conflict of interest.
"That's not an unreasonable interpretation, but I haven't studied the issue," answered Eagleton, also an attorney.
"We had one councilor recuse himself because a distant relative sits on the board," he noted.
"Man, that is a tough question. I think it depends on what her ties were and what they are now," said Westcott.
"If she has any financial ties, if she owns stock, it could be a conflict of interest. But I don't know of any current ongoing relationship between the Mayor and the Bank of Oklahoma that could be cause for a conflict of interest," he added.
When questioned about her current BOk ties, Taylor told UTW, "I have a bank account at the Bank of Oklahoma."
"I also have one at J.P. Morgan Chase. It's a very small bank account. I pay for my haircuts on it," the Mayor quipped.
She said she served on the BOk board for about four months in 2005 when she was the state secretary of commerce, then resigned to announce her candidacy for mayor.
She noted that it was long after the Bank of Oklahoma approved the loan for Great Plains, and after the lawsuit was filed.
"I had no involvement in the loan. I had no involvement in the discussions on behalf of the bank. And I resigned before I ran for Mayor," Taylor, also an attorney, said.
But, many still wonder about the urgency of the settlement resolution.
"I don't know why there's the push to settle it now and I don't know why it was brought to the Council so late, with only four days to pay it," said Westcott.
When asked about that by UTW, the Mayor answered, "Well, there's been no urgency. The lawsuit's been pending for five years. We have been spending money on legal fees-$450,000 to date, and an estimate of an additional $400,000."
"Whenever you have a big piece of litigation that could potentially cost $12-plus million against the city, we monitor it on a regular basis and ask counsel for recommendations as to progress. If you just let a lawsuit ramble on, the only person that benefits, frankly, are the lawyers and, in the end, the clients make a huge gamble," she continued.
Taylor said she "did what any responsible CEO does," which is to confer with legal counsel, "Tell me what my risks are. And tell me when you believe the risks of going forward with the lawsuit outweigh the settlement."
With her past ties to BOk in view, though, the Mayor said she's "been very careful to make sure that the Airport Authority Board was looking separately at this, that we had counsel separate and apart from the city attorney's office reviewing it and analyzing it, and counsel separate and apart from those trying the case."
"Clearly, this isn't a decision that the Mayor is making on her own," she added.
"The options were to continue to go to trial and risk a much larger judgment against the city, and the best judgment of the lawyers was, based on where our case was, it should be settled," Taylor explained.
"This job requires a lot of courage and to make difficult decisions based on the best data and analysis available, and that's what I do every day. The easy thing would have been to spend another four or five hundred thousand dollars and hope that the next guy got to be in office when the judgment got rendered. But that's not the right thing to do," she concluded.
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