November 13, 2002 Wednesday
SECTION: METRO - EDITORIAL; Pg. 6
LENGTH: 521 words
HEADLINE: Chutzpah on wheels
BODY:
Glenn Haydel wants his patronage back.
Early in Marc Morial's mayoral administration, Mr. Haydel, who is Mr. Morial's uncle, and two partners bought control of Metro New Orleans Transit Inc. -- and a lucrative management contract with the Regional Transit Authority -- from allies of former mayor Sidney Barthelemy. Subsequently, the management contract ballooned to $746,000 a year, and the firm and its subcontractors took in nearly $7 million from the RTA.
After buying out his partners earlier this year, Mr. Haydel sold a majority interest in Metro New Orleans Transit to Mayor Nagin's brother-in-law, Cedric Smith, after the new administration took office. But Mayor Nagin was outraged when he learned of the deal and said that the contract would be "history."
Now Mr. Haydel is accusing Mr. Smith of gaining control of the transit management company through "fraud, misrepresentations and duress" and is suing to dissolve the sale.
In truth, Mr. Haydel has no good reason to complain, and going to court to keep control of a fat patronage contract takes a lot of gall.
The suit alleges that Mr. Smith repeatedly said the RTA management contract would be in danger from the incoming Nagin administration unless Mr. Smith became majority owner of the company. Mr. Haydel presumably was in no position to complain about the incursion of politics into public contracting, since his company has benefited handsomely from such patronage over the years.
What Mr. Haydel didn't know at the time, the suit suggests, was that Mr. Smith didn't have the influence he was peddling or that the new mayor hadn't blessed the Metro deal. Mr. Haydel apparently had no idea that Nagin administration staffers sometimes refer to Mr. Smith as "our own Billy Carter."
It is impossible to feel bad for Mr. Haydel. For one thing, he admits to selling 70 percent of a lucrative business for a mere $700. If this is Mr. Haydel's notion of sound financial judgment, and his company has a contract to help manage the RTA, it's no wonder the authority has been in such parlous condition for so long.
More fundamentally, Mr. Haydel was trying to take advantage of the system. If his own allegations are true, Mr. Haydel was trying to hang on to a piece of a bloated contract by giving a sweet deal to someone whom he took for a political insider.
Still, it's surprising that Mr. Haydel filed suit. People who try to profit from unethical activities rarely call in the authorities when they think they've been fleeced. Maybe Mr. Haydel got the idea from state legislator Kyle Green, who unsuccessfully sued Gov. Foster for double-crossing him on a backroom deal.
In truth, it doesn't matter who controls Metro. There is little or no need for a management contract at the RTA, which has its own managers. Mr. Smith has zero experience managing a public transit system, yet Mr. Haydel still promised him a $300,000-a-year salary plus 70 percent of the company's profits. If Mr. Haydel could still make money while giving Mr. Smith such generous terms, it clearly isn't providing many worthwhile services to the RTA.
Showing posts with label Cedric Smith. Show all posts
Showing posts with label Cedric Smith. Show all posts
Wednesday, April 4, 2007
Tuesday, March 27, 2007
Nagin in-law wants out of Metro partnership -- Times Picayune March 19, 2003
March 19, 2003 Wednesday
SECTION: NATIONAL; Pg. 1
LENGTH: 1002 words
HEADLINE: Nagin in-law wants out of Metro partnership;
Consulting firm had contract with RTA
BYLINE: By Frank Donze; Staff writer
BODY:
Cedric Smith's brief association with a consulting firm that has held a lucrative Regional Transit Authority contract for the past decade has produced nothing but headaches for him.
Smith, the brother-in-law of Mayor Ray Nagin, has been depicted as a shakedown artist in a lawsuit filed by his business partner. And Nagin's staff has portrayed him as a New Orleans' version of Billy Carter -- a reference to former President Carter's brother, who tried to cash in on the presidency by cutting deals for himself.
Weary of the political intrigue, Smith now says he just wants out.
Smith recently told his lawyers to take whatever steps are necessary to divest himself of his majority ownership in Metro New Orleans Transit Inc., which he acquired in August from investment banker Glenn Haydel, former Mayor Marc Morial's uncle.
Haydel has since asked a court to void the transaction, charging that Smith engaged in fraud by portraying Nagin as a supporter of the deal.
After learning about Smith's involvement last November, Nagin told RTA Chairman Jimmy Reiss to cancel the Metro contract immediately. Reiss has done so, prompting another suit by Haydel charging the RTA with breach of contract.
Timing questioned
After his involvement came to light, Smith apologized to Nagin for what he admitted was an error in judgment. But while Smith said he had no desire to retain his Metro ownership, he said he wanted to hold onto the controlling interest until he could go to court to repair the damage to his reputation from what he called Haydel's false claims.
Smith had a change of heart, however, after Haydel amended his suit, adding allegations against Nagin, Reiss and the RTA.
"I do not want my dispute with Haydel to become a vehicle for him to attack others," Smith wrote in a March 12 letter to his lawyers David Sherman and Julian Murray. "I have therefore, decided to return the stock to Haydel unconditionally."
While he expressed surprise at the turn of events, an attorney for Haydel said his client is ready to accommodate Smith.
"Mr. Haydel is obviously glad that he's not going to have to litigate this issue," Scott Yount said.
"The only thing we question is its timing, considering we have an outstanding subpoena for documents to the mayor and the city of New Orleans seeking information relative to issues involved in the suit," Yount said.
Sherman said no one should be surprised by Smith's decision.
"From day one it's been Cedric's intent to tender the stock," Sherman said. "The reason why he's doing so now is because it's apparent Mr. Haydel is using this litigation to further his interests with the city and the RTA."
Both sides said Tuesday they hope to complete the ownership transfer by April 1.
Political infighting
The machinations behind the Metro deal are extraordinary even by New Orleans' standards of political infighting.
While Haydel has said Smith approached him about the deal, Smith says it was the other way around. In fact, Smith alleges that Haydel and other Morial allies came looking for him and methodically seduced him into signing the agreement.
Haydel counters that he is the aggrieved party, having been victimized by Smith's fraudulent claim of having Nagin's full support for the business arrangement. In his suit, Haydel charged that Smith repeatedly suggested that the RTA contract "would be in jeopardy" if Smith were not made majority owner -- allegations that Smith vehemently denies.
Smith has said that he never mentioned Nagin's name during his months-long discussions with Haydel that culminated over the summer, when Haydel sold him a 70 percent interest in Metro for $700.
The sale price appears to be way out of line considering that Metro and its subcontractors have been paid nearly $7 million by the RTA since Haydel acquired the firm shortly after Morial took office in 1994.
But Yount, Haydel's lawyer, maintains that there is a logical explanation for the $700 transaction.
"When Glenn was approached by Cedric about the purchase, he (Haydel) was looking for a partner, someone to do some work for the benefit of the company," Yount said. "He also was told by Smith that he needed him (Smith) to keep the contract. Keeping the contract was Mr. Haydel's primary concern."
$300,000 salary
Under the contract he signed with Haydel on Aug. 29, Smith, who has never worked in the transit industry, was guaranteed an annual salary of $300,000 and a year-end bonus of 70 percent of Metro's profits. The deal also called for Haydel to receive a $300,000 salary and 30 percent of the company's net revenue.
Although he said he has not received any salary from Metro, Smith said he was paid a $25,000 consulting fee by Haydel before signing the deal. Smith said the fee was for work on an administrative reorganization proposal for the transit system.
Although he was prepared to present his $700 check at the time of the signing, Smith said, Haydel told him it was not necessary. Smith said he still has not paid Haydel any money.
Haydel has said he paid considerably more than $700 when he and two associates bought Metro in 1994 from Gerald Mouton, an ally of former Mayor Sidney Barthelemy, but he has declined to elaborate on the price.
In September 2001, the RTA board controlled by Morial appointees approved a five-year, $3.7 million extension of Metro's contract. The $746,000 annual agreement, about $300,000 larger than the previous contract, was set to expire Oct. 1, 2006, nearly five months after Nagin's mayoral term ends.
Metro, the lone bidder for the job, has provided a range of services to the RTA since Haydel took it over, including union contract negotiations, legal advice and oversight of capital improvements.
Haydel has said he won't walk away from the deal until the RTA pays him $900,000 in past-due fees and penalties.
LOAD-DATE: March 19, 2003
SECTION: NATIONAL; Pg. 1
LENGTH: 1002 words
HEADLINE: Nagin in-law wants out of Metro partnership;
Consulting firm had contract with RTA
BYLINE: By Frank Donze; Staff writer
BODY:
Cedric Smith's brief association with a consulting firm that has held a lucrative Regional Transit Authority contract for the past decade has produced nothing but headaches for him.
Smith, the brother-in-law of Mayor Ray Nagin, has been depicted as a shakedown artist in a lawsuit filed by his business partner. And Nagin's staff has portrayed him as a New Orleans' version of Billy Carter -- a reference to former President Carter's brother, who tried to cash in on the presidency by cutting deals for himself.
Weary of the political intrigue, Smith now says he just wants out.
Smith recently told his lawyers to take whatever steps are necessary to divest himself of his majority ownership in Metro New Orleans Transit Inc., which he acquired in August from investment banker Glenn Haydel, former Mayor Marc Morial's uncle.
Haydel has since asked a court to void the transaction, charging that Smith engaged in fraud by portraying Nagin as a supporter of the deal.
After learning about Smith's involvement last November, Nagin told RTA Chairman Jimmy Reiss to cancel the Metro contract immediately. Reiss has done so, prompting another suit by Haydel charging the RTA with breach of contract.
Timing questioned
After his involvement came to light, Smith apologized to Nagin for what he admitted was an error in judgment. But while Smith said he had no desire to retain his Metro ownership, he said he wanted to hold onto the controlling interest until he could go to court to repair the damage to his reputation from what he called Haydel's false claims.
Smith had a change of heart, however, after Haydel amended his suit, adding allegations against Nagin, Reiss and the RTA.
"I do not want my dispute with Haydel to become a vehicle for him to attack others," Smith wrote in a March 12 letter to his lawyers David Sherman and Julian Murray. "I have therefore, decided to return the stock to Haydel unconditionally."
While he expressed surprise at the turn of events, an attorney for Haydel said his client is ready to accommodate Smith.
"Mr. Haydel is obviously glad that he's not going to have to litigate this issue," Scott Yount said.
"The only thing we question is its timing, considering we have an outstanding subpoena for documents to the mayor and the city of New Orleans seeking information relative to issues involved in the suit," Yount said.
Sherman said no one should be surprised by Smith's decision.
"From day one it's been Cedric's intent to tender the stock," Sherman said. "The reason why he's doing so now is because it's apparent Mr. Haydel is using this litigation to further his interests with the city and the RTA."
Both sides said Tuesday they hope to complete the ownership transfer by April 1.
Political infighting
The machinations behind the Metro deal are extraordinary even by New Orleans' standards of political infighting.
While Haydel has said Smith approached him about the deal, Smith says it was the other way around. In fact, Smith alleges that Haydel and other Morial allies came looking for him and methodically seduced him into signing the agreement.
Haydel counters that he is the aggrieved party, having been victimized by Smith's fraudulent claim of having Nagin's full support for the business arrangement. In his suit, Haydel charged that Smith repeatedly suggested that the RTA contract "would be in jeopardy" if Smith were not made majority owner -- allegations that Smith vehemently denies.
Smith has said that he never mentioned Nagin's name during his months-long discussions with Haydel that culminated over the summer, when Haydel sold him a 70 percent interest in Metro for $700.
The sale price appears to be way out of line considering that Metro and its subcontractors have been paid nearly $7 million by the RTA since Haydel acquired the firm shortly after Morial took office in 1994.
But Yount, Haydel's lawyer, maintains that there is a logical explanation for the $700 transaction.
"When Glenn was approached by Cedric about the purchase, he (Haydel) was looking for a partner, someone to do some work for the benefit of the company," Yount said. "He also was told by Smith that he needed him (Smith) to keep the contract. Keeping the contract was Mr. Haydel's primary concern."
$300,000 salary
Under the contract he signed with Haydel on Aug. 29, Smith, who has never worked in the transit industry, was guaranteed an annual salary of $300,000 and a year-end bonus of 70 percent of Metro's profits. The deal also called for Haydel to receive a $300,000 salary and 30 percent of the company's net revenue.
Although he said he has not received any salary from Metro, Smith said he was paid a $25,000 consulting fee by Haydel before signing the deal. Smith said the fee was for work on an administrative reorganization proposal for the transit system.
Although he was prepared to present his $700 check at the time of the signing, Smith said, Haydel told him it was not necessary. Smith said he still has not paid Haydel any money.
Haydel has said he paid considerably more than $700 when he and two associates bought Metro in 1994 from Gerald Mouton, an ally of former Mayor Sidney Barthelemy, but he has declined to elaborate on the price.
In September 2001, the RTA board controlled by Morial appointees approved a five-year, $3.7 million extension of Metro's contract. The $746,000 annual agreement, about $300,000 larger than the previous contract, was set to expire Oct. 1, 2006, nearly five months after Nagin's mayoral term ends.
Metro, the lone bidder for the job, has provided a range of services to the RTA since Haydel took it over, including union contract negotiations, legal advice and oversight of capital improvements.
Haydel has said he won't walk away from the deal until the RTA pays him $900,000 in past-due fees and penalties.
LOAD-DATE: March 19, 2003
Our Own Billy Carter -- Times Picayune October 11, 2002
October 11, 2002 Friday
SECTION: METRO; Pg. 6
LENGTH: 617 words
HEADLINE: Our own Billy Carter
BODY:
When Ray Nagin took over as mayor, his plan wasn't merely to give a different group of political hacks a chance at the trough. He promised to clean up city government and to run it in a businesslike manner.
Now his own brother-in-law, Cedric Smith, has provided a vivid illustration of the problems that the new administration has to fix.Apparently without Mayor Nagin's knowledge, Mr. Smith bought a majority share of Metro New Orleans Transit, which holds a $746,000-a-year contract to help the Regional Transit Authority with contract negotiations, finance, legal advice and oversight of capital improvements. Never mind that Mr. Smith has no experience running a public transit system.
After learning of the deal from a Times-Picayune reporter Wednesday, Mayor Nagin was appropriately outraged. He said that the "contract, one way or another, is history."
That reaction is encouraging. But the real test of Mayor Nagin's mettle is whether he moves quickly to get New Orleans out of the Metro contract -- which was appalling long before Mr. Smith got involved.
If there were an award for sleaziest political deal in New Orleans, Metro's contract with the RTA would be a leading nominee. The services included are basic management duties that the RTA's management staff should be able to handle.
Yet the contract, which has been in place since former Mayor Sidney Barthelemy's administration, keeps getting fatter and fatter. The company's fees grew from less than $160,000 a year in 1995 to about $450,000 a year, before the RTA board renewed the contract last fall for five years at an annual price of $746,000. It can't be a coincidence that when the board, appointed by then Mayor Marc Morial, approved that contract extension, Metro was owned by Glenn Haydel -- the then-mayor's uncle -- and two partners.
What's especially obscene is that, with each change of administrations, a new politically connected buyer steps forward. Mr. Haydel and his partners bought the company from associates of Mr. Barthelemy after Mr. Morial took office. After buying out his partners this year, Mr. Haydel has now sold control to Mr. Smith. Plane tickets may not be transferable, but the right to help yourself to the RTA's money certainly is.
Mr. Smith says he wasn't required to inform the mayor that he had bought control of Metro. And while Mayor Nagin says he was shocked to learn of the deal, he and his advisers clearly worried about Mr. Smith. Before taking office, Mr. Nagin sent Mr. Smith a letter telling him not to try to make money or gain favors from his relationship with the new mayor. Nagin staffers have dubbed Mr. Smith "our own Billy Carter," after President Carter's embarrassing brother.
Mayor Nagin says his brother-in-law did raise the possibility of buying into Metro in April. He also says he told Mr. Smith that doing so would be a bad idea and that the city would likely try to get out of the deal.
Under the terms of the contract, getting rid of Metro without cause could cost the city $500,000. But it might not take much effort to identify a cause: that the contract isn't needed and that the authority isn't getting its money's worth. It's impossible to believe that a company now controlled by someone with zero experience in public transit could provide $746,000 worth of benefits to the RTA every year.
In July, Mayor Nagin authorized the arrest of his cousin in a taxi corruption sweep. He should show the same willingness to put the public interest before family concerns in the Metro case. Getting out of the contract was worth exploring before. Doing so -- at the lowest possible cost to the city -- is imperative now.
LOAD-DATE: October 11, 2002
Seems to be an editorial, but not listed as such on LexisNexis
SECTION: METRO; Pg. 6
LENGTH: 617 words
HEADLINE: Our own Billy Carter
BODY:
When Ray Nagin took over as mayor, his plan wasn't merely to give a different group of political hacks a chance at the trough. He promised to clean up city government and to run it in a businesslike manner.
Now his own brother-in-law, Cedric Smith, has provided a vivid illustration of the problems that the new administration has to fix.Apparently without Mayor Nagin's knowledge, Mr. Smith bought a majority share of Metro New Orleans Transit, which holds a $746,000-a-year contract to help the Regional Transit Authority with contract negotiations, finance, legal advice and oversight of capital improvements. Never mind that Mr. Smith has no experience running a public transit system.
After learning of the deal from a Times-Picayune reporter Wednesday, Mayor Nagin was appropriately outraged. He said that the "contract, one way or another, is history."
That reaction is encouraging. But the real test of Mayor Nagin's mettle is whether he moves quickly to get New Orleans out of the Metro contract -- which was appalling long before Mr. Smith got involved.
If there were an award for sleaziest political deal in New Orleans, Metro's contract with the RTA would be a leading nominee. The services included are basic management duties that the RTA's management staff should be able to handle.
Yet the contract, which has been in place since former Mayor Sidney Barthelemy's administration, keeps getting fatter and fatter. The company's fees grew from less than $160,000 a year in 1995 to about $450,000 a year, before the RTA board renewed the contract last fall for five years at an annual price of $746,000. It can't be a coincidence that when the board, appointed by then Mayor Marc Morial, approved that contract extension, Metro was owned by Glenn Haydel -- the then-mayor's uncle -- and two partners.
What's especially obscene is that, with each change of administrations, a new politically connected buyer steps forward. Mr. Haydel and his partners bought the company from associates of Mr. Barthelemy after Mr. Morial took office. After buying out his partners this year, Mr. Haydel has now sold control to Mr. Smith. Plane tickets may not be transferable, but the right to help yourself to the RTA's money certainly is.
Mr. Smith says he wasn't required to inform the mayor that he had bought control of Metro. And while Mayor Nagin says he was shocked to learn of the deal, he and his advisers clearly worried about Mr. Smith. Before taking office, Mr. Nagin sent Mr. Smith a letter telling him not to try to make money or gain favors from his relationship with the new mayor. Nagin staffers have dubbed Mr. Smith "our own Billy Carter," after President Carter's embarrassing brother.
Mayor Nagin says his brother-in-law did raise the possibility of buying into Metro in April. He also says he told Mr. Smith that doing so would be a bad idea and that the city would likely try to get out of the deal.
Under the terms of the contract, getting rid of Metro without cause could cost the city $500,000. But it might not take much effort to identify a cause: that the contract isn't needed and that the authority isn't getting its money's worth. It's impossible to believe that a company now controlled by someone with zero experience in public transit could provide $746,000 worth of benefits to the RTA every year.
In July, Mayor Nagin authorized the arrest of his cousin in a taxi corruption sweep. He should show the same willingness to put the public interest before family concerns in the Metro case. Getting out of the contract was worth exploring before. Doing so -- at the lowest possible cost to the city -- is imperative now.
LOAD-DATE: October 11, 2002
Seems to be an editorial, but not listed as such on LexisNexis
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