Port of Seattle Commission

Audit Committee

November 1, 2011

Commissioner Practices Review Summary Page 1 Bright Spring Consulting

DATE: November 1, 2011

TO: Audit Committee

FROM: Susan L. Coskey, JD, MBA, Principal

Bright Spring Consulting

SUBJECT: Commissioner Practices Review

Scope of Review

In July, 2011, I was retained by the Port of Seattle (“POS”) Commission to conduct a review of

certain Commissioner practices relating to POS credit card use and selected other activities. The

purpose of the review was to identify potential concerns and provide recommendations sufficient

to enable the Commissioners to determine potential next steps. This review was not an

exhaustive audit, but rather was in response to specific identified issues. The review included

document and policy review, interviews with POS staff and Commissioners, and follow up

conversations and emails as needed.

Policies Reviewed

The POS Resolutions and Policies upon which I relied were:

 Commission Resolutions No. 3583, 3628;

 POS AC Policies 1-4;

 Commissioner Transparency Code of Conduct.

It is important to note that the Commission Resolutions do not consistently state that

Commissioners will be subject to the same policies relating to credit card, travel and expense

practices as POS employees are (i.e., AC policies). Certain of the AC policies specifically refer

to the Commissioners, while others do not. Nonetheless, the AC policies have been generally

presumed to include the Commissioners and have been applied as such by Commission

administrative staff and POS Accounting and Financial Reporting staff. Although several

Commissioners have stated that they do not believe some or all of these general POS policies

should or do apply to them, in general they have agreed to the application of these policies as a

whole.

Summary of Findings

Improper Credit Card Use

The review referenced in this memo was conducted by Susan Coskey who was a principal with the consulting firm

of Seabold Group until 10/31/2011. As of 11/1/2011, Ms. Coskey moved her practice to Bright Spring Consulting,

where she is also a principal.

Port of Seattle Commission

Audit Committee

November 1, 2011

Commissioner Practices Review Summary Page 2 Bright Spring Consulting

The issues identified relating to credit card use (assuming application of AC policies to

commissioners) fell into three broad categories:

 Commissioners inappropriately charging personal expenses to the POS credit card;

 Commissioners charging meals to the POS that were not allowed by policy; and

 The timeliness of Commissioner reimbursement to the POS when personal or disallowed

expenses were charged to the POS credit card.

I found instances where every Port Commissioner at one time or another since 1/1/2010 had

improperly included a personal or disallowed expense on his or her POS credit card. One

Commissioner in particular appeared to have been unaware during his first few months of office

of the proper uses of the POS credit card and incurred extensive personal charges on his card that

were not consistently repaid in a timely manner. These improper expenses dissipated over time,

particularly after the Commissioner turned in his credit card to Commission office staff. Another

Commissioner commonly charged personal expenses related to POS expenditures on his POS

credit card ostensibly for ease of use and then generally promptly reimbursed the Port for these

items. The remaining three Commissioners had incidental personal or disallowed use, and each

reimbursed the POS when these expenditures were identified to them as questionable or

inappropriate.

Related to the use of credit cards were two other issues that arose during the review. One, which

was unsubstantiated, was an allegation that a Commissioner had allowed a third party to use his

credit card to make an expenditure on his behalf. The second involved POS coverage of a

significant conference cancellation fee incurred by a Commissioner and the process and analysis

that went into this decision.

Further Issues Raised

In addition to evaluating Commissioner credit card use, I was asked to review several ethics and

compliance issues that were identified either prior to or during the course of the review. These

issues included potential conflicts of interest, improper use of office for personal or professional

gain, and improper use of POS resources.

Contextual Observations

In assessing Commissioner credit card use and the other issues identified, I formed numerous

observations relevant to specific concerns as well as to Commission operations more generally.

Those observations are set forth below.

 Although Commission staff have made efforts to familiarize new Commissioners with

POS policies and practices, there is no specific Commissioner orientation, and it does not

appear that current efforts are adequate.

 There is ambiguity as to the applicability of general POS policies to Commissioners.

 Even when the general POS policies are applied to Commissioner behavior, there are

ambiguities in the language of some of the policies that make their application confusing.

Port of Seattle Commission

Audit Committee

November 1, 2011

Commissioner Practices Review Summary Page 3 Bright Spring Consulting

 One way Commissioners have dealt with the lack of clarity regarding application of the

POS credit card policies is to stop using the cards – which does not address the

underlying issues.

 There is no identified mechanism through which the Commission as a body uniformly

identifies, evaluates or responds to potential breaches of policy, ethics or conflict of

interest or through which Commissioners hold themselves or each other accountable.

 The Board of Ethics identified in Commission Resolution 3583 is inactive and, even if

active, does not incorporate an advisory function. Thus, at present, Commissioners are

left to relying on their own judgment or seeking advice from POS General Counsel on

potential ethics or conflict issues.

 There is no identified mechanism through which POS staff concerns relating to

Commissioner adherence to policy or interaction with staff are brought to Commissioner

attention or resolved.

 There is no identified mechanism through which Commissioner concerns with staff are

identified or resolved.

 Without resolving outstanding issues at staff or Commissioner levels, individuals can lose

the benefit of the doubt and interactions and/or motives can be misconstrued.

 There appear at times to be decisions relating to policy/ethics/conflicts of interest made

by Commission office staff on behalf of but not in consultation with the Commissioners.

 The roles/responsibilities within the Commission office as relate to staff and

Commissioners themselves are not clear, thus making it difficult both to identify

responsibilities within the office and to hold people accountable for meeting clear

expectations.

 In the absence of specific policies and procedures, there exists the possibility of

inconsistent (real or perceived) treatment of/approach to situations and individual

Commissioners.

 The lack of consistent policies, practices and expectations affects the ability and morale

of Port and Commission staff in their efforts to support Commissioners and Commission

activities.

Recommendations

Consistent with the scope of this review, the recommendations provided to the Commission to

enable it to determine next steps fall into three main categories.

Recommendations Related to Commissioner Accountability

With regard to specific issues that were raised in the context of this review, it is recommended

that the Commission consider taking the actions that are identified below.

 Determine how to respond to issues that appear to be policy violations, including

confirmed (even if not intentional) credit card misuse.

 Determine whether and how to make further inquiry into the propriety of matters that

have not been fully vetted or subject to a specific process when raised.

Port of Seattle Commission

Audit Committee

November 1, 2011

Commissioner Practices Review Summary Page 4 Bright Spring Consulting

 Determine how potential conflicts of interest concerns will be resolved when

Commissioners participate in matters that might be perceived as leading to professional

gain.

 Determine how the Commission will document its findings and actions.

Recommendations Related to How the Commissioners Engage as a Body

With regard to specific findings related to how the Commission interacts as a body, it is

recommended that the Commission consider taking the actions identified below.

 Institute a new Commissioner orientation.

 Establish and/or clarify the application of POS and /or Commission policies to

Commissioners.

 Institute processes and procedures through which Commissioners as individuals and the

Commission as a body identify, evaluate and respond to potential breaches of policy,

ethics or conflict of interest and through which Commissioners hold themselves and each

other accountable.

 Create a means through which potential conflict of interest issues can be analyzed.

 Identify an entity that can provide an advisory ethical function for the Commissioners,

whether through the existing Board of Ethics structure or otherwise, and remove this

function from the POS General Counsel’s office.

Recommendations Related to the Commission Office Operations

With regard to specific findings related to how the Commission Office operates, it is

recommended that the Commission consider taking the actions identified below.

 Clarify roles/responsibilities/expectations/accountability within the Commission office as

relate to:

 Commissioners to Commission staff and staff to Commissioners;

 Commission staff to Commission staff/other POS staff.

 Institute a procedure through which Commission or other POS staff concerns relating to

Commissioner adherence to policy or interaction with staff are brought to Commissioner

attention and resolved with regard to:

 Perceived ethical/conflict issues;

 Perceived policy violations;

 Perceived other issues that raise concern with colleagues/staff.

 Determine how Commission staff will be managed and institute procedures through

which:

 Expectations are identified and articulated;

 Staff concerns with staff are identified and resolved;

 Commissioner concerns with staff are identified and resolved.