Cleveland Ignored Red Flags on Airport Project

But as an electricians union official investigated the $130 million contract he the company hired by to do the electrical work, had a bogus office address in a Cleveland housing project.

O'Malley complained to Sheperd, and eventually O'Malley, Sheperd, Allega and others met in a room next to the mayor's office. White came into the meeting but only stayed for a moment.

"He said, 'I understand there's a problem. I'm going to leave and let you guys discuss it. You better fix the problem,' " O'Malley recalls White telling the group.

Allega went ahead and bid on the contract using laborers' wages. Allega's bid was at least $10 million lower than the competitors'.

O'Malley became more suspicious when he didn't recognize some of the subcontractors on Allega's bid. Under Cleveland rules, some of the work on major projects using city money must be set aside for companies owned by women and minorities.

O'Malley looked into Chem Ty. He found a thin work record and lots of liens for unpaid taxes. He drove to the company's Cleveland address listed on the bid and found a boarded-up building in the Outhwaite housing project.

O'Malley took his concern to Councilman Dolan, who chaired the Aviation Committee in 2001.

Dolan said O'Malley's findings immediately disturbed him. At a hearing to discuss the contract in early 2001, Dolan said he held up a Polaroid photo of the building listed as Chem Ty's office to show then-airport Director Sheperd.

"It was clearly nobody's office," Dolan said in an interview.

Dolan and O'Malley also said Chem Ty was not licensed by the city as an electrical contractor. Knowing all of this, Dolan said a squabble over which union should do the work became much more troublesome for him.

"Chem Ty acting as a front company was very clear," Dolan said. "For anyone to say, 'Oh, we didn't know that,' that simply cannot be possible."

Councilman Patmon, who served on the Aviation Committee, said he recalls Dolan voicing concern about the bogus Chem Ty address, but not claiming that the business was a front company. The debate, Patmon said, strictly focused on which union should get to do the work.

The administration awarded the contract to Allega soon after the hearing, in February 2001.

Council does an about-face

In March, Dolan introduced legislation requiring the runway project to use a licensed, registered electrical contractor that paid electrician-union wages. Its passage would mean the Allega bid, which used Chem Ty as a subcontractor, would have to be thrown out.

Council passed the law, 20-0. But the issue wasn't closed.

Shortly after the vote, Dolan said he saw John Allega in a meeting in Council President Polensek's office.

Polensek said he might have met with Allega, but does not recall. He does have a record of a meeting with a former Allega executive.

Less than two months later, Polensek introduced his legislation to repeal Dolan's.

Before council voted to adopt Polensek's law, several council members gathered behind closed doors for more than an hour to debate the issue. Later that evening at the public council meeting, Polensek's key supporters on council who helped elect him president - Dolan, Ed Rybka, Tim Melena and Mike O'Malley, Walter O'Malley's brother - walked out in disgust.

Polensek said at the time that most members believed the unions representing electricians and laborers should settle the issue without council picking sides.

Walter O'Malley said Polensek's turnaround was shocking.

"Polensek has always been tight with John Allega and Local 860 [the laborers union]," O'Malley said.

"I don't know who told Polensek to repeal it, but obviously it was someone with enough influence out there to make sure it went the way it did."

In an interview, Polensek said Allega never pressured him to repeal Dolan's legislation. And he said neither the electricians union nor fellow council members presented any suspicions to him about Chem Ty.

Polensek said that as the runway construction project got under way, he heard rumors of payoffs and illegal deals.

Council tried to examine each contract thoroughly at public hearings, but "we're not the FBI," he said.

"I think we did a yeoman's job of looking at the contracts," Polensek said.

"Maybe had we pushed the envelope a little more. Maybe had we held investigative hearings. But all we had was rumors."

White, reached at home last week, said he knows nothing about Chem Ty.

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