Report on port, Bay Star signed, forwarded to ethics board

Published 12:00 am Monday, January 18, 1999

By LEONARD GRAY / L’Observateur / January 18, 1999

LAPLACE – Allegations of improper loans, inflated expenses and conflicts of interest pepper the final report from Louisiana Inspector General Bill Lynch on the Port of South Louisiana and Bay Star Enterprises.

That report, released Tuesday, has been referred to the Board of Ethics for further review.

“Sounds like things are normal in Louisiana,” former executive port director Richard Clements commented dryly.

The report details, chapter and verse, several episodes of alleged improper financial dealings involving former Globalplex operator Bay Star Enterprises and its owner, Marvin Harvey, port commissioner E.J. Martinand port attorney Joseph Accardo.

Recommendations from Lynch include recovery of wayward funds and, he added: “Commission members should refrain from involving themselves in the internal affairs of companies doing business with the port.”St. John Commissioner Brent Tregre commented: “It didn’t reach strongenough recommendations for me.” He pointed out Lynch’s office has nosubpoena authority to gather further information.

Also included in the report are rebuttal letters from Clements, now living in retirement in Florida; Accardo; Harvey; and president Jay Shah of Fromherz Engineers Inc.

Meanwhile, an independent audit investigation of Bay Star by Baton Rouge attorney Stephen M. Irving is still under way, approved at the portcommission’s August meeting.

Although an arbitration overture has been made, Tregre added, Harvey has not expressed an interest and a lawsuit may end up filed over the matter in an attempt to recover the port’s alleged losses.

On the other hand, according to a letter from Harvey forwarded to Lynch’s office by his attorney, Bay Star Enterprises actually lost money on its contract with the port.

Lynch also noted that Harvey “declined to answer questions pertaining to this investigation, citing a parallel investigation by the State Police and other agencies.”Lynch’s report suggested not all charges made to the port by Bay Star during its May 1995-December 1997 management of Globalplex were legitimate.

The report also concluded that “Bay Star failed to account for the sale of scrap and salvage timely as required by the contract, and failed to remit an excess balance of $3,268 to the port.”The port contracted with Bay Star in October 1995 for asbestos removal at the old Godchaux Refinery site, with a $500,000 cap on the project. Thenext month the port contracted with Pro-Tech Environmental Services to remove asbestos. Bay Star received $78,016 from Pro-Tech for consultantservices and the purchase of scaffolding. Bay Star was awarded salvagerights to materials and equipment recovered from the buildings.

Under the terms of the agreement, Bay Star had to account to the port all salvaged material and equipment. The list, not forwarded until 1997,detailed $29,598 in gross sales of salvaged material and $26,329 in expenses, leaving a $3,268 balance on the asbestos salvage contract.

Harvey’s letter responded there were no such monies due to the port and added, “In fact, not only did the SLPC receive all monies due to it, but Bay Star actually paid $2,226.80 of expenses out of its own monies (over andabove the receipts).”Other improper activities detailed include the port paying the legal expenses for a personal lawsuit brought by two of its officials, totaling $5,616; Martin loaning money over which he had control to two individuals doing business with the port; and the port paying $5,000 in travel expenses for two contractors traveling to Brazil in a trip which did not appear to involve port business.

Martin, treasurer of the port commission in 1994, allegedly tried to influence a Malaysian wood products company into assigning its warehouse and milling operations to Harvey, a longtime personal friend.

This was, Lynch asserted, beyond the scope of Martin’s authority.

In that episode, Martin reportedly tried to have Tecta Pacific assign its contract to Bay Star. Instead, Tecta Pacific selected Belle Point Inc., acompany created by St. John Parish Councilman Ranney Wilson and JillSherman.

The Belle Point principals became the target of a personal defamation lawsuit by Martin and Clements, the legal bill of $5,616 being paid by the port. Invoices were forwarded by Clements to the port accounting officefor payment. The suit was settled out of court.However, the checks were issued to Accardo’s law firm which, in turn, issued a check in his firm’s name to the lawsuit’s attorney. This was done,according to a letter from Accardo to Clements, on condition the action would be confirmed by the commission.

The action was never confirmed by the commission, Lynch said.

Accardo, by letter to Lynch’s office, said he was initially directed to prepare the defamation suit, as it could damage port business interests.

As the research developed, it was decided to hire a special counsel and the checks paid were proper.

In another matter, Martin reportedly loaned $200,000 to Jayendra Shah of Fromherz Engineers in March 1994, a company doing business with the port. The loan has since been repaid. Additionally, Martin loaned Harveycash for items such as trucks, tractors and land. A review of port booksturned up checks totaling $37,735. The state Code of Ethics generallyprohibits board members from continuing to serve if individuals with whom they have financial dealings do business with the port.

Shah, by letter, told Lynch’s office: “Had I known that such business dealings between friends are considered improper or unethical, I would not have even considered it. I respect Mr. Martin too much. In all theseyears, I have yet to buy a lunch for him because he would not accept anything like that.”Finally, Harvey and Mike Curtis of Curtis Testing Laboratory took a trip to Brazil, ostensibly on port business. However, Lynch said, seven of theeight Brazilian organizations they contacted had nothing to do with any port business.

The port commission, Lynch said, does not have documentation to explain the purpose of the trip. Expenses totaling $3,042.98 were, nevertheless,paid by the port. Harvey’s letter declared the trip was on port business.”I wish they would dig into it a little more,” Clements concluded.

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