SFO audit raises hard questions 

Mismanagement, lack of accountability and one failed international project could end up costing San Francisco International Airport up to $1.5 million following the closing of SFO Enterprises, Inc, its controversial consulting firm.

According to an audit released by the San Francisco Controller’s Office Thursday, the airport has lost $667,000 in its investment with SFOE, and that number could rise to $1.5 million.

The private consulting firm, operated and staffed by airport employees with the ultimate goal of bringing revenue back to The City, was initially expected when it launched in 1999 to reimburse the airport once it became profitable.

Although airport officials — acting for SFOE — attempted to get consulting contracts around the world, the only job they got was working as part of a consortium to privatize the four international airports in Honduras.

The audit, triggered by the termination of SFOE operations, was requested by the Board of Supervisors in 2003 in response to concerns about the agency’s accountability and use of city funds. Justifying that concern, the report found airport employees violated a number of city spending and expense regulations.

Among other violations, airport employees working as SFOE consultants flew business class while traveling, violating regulations that say they must use the lowest published fare and the most economical mode of transportation for official business, the report said.

In addition, a $40,000 travel expense advance was used by one airport employee to open a bank account in Miami. The employee then purchased a Nissan Pathfinder, office furniture and computer equipment with the money and rented an apartment in Honduras.

Airport spokesman Mike McCarron said the airport is accepting the loss of funds and stands by a response from Airport Director John Martin that said, "I believe that the SFOE project was well managed, expenses and revenue were correctly accounted and costs were attributed to the appropriate cost center."

Martin said the airport does not expect to get back the $787,200 still not recovered after the sale of SFO Honduras LLC, the subsidiary involved in the Honduras consortium, to YVH General Services out of British Columbia, Canada.

Board of Supervisors President Aaron Peskin and members of the Airport Commission had not read the report by press time and said they could not yet comment on its findings.

jgoldman@examiner.com

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