OAKLAND -- Even before misspending by Port of Oakland executives came to light, staff and officials knew that the agency's expense policies were being ignored and even at the top ranks of the organization blatantly defied.

The proof came in the findings of a probe into spending as well as an internal audit, both released Monday.

"We are already transformed as a result of that," acting Executive Director Deborah Ale Flint said after the release.

Some problems were glaringly obvious such as the strip club sprees billed to the Port by former Executive Director Omar Benjamin and outgoing Maritime Director James Kwon.

Others reflected the fine line between reasonable spending on travel, entertainment and gratuities, which are part of the cost of building the port's business, and extravagant waste at the top. Auditors singled out U2 concert tickets, Warriors tickets, jewelry, wine, a lush management retreat and a holiday cruise.

In response, the port plans to put in place a series of spending reforms to make sure expense policies are more than empty rules.

"We are launching a new era," Port of Oakland Commissioner Gilda Gonzales said, acknowledging the problems but echoing talking points crafted for the board and staff to emphasize a shift toward better governance. The centerpiece of the Port's reform is what they called a "matrix for responsible expense practices" that they have begun rolling out.


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  • Define rules for acceptable spending on airfare, hotels and meals.

  • Reduce the number of people who have an agency credit card.

  • Create a "three-strikes" rule for managers who approve expenses that violate policies.

  • Revoke cards if users don't submit paperwork on time and report violations and "questionable" items to the board.

  • Regular reporting by staff and commissioners of expenditures.

  • Mandatory ethics training.

  • Give the accounts payable office authority to deny expenses that don't meet IRS guidelines

    The port will also improve policies for gifts and promotional items that port officials regularly hand out during business trips, particularly to Asia, which makes up a hefty portion of maritime business.

    The port spent $11,397 on Tiffany key chains that cost more than $100 a piece to hand out to dignitaries and nearly $20,000 on liquor and wine.

    In 2011, Oakland Mayor Jean Quan arrived with a port delegation in China carrying some of the wine, at least 60 of the sterling silver key chains and other thoughtful but expensive gifts for dignitaries and business contacts, port officials confirmed.

    Auditors questioned whether the giveaways could have violated state laws governing the use of public funds and a federal bribery ban.

    Kwon in particular spent lavishly on his business trips to Asia, including a $682 bottle of cognac, a $1,452 nightclub dinner and a $100 haircut his lawyer said was not for Kwon.

    Commissioners also expensed mini bar beverages, room service charges and hired chauffeured luxury Cadillac sedans.

    Even a $133 bill for a Tiffany leather passport cover presented to a retiring deputy executive director by the board during a public meeting was reimbursed despite a clear rule against spending on social events or gifts to express congratulations.

    The port, battered by the recession, had begun to steer toward more accountability in recent years.

    But change was slow at the top during the five years Benjamin was in charge from 2007 until his ouster in November. Finance staff who knew about the problems felt powerless to report them, the auditors concluded.

    In other words, the problems were an open secret that commissioners either didn't know or, as one worker, Yvette Nixon, who complained during meetings, put it, "swept under the rug."

    "It's like they're in a world of their own," said Nixon, a member of SEIU 1021, which has been locked in a contract renewal battle with the port until last week. But other Port workers and former commissioners interviewed echoed Nixon: that the policies were only as good as the enforcement and that there was no enforcement from the top.

    "The vast majority of Port employees have been doing the right thing," Gonzales said.

    But she emphasized the need for clarity to make sure that the reforms are "rigorously implemented."

    "This conversation is going to stay front and center," she said.