OAKLAND -- Despite clear policies that should have alerted Port of Oakland officials in charge of overseeing how the agency spends public money, four years passed before reimbursements submitted by embattled Port of Oakland executive James Kwon raised a red flag.
Now the Port is investigating whether his boss, Executive Director Omar Benjamin, helped Kwon run up a $4,500 tab at a Houston strip club, an expense passed on to the Port.
"I want to emphasize that I am cooperating with the Port inquiry and will do whatever I can to resolve this matter constructively and in the interests of the Port of Oakland," Benjamin wrote in an email on Thursday.
Benjamin did not respond when asked to deny or confirm his presence in Houston on Oct. 21, 2008. That is the date the party was held at the club, Treasures, which Houston officials recently asked a judge to shut down.
An agenda from the North American Port and Intermodal Finance and Investment summit in Houston listed Benjamin as a speaker during an Oct. 22 session of the summit. (The summit is held annually in different locations.)
But Port officials would not comment on whether he or any other Port staff were with Kwon at the club. The Port also redacted names from the expense records submitted by Kwon.
Port officials justified the redaction as a protection of privacy. However, the California Public Records Act requires public agencies to release records of expenses paid by
Kwon and Benjamin are on paid leave. Benjamin was paid $257,508 in 2011. Kwon's pay was $214,248.
The Port has hired Arnold & Porter LLP to audit Port records for other questionable expenditures, including expensive wines, shoes, massages and golf games.
The Interim Executive Director Deborah Ale Flint ordered Kwon to return to the United States from a business trip in Asia.
Kwon's attorney Kenneth Katzoff said his client is in Korea with his family caring for a "gravely ill" mother-in-law but plans to return to the Oakland on Saturday.
Katzoff also said that besides himself, Kwon has not spoken to anyone about his case or about Benjamin.
Kwon is "anxious to set the record straight," Katzoff said.
Kwon and other staff could be subject to dismissal if the investigation shows they improperly billed the Port, according to the agency's administrative policies.
Port policy allows "reasonable and necessary travel, entertainment and other expenditures incurred in the course of conducting the business of the Port." It does not say where they can be entertained or how much executives can spend entertaining them.
But the manual is clear on several other points.
If the event was a legitimate expense, and Benjamin was present at the club, he should have submitted the reimbursement request because he is Kwon's boss.
"Where more than one employee participates in a business activity, the individual at the highest level of authority should report the expense," according to the Port's administrative manual.
In turn, Benjamin's expenses are supposed to be submitted to "a higher level of authority."
The Port's Financial Services Division also is supposed to review expense reports and the Office of Audit Services is supposed to conduct regular audits.
Reimbursement requests should show the amount of the expense, the date and place of the payment, names and titles of other attending, and the business purpose of the expense.
However, the delegation of BNSF businessmen Kwon was supposed to be entertaining in Houston have said they have no record of being at the club or in Houston at the time, BNSF spokeswoman Lena Kent said.
A Treasures employee said $4,500 was "about average" in 2008. The club referred inquires to their attorney because the local Houston press has been reporting the Port reimbursement story. He could not be reached for comment.