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The Port Everglades mess: Millions unaccounted for or lost; the illegal dumping of untreated ship wastewater

Aerial of Port Everglades
Port Everglades, June 2019
Photo: Creative Commons BY-SA 4.0

By Dan Christensen, FloridaBulldog.org

“Gross mismanagement” at Port Everglades led to mass employee theft, millions of dollars in unverified county credit card purchases and millions more that was apparently lost rent from tenants at the Foreign Trade Zone, according to a 337-page audit report.

During the same five-year audit period, 2014-2018, approximately 2.5 million gallons of untreated ship wastewater was illegally dumped into the Port’s sewer system, which hooks to an aging treatment plant that auditors said is not designed to handle toxic substances or most oily bilge wastewater. To visualize, one million gallons would fill a swimming pool that’s nearly as long as a football field, 50 feet wide and 10 feet deep.

None of that wastewater, including some trucked north from the Port of Miami by county-approved hauler franchisees, was tested. Port management had no idea whether it was hazardous or contained excessive levels of contamination that spilled into Florida’s underground environment, the report said.

“Because of the lack of processes and controls, kickbacks or other bribery schemes could have occurred in collusion with Port staff without detection,” the report said.

Those problems, and others, were traced to poor or nonexistent operational controls at the port. “We noted numerous procedures and controls that are basic to this type of operation, which have been nonexistent or ineffective,” the audit report says. “These areas contribute to gross financial mismanagement.”

The Port Everglades mess

For example, County Auditor Bob Melton and his staff found that no “work order system” or “comprehensive inventory system” existed before the audit. That meant the port’s approximately 20 storeroom locations where parts and supplies are kept had no inventory system “to track each part on hand and their issuance to those employees who need them.”

Broward Auditor Bob Melton

Likewise, there was no centralized receiving system or comprehensive tracking of purchased equipment and supplies. During the audit period, the report said, Port Public Works employees purchased more than $11 million in parts, equipment and services using county credit cards, or P-Cards. Employees said they picked up purchases themselves or had them delivered, but port management never knew whether the items were actually received, used or misappropriated, the report said.

Access to port storerooms was loose. Some were left unlocked and unattended. Auditors said private sales representatives came and went with “minimum controls.” Things were so loose, in fact, that auditors “could not determine whether over 7000 P-Card purchases totaling approximately $5 million for items purportedly delivered to the Port were received.”

Florida Bulldog first reported in January that county auditors and Broward Sheriff’s Office detectives were investigating apparently out-of-control spending by port employees using county issued P-Cards. Since then, with the FBI also involved, five persons have pleaded guilty to criminal charges in federal court.

Port Everglades is a 2,200 acre, county-owned business with 251 employees. Last year alone, 4,214 cruise ships, cargo container ships and military vessels, came and went carrying 3.9 million passengers and 7.4 million tons of cargo. The port is a self-supporting enterprise fund and department of Broward County that uses no taxpayer dollars for operations or capital improvements, but also contributes none of its considerable profits to the county’s general fund. In 2017, the port’s reported gross profit margin was $75 million.

Who was in charge?

The audit report does not name those individuals who held positions of operational leadership at the port during the audit period. But they include Acting Chief Executive and Port Director Glenn Wiltshire, Business Administration Division Director Jorge Hernandez, Seaport Engineering and Facilities Maintenance Division Director John Fogelsong, Finance Director Leah Brasso, Operations Director Robert Flint and his assistant Jeffrey White, and Chief Harbormaster Conrad Strong. Steve Cernak was port director from 2012 until his death last March. Above them all was County Administrator Bertha Henry.

Port Everglades Chief Executive and Port Director Glenn Wiltshire

The audit report is to be formally presented to the County Commission on Dec. 10. It includes this warning: “Because of the grossly inadequate procedures and controls, additional fraud and misappropriation of resources other than those identified during the audit could be occurring without detection. We can provide no reasonable assurance that all such instances have been identified.”

Broward Mayor Dale V.C. Holness did not respond Monday to a request for comment.

Auditors said they got involved on July 6, 2018 when Wiltshire called to inform them of “an alleged fraudulent situation at the Port involving Purchasing Cards (P-Cards).” A whistleblower sent out the original alarm.

The report contains 84 recommendations for improvement. Management agreed or partially agreed with each of them and some have been implemented.

Undercharging rent at Foreign Trade Zone

In addition to the losses sustained due to P-Card abuse, the lack of adequate internal controls appears to have cost the port – and the county – millions of dollars in lost rent at the Foreign Trade Zone. In February, Florida Bulldog reported that Port Everglades’ property manager had resigned, a month after accusing port administrators of allowing commercial tenants to dodge millions of dollars in rent by “dramatically undercharging” for port warehouse space.

IWS website advertisement

The auditors’ report does not identify any commercial tenant. Loren Fourness’ assessment, however is detailed in a memo contained in his county personnel jacket. In September 2018, Fourness wrote that the Foreign Trade Zone’s largest tenant – International Warehouse Services Inc. (IWS) – “was occupying over 200,000 square feet yet only paying for 104,000 square feet. This equated to about $900,000 annually of lost revenues. As far as I can determine, this has been going on for the last six years.’’ That totaled about $5.4 million in additional rent for that period. IWS has been a trade zone tenant for decades.

At the time of publication, Port Everglades spokeswoman Ellen Kennedy said Fourness had “misunderstood” how warehouse space is leased and managed in the Foreign Trade Zone. “He was confused. From what I was told when it was explained to him, he seemed surprised,” Kennedy said.

Auditors, however, agreed with Fourness. They determined that “port management did not implement adequate internal controls to monitor and verify that tenants occupied only leased storeroom space in the Foreign Trade Zone. Leased space within the FTZ was practically controlled almost entirely by one Port employee. We noted that one tenant had the ability to occupy more warehousing space without compensation to the County.”

The lack of controls left auditors “unable to provide reasonable assurance that the proper amount of space has been utilized by any tenant, or that no funds have been misappropriated though (sic) bribes or other fraud schemes. Improprieties could occur without detection.”

The auditors concluded their findings with these remarks: “Management has a fiduciary responsibility to manage operations in an efficient and effective manner, with adequate controls to help ensure public resources are used appropriately and wisely. The situations noted above, when combined and considered in totality, constitute gross financial mismanagement, with fiduciary responsibilities not fulfilled by Port management.”

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Latest comments

  • Typical Broward

  • Bertha Henry’s incompetence strikes again!

  • Wow! Pretty pathetic management of a major county facility and department and utter disregard for taxpayer money! The County Commission needs to clean house at the Port and maybe higher up!

  • The gross mismanagement by the Port for the past decade is mind numbing. With the limited and biased oversight, it’s amazing they found what they did. The commission discussion was good, but they need to change the culture which begins at the top of the leadership. Bring in new outside leadership without the chummy relationships with the shippers, vendors and cruise lines.

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