Airport Contracts Defended

In a presentation intended to dispel concerns about the role of its minority and female partners, Duty Free Shoppers Group Ltd. Partnership on Wednesday assured Los Angeles airport officials that the partners are directly involved in running gift and duty-free shops at Los Angeles International Airport.

Duty Free Shoppers officials promised the Board of Airport Commissioners that the minority- and female-run firms will assume virtual control of shops at two airport terminals by the end of the year. They said the practical experience in running the shops is intended to prepare the two firms--Mir Kanon Inc. and Peideau Inc.--to operate such businesses on their own.

“We are really proud of our majority partners for accepting us and in allowing us to learn their business the way they have,” said Iris D. Rideau, who represented Peideau at the meeting.

Concession contracts at the city-owned airport, including those with Duty Free Shoppers, are under investigation by city officials because they appear to lack the level of participation by minority partners that federal guidelines require. The guidelines are designed to increase participation by disadvantaged minorities and women in contracts by giving them clearly defined, hands-on roles in running the concessions.

Airport commissioners, however, said Wednesday that they were satisfied with Duty Free Shoppers’ explanations. “I think that this report exemplifies what the mayor has been saying to us for a long time,” Commission President Jerry B. Epstein said. “If we can extend this formula that you are doing to other industries here, you will have really set a tremendous example of what can be done.”

The Duty Free Shoppers contracts have drawn particular attention because Mir Kanon and Peideau have the same 10 partners, including Betty Dixon, the wife of Rep. Julian C. Dixon (D-Los Angeles), who heads the House Ethics Committee. Duty Free Shoppers, the world’s largest duty-free concessionnaire, brought in the 10 partners to boost its chances of winning contracts to operate shops at the airport.

Betty Dixon was not at Wednesday’s meeting but has acknowledged that she has not served in any hands-on management position in one Duty Free Shoppers contract and has been involved only “on a limited basis” in another.

Duty Free Shoppers officials did not directly address the level of Dixon’s involvement except to assure the airport commissioners that “all shareholders of Mir Kanon and Peideau attend Management Committee meetings every six months.” They also said representatives from the two firms attend monthly meetings that oversee operations of the duty-free concession and the gift and news concession.

Joe Lyons, vice president of business development for Duty Free Shoppers, acknowledged, however, that when differences arise about running the stores, Duty Free, which has a 68% interest in the joint venture, has the final say. The Department of Airports has set a goal of giving minority-owned businesses a 20% stake in companies that get contracts, and female-owned businesses 12%.

The presentation was held in response to questions from the commission following news reports about Dixon’s role in the firms. The substance of Wednesday’s meeting mirrored a letter last month from Duty Free Shoppers to Clifton Moore, the airport department’s executive director.

Moore told The Times in June that he was critical of Dixon’s role in the joint venture because her limited involvement in the airport concessions “does not seem to be consistent” with the minority participation program approved by the department.