Elite Group Reaped Profit of $7.3 Million at Airport

A Los Angeles Airport Department program to help minorities and women develop business skills has instead helped a small group with political connections to reap $7.3 million in profits for little or no work, according to a city report Friday.

Among those who profited was Betty Dixon, wife of House Ethics Committee Chairman Julian Dixon (D-Los Angeles), who has made at least $499,408 over the last four years.

Betty Dixon became involved in the program after she and her husband attended a Washington party held by Duty Free Shoppers Group Ltd., which has contracts to operate at Los Angeles International Airport, according to a report by the city administrative officer.

She was one of 10 minorities and women selected by Duty Free Shoppers to participate in a joint venture intended to satisfy city demands for increased involvement of women and minorities at airport concessions.

Another eight women and minorities were selected to participate in a joint venture with Host International Inc., which operates concessions at LAX and Ontario Airport.

One of those was clergyman H. H. Brookins, a politically active African Methodist Episcopal bishop who helped launch Mayor Tom Bradley’s political career.

Brookins received at least $296,840 over the last four years, the report said.

His share was five times that of the other Host partners, even though he was “not involved in any way with the management or operations of the partnership or facilities” and did not attend management meetings, the report said.

The 18 minority and female partners brought in by Host and Duty Free Shoppers have made an estimated profit of $7.3 million since 1986 after investing virtually no money of their own and performing little or no work, the report concluded.

Some of the profits went to Host and Duty Free Shoppers in return for ownership shares in the companies, the report said.

“This is clearly not what the mayor and council intended,” said Keith Comrie, the city’s administrative officer.

City Councilman Michael Woo requested the report last summer after reports in The Times disclosed problems with the program.

Woo said Friday that women and minorities “were betrayed” and that he will hold hearings next month about the matter.

“Host International and DFS (Duty Free Shoppers) apparently used those people as window dressing in a cynical attempt to manipulate the process,” Woo said. “The vital goal of encouraging women and minorities in business was subverted.”

William Foss, senior vice president and general manager of Duty Free Shops, said Friday: “It has always been our position that we tried to meet city goals with regard to minority and women involvement.”

He said it was difficult to find women and minorities with sufficient experience to take over a large percentage of the company’s airport business. The company intended to involve the partners in a gradual learning process, he said.

Dixon and Brookins could not be reached for comment. Officials of Host International did not return phone calls.

The joint ventures were started in 1986 and 1987 when the city began a push to increase minority participation closer to the airport goal of 20% minority and 12% women, the report said. The airport commission encouraged the creation of joint ventures for that purpose. Previously, the prime airport concessionaires had hired minority and female subcontractors in an attempt to meet the goals.

But the limited partnerships were “arrangements contrived primarily” to “meet the numbers” rather than the “spirit of business development” that was supposed to be the objective, the report said.

Joint ventures can become “a very murky arrangement whereby minority names and reputations are ‘rented’ to meet government agency requirements without real participation of the individual partners,” the report said.

Subcontracting, on the other hand, clearly defines the work to be done and the payment for services.

Neither Host and Duty Free Shoppers nor the minority partners would provide financial data, citing the competitive nature of the business, according to the report.

The profit estimates in the report were described as “very conservative” because they are based on gross sales figures from the early months of the joint ventures. Duty Free gross sales have increased from a monthly average of $4 million in 1986 to $7 million in 1989.

Duty Free Shops has yet to turn over operations of duty-free facilities in Terminals 3 and 5 at LAX to the minority and female participants, even though the 1986 joint venture agreement requires it.

The report recommended that detailed guidelines be set up for the program to avoid such problems in the future.