Burke Denies Conflict in Contract Vote

Supervisor Yvonne Brathwaite Burke serves as a director for a public corporation spun off from a privately held technology company, whose $399,000 contract extension with Los Angeles County she voted to approve, according to documents and interviews.

Burke is on the board of directors of OAO Technology Solutions Inc., which lists the same address as OAO Corp., a privately held Maryland company that has long done work for the county.

OAO Technology was spun off from OAO Corp. in 1996, and Burke said she then was one of the original directors of the new company.

The two companies continue to work closely together, according to documents, and recently teamed up in a consortium bidding for federal contracts.

In March 1999, county records show Burke joined her four supervisorial colleagues in voting to extend for seven months OAO Corp.’s contract to operate computers for the county Department of Public Works.

Burke said her vote was proper because the two companies are financially separate and perform different types of work. They have no overlapping officers, nor does OAO have a controlling interest in the public company, she said. Nor does Burke have any financial stake in OAO, she said.

“There is no relationship because they are separate companies,” Burke said. “The reality is that I am on the board of a public company. OAO is a private company.”

Burke said she did not realize at the time that she was voting for a company that had any connection to the one on whose board she sits.

Still, she said, she would have abstained if she had to do it over again to avoid confusion about her roles.

Bob Stern, an attorney who helped write California’s campaign finance and ethics laws, said Burke’s vote is apparently legal, if she does not have a financial stake in OAO and the two companies are separate.

In 1989, before Burke joined the Board of Supervisors, the county signed a 10-year, $27-million contract with OAO for the company to operate the data center in the Department of Public Works.

Ten years later, when Burke was on the Board of Supervisors, the department proposed extending that contract for seven months until the county’s staff was ready to take over the task. OAO was paid $399,000 until the contract expired in October.

By that time, OAO Technology, once a branch of OAO, had spun off as a publicly traded company. It incorporated in 1996 and went public in December 1997, according to its SEC filings.

Burke then joined a board of directors that included as its vice chair Cecile Barker, the founder, chief executive officer and majority shareholder of the original OAO. Barker also owns 15% of the stock in OAO Technology, according to documents.

Burke said that she was asked to join the company and that one reason she agreed is that it is a minority-run business. Burke, who is black, has a long history of promoting African American business efforts.

OAO Technology issued stock option grants to three directors last year, including Burke, who received options on 4,000 shares priced at $3.32 per share, according to SEC filings. Burke said she has not exercised those options. The company’s stock peaked at about $5 in September but closed at $2.69 per share Thursday on the Nasdaq exchange.

The company also pays directors $6,000 annually plus a stipend per meeting.

Since OAO Technology separated from OAO it has purchased another unit of its original company, according to its SEC filings. The two companies also teamed up in an alliance to win contracts from the National Security Agency, according to a press release issued Aug. 24. Other companies in the consortium include Raytheon Co. and WorldCom Inc.

In that release, OAO’s president, retired Lt. Gen. Emmett Paige, said: “We have a close and successful relationship with OAOT.”

Paige could not be reached for comment Thursday afternoon, and a spokeswoman for OAO Technology did not immediately return a call for comment.

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Times staff writer James F. Peltz contributed to this report.