By Bill Parry
A Jamaica-based ground handling company is in hot water with state Attorney General Barbara Underwood.
The attorney general announced Dec. 13 a new $12.3 million settlement in her ongoing investigation into the contracting and procurement processes at JFK International Airport known as “Operation Greased Runway,” this time with Ground Services International, for making fraudulent kickback payments intended to influence various contracts the company had at JFK and other airports nationwide.
Underwood’s ongoing investigation revealed that GSI expanded its business and won new contracts with two major companies, British Airways and Terminal One Group Association L.P., while at the same time making undisclosed payments to the companies’ key executives.
GSI has agreed to pay $12.3 million to settle claims pursuant to New York State Executive Law Section 63(12), which bars deceptive and fraudulent business practices, and has also agreed to injunctive relief that will improve the company’s compliance and contracting processes in the future.
As a term of the settlement, GSI acknowledged its conduct was deceptive, improper, and compromised the integrity of business operations at JFK Airport.
“New Yorkers deserve safe airports where businesses play by the rules,” Underwood said. “Yet these brazen, longstanding pay-to-play tactics undermined the contracting at JFK — allowing greed to trump fairness. Our investigation continues, and we’re committed to rooting out corruption wherever it exists.”
The AG’s investigation uncovered that GSI’s longtime President Jeff Kinsella secretly agreed to provide an ownership interest in GSI to a senior British Airways executive who had influence over procurement decisions at the airline, while that executive was promoting GSI’s services within British Airways.
Further, from 2009 to 2016, Kinsella made regular payments to the British Airways executive that totaled more than $1.2 million. During this same period, British Airways expanded its business with GSI substantially, including to service Terminal Seven at JFK.
When Kinsella sold the company in 2016. The British Airways executive received an additional payment of $3.6 million from Kinsella for his secret ownership interest. GSI never disclosed either its payments to the executive, or the executive’s financial stake in GSI, to British Airways, the Port Authority, or any other entity in the airline industry.
GSI also made improper payment to TOGA executive director Edward Paquette, the key decision maker with respect to the contract for ground services at JFK’s Terminal One. While secretly making these improper payments, GSI made millions of dollars in profits from its contracts at Terminal One and terminal Seven at JFK Airport with British Airways and TOGA respectively.
“Today’s announcement exposes a pay to play scheme that enabled Port Authority tenants and vendors to game the system and award business in exchange for payoffs and greed versus integrity and fairness,” Port Authority Inspector General Michael Nestor said.
In addition to the $12.3 million monetary fine, GSI is required to implement and maintain an anti-bribery and corruption policy, and to train employees on that policy annually. The company will also establish an anonymous tip line where employees can report suspected violations of the policy.
GSI must also submit to review by an outside audit firm, appoint a Chief Ethics and Compliance Officer, reform its internal bidding process to ensure that potential conflict of interest are identified, and submit an annual affirmation of compliance signed either by the company’s CFO or CEO to the Port Authority Inspector General’s Office.
Reach reporter Bill Parry by e-mail at bparr