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Conflict over CEO leaves port commission looking for help

The Seattle port commissioners decided Tuesday to have two commissioners hire an outside attorney to review whether port CEO Tay Yoshitani has a conflict of interest — apparent or real — by also serving on the board of Expeditors International.

That outside attorney will also look at whether to make all confidential paperwork on the issue public and how to avoid future similar conflicts; the attorney will present his or her report to the commissioners in public no later than Oct. 23. The vote was 4-0 with Bill Bryant abstaining.

Seattle-based shipping logistics company Expeditors International's board appointed Yoshitani — the port's CEO for the past five years — to the board in early August. Yoshitani earns $367,000 annually as port CEO. The Expeditors' board post will give him $230,000 annually in pay and stock options.

That sparked heavy protests over the apparent conflict of interest of a port CEO also earning money from a shipping logistics corporation. Thirteen legislators voiced concern about the matter in an Aug. 24 letter, followed by a similar Sept. 5 letter by state House Speaker Frank Chopp.

In an Aug. 28 letter to the 13 legislators, commissioner Tom Albro wrote that the commissioners approved a renewed contract in 2011 with Yoshitani that allows him to served on corporate boards as long as he does not do so on port time. In a recent interview with the Puget Sound Business Journal, Yoshitani said his Expeditors board obligations are four morning meetings a year, for which he will take vacation time.

On Tuesday (Sept. 11), all five port commissioners voiced concerns about transparency and being open to the public — especially on this issue. They expressed mixed views on whether an actual conflict exists.

Commissioner John Creighton said the commissioners received roughly 2,000 emails on the subject in the past two weeks. "A big percentage of the emails expressed concerns over the apparent conflict of interest. …. We have heard today that reasonable lawyers can differ," Creighton said.

"While state law is silent on this issue, the public is not," said port commission President Gael Tarleton.

The issue was sliced and diced Tuesday on nuances such as:

Expeditors International does not do business directly with the port, but could the two interests tangle indirectly?

Yoshitani might not have a strictly legal conflict of interest, but how should the appearance of conflict play in a port answerable to the taxpayers?

The port's in-house counsel — who reports to Yoshitani — decided he has no conflict of interest. The in-house counsel also hired an outside counsel to check the same question, and that firm came up withthe same answer. But questions arose about the two sets of attorneys being answerable directly to the port's internal chain-of-command, and not directly to the commissioners. Referring to the outside counsel, Timothy Leyh, inside attorney Craig Watson said, "I didn't ask Mr. Leyh for any particular outcome."

With all five commissioners apparently willing to publicly release most, if not all, of the internal legal document on this matter, what are the long-term ramifications of such an action on future matters?

The commissioners appointed Albro and fellow commissioner Rob Holland as a committee to hire the commission's outside counsel and experts to tackle the conflict-of-interest and public disclosure matters by Oct. 23. Bryant abstained on this vote because he questioned spending more money on a second outside counsel after an earlier outside attorney already reported to Watson. However, Bryant agreed with the other four to make the previous outside counsel's work public.

Yoshitani was not at Tuesday's meeting. He issued a written statement that said: "I'm prepared to fully cooperate with the review so the matter can be resolved and the port can move forward. I believe I have followed all the proper steps, but will accept accountability if anything I have done is contrary to any statute or applicable policy."

Earlier, he told the Puget Sound Business Journal that he has not ruled out filing a lawsuit if the commissioners decide he cannot hold both positions.

About a half-dozen people bent the commissioners' ears in public testimony.

State Rep. Gerald Pollet, D-Seattle and one of the legislators questioning the arrangement , said he and the Washington Coalition for Open Government have requested all documents pertaining to the matter, including Yoshitani's and Expeditors' correspondence with each other, so the public can have all the facts before the commissioners rule on the matter. "There's no way for the public to evaluate the appearance of or an actual conflict of interest without knowing the scope of Expeditors' interests and his dealing with tenants," Pollet said.

Retired construction businessman MIchael Sotello argued that Yoshitani has posted a good record as port CEO, and other public officials, such as former University of Washington President Mark Emmert, have served on Expeditors' board. Sotello contend that the ability to serve on boards is needed to attract top candidates for the Port of Seattle CEO post.

Retired Seattle Attorney Mark Crutcher argued that a conflict of interest exists because Expeditors will have to decide whether to ship a client's products through a port that the Port of Seattle is competing with. Consequently, Yoshitani as an Expeditors board member might be obligated to favor a competing port while he is also obligated as port CEO to push the Port of Seattle, he said. "It creates an atmosphere of favoritism. The port's customers would use Expeditors because they think that they have an inside track," Crutcher argued.

Genevieve Aguilar, representing the labor and community development group Puget Sound Sage and airport worker Alex Popescu said that the low wages of roughly 4,000 airport nonunion workers are being overshadowed by the Yoshitani controversy. They said airport workers were told to not to discuss the matter with the the public in parts of the airport, which Aguilar and Popescu contended is a double standard since Yoshitani can publicly discuss his pay.

Port spokesman Perry Cooper said the workers are allowed to publicly discuss wage matters at parts of the aiport, but not in the passenger drop-off zone. He said workers discussing these issues were told to leave the dro-off zone because no public demonstrations are allowed in that area.