Page 2 of 3
Even so, airport officials had clung to the fiction that SFO and SFO Enterprises were functionally separate organizations.
Until very recently.
For reasons that aren't immediately clear, Martin has spent several months insisting that the city now faces imminent legal peril in connection with airport officials' Honduras activities -- a circumstance he'd previously denied was possible.
Martin has repeatedly pleaded with city supervisors to give him money he says he needs to "work on" SFO Enterprises' ongoing deal to privatize Honduras' airports. Martin's campaign for additional funding is puzzling; sources in Honduras say they see no immediate apparent need for the additional city funding.
The firm set up by SFO Enterprises to operate in Honduras, SFO Honduras, has a contract that gives it $745,000 per year to provide "operation and management services" for the consortium that won the 20-year contract to manage and overhaul Honduras' airports. The fee is paid every quarter. SFO Enterprises also receives a $50,000-per-year travel budget from the consortium, says Raul Torres Lazo, a Honduras industrialist whom SFO officials recruited in 2000 as a consortium member.
"It makes no sense to me why John Martin would be asking for more money. SFO couldn't possibly be spending $750,000 per year here. It just doesn't make sense," Torres Lazo says, using a rounded figure for the SFO fee. "As current members of the consortium, we know we're paying them $750,000 per year. And we know that with that money -- with far less than that amount of money -- they could contract a company to do the work they're obliged to do."
Nonetheless, Martin has dedicated an untoward amount of time and political capital begging for new city money to fund SFO activities in Honduras. The need for money is apparently so acute that Martin has tossed aside the conceit -- carefully guarded until recently -- that the SFO Enterprises corporate shell protects San Francisco from liability.
Now, Martin maintains, the city of San Francisco stands accountable for SFO Enterprises' financial obligations in Honduras.
In March, Martin wrote a letter to Board of Supervisors President Matt Gonzalez requesting money to fund SFO Enterprises Inc. activities, saying if he didn't get the money, the city might be sued.
"I have consulted the advice of legal counsel on this matter. I understand that if I discontinue funding staff from the available resources the City may face legal action, including an allegation that the City has breached the agreements with Honduras," Martin wrote in the signed, March 5 letter.
And Friday, during a Board of Supervisors meeting, Martin said the legal peril the city faces is serious.
"It is very clear that if I stop work, that I almost certainly have a lawsuit; the General Fund will have a lawsuit," Martin said. "I cannot be in a position, as a department head, of placing the city at risk of a lawsuit."
If it's unclear why Martin is begging for more money to conduct business in Honduras, it's quite clear that he's correct about one thing: Honduran government officials are extremely angry with employees of the San Francisco International Airport.
When it won the contract in 2000 to run and refurbish Honduras' airports, the SFO Enterprises-led consortium agreed to finish construction of a passenger terminal at the airport in the Caribbean city of La Ceiba, and to expand facilities at the airport on the island of Roatan, among other things. This April -- after the consortium spent 2 1/2 years failing to live up to many aspects of the privatization contract -- the Honduran government began levying a fine of $20,000 per day, which, as I write on Monday, continues accruing.
According to government regulators, San Francisco has treated Honduras to lies, excuses, misrepresentations, and broken agreements, almost from the day SFO employees began showing up in Tegucigalpa three years ago.
"For us, this has been a huge fraud," Honduran government regulator Silvio Larios Bones told me last week. "It's clear [San Francisco] has acted in bad faith all along. Here, it feels like they're treating us like the Spanish during their empire. They're selling us little birds in exchange for pieces of gold."
Still, according to Torres Lazo, the Tegucigalpa industrialist whom San Francisco recruited as a consortium partner, the little problem of the $20,000-a-day fine will be taken care of soon. Honduran President Ricardo Maduro has taken a keen interest in the airport problems, Torres says. Maduro recently arranged a series of negotiations among officials in the ministry of public works, transportation, and housing (Soptravi) and the tourism ministry, several presidential aides, many business leaders, and members of the private airports consortium, Interairports SA.
Honduras regulators tell me they have the authority to continue saddling the SFO Enterprises consortium with massive fines. But this option might give the country a bad reputation with international investors, both Larios and Torres Lazo say. So the Honduran congress will soon vote on a proposed arrangement that would slash the fine, and let the airport consortium operate under a new set of contract stipulations.
"Maduro's party has a simple majority in congress, so there won't be a problem," Torres Lazo says. "You can take it as a given the consortium's not going to collapse over this."
So there's nothing to worry about, then -- unless one considers it unseemly that San Francisco officials have been involved in back-room, high-stakes financial negotiations with a government that Transparency International, a Berlin-based organization devoted to combating corruption worldwide, calls one of the world's more corrupt.
That's not to say SFO officials did anything improper during those negotiations. Why would anything questionable happen during secret negotiations over government concessions in a banana republic?
Isn't it about time that San Franciscans learned what is really going on with our Honduran adventure? I'd love to do the learning, and pass on the full truth about SFO Enterprises, but -- at least for the moment -- I can't.
