The former chairman of the Development Authority of Fulton County (DAFC) earned a salary as an employee of the agency for more than six years while also claiming hundreds of thousands of dollars in per diem payments for his service on the agency’s board, an investigation by The Atlanta Journal-Constitution found.
Bob Shaw collected more than $1 million in salary and board stipends from January 2011 to April of this year, documents obtained by the AJC showed. More than $850,000 of that compensation came since May 2014, when Shaw was hired to a staff position as the authority’s interim executive director and later as director of external affairs.
Legal experts who spoke to the AJC said they have never heard of a board member for a public agency legally earning both a board of directors stipend for his oversight role and a salary as an employee of the same government entity. The dual roles set up the potential for a glaring conflict of interest, they said.
Loose state laws governing development authorities make it possible for authority board members to earn a staff salary, provided the authority meets modest disclosure requirements, one employment lawyer told the AJC. But DAFC did not.
The AJC’s investigation found that Shaw’s employment was subject to few, if any, financial controls and virtually no oversight from the agency’s board of directors. The arrangement was approved without proper public notice. Board minutes state his external affairs job was intended to last up to one year, but continued for five more — all without re-authorization from the board or a written employment contract.
In interviews with the AJC, the agency’s two most recent executive directors contradicted one another about who Shaw reported to — the executive director or the board.
And three board members who had oversight of the agency during this time, including the current executive director, insisted they had no knowledge of the arrangement until after Shaw resigned as chairman in November, even though Shaw at times used his chairman and director of external affairs titles on his email signature.
Though meeting minutes show Shaw routinely provided a report to the board as chairman, they do not show he provided any reports as external affairs director.
Shaw withdrew from consideration for reappointment to the authority board in June, following reporting by the AJC and Channel 2 Action News that revealed he and other board members collected hundreds of thousands of dollars in per diems. The Fulton County Board of Commissioners later said it could find no evidence it ever authorized per diems for the DAFC board, meaning the payments might never have been legal.
Fulton Commission Chairman Robb Pitts told the AJC he has been made aware of as many as two governmental agencies that are scrutinizing the authority following the AJC’s reporting, but was uncertain if either agency has opened a formal investigation.
“From the public’s point of view, you cannot explain away $1 million in income for a part-time job,” Pitts said. “That’s impossible.”
Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com
Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com
Shaw canceled a Tuesday interview with the AJC due to health reasons and then declined to answer emailed questions because he did not have access to authority records.
Unanimous votes without public input
The authority generally employs fewer than five people but has an outsized role in the region’s economy and tax collection, having the power to dole out lucrative subsidies and tax breaks to developers. Nine appointed board members govern it.
The 91-year-old Shaw joined the DAFC board in the mid-1990s and held its most visible roles, including board chairman, after making a name for himself as a top official in the state and Fulton County Republican parties.
Credit: undefined
Credit: undefined
On May 27, 2014, after the authority’s top executive resigned, Shaw stepped in as interim executive director upon unanimous vote of the board. Three days later, records show Shaw started earning a $5,000 monthly salary, which grew to $6,500 per month.
State law requires development authorities to publish notice of a potential financial involvement of a board member, such as Shaw’s employment, in the county’s legal organ at least 30 days prior to “consummating such transaction.” The AJC could find no such notice in the online archive of the Fulton Daily Report.
On Aug. 26, 2014, the DAFC board met to hire Al Nash as executive director and approve the creation of a new staff job for Shaw as director of external affairs. Shaw’s appointment was approved unanimously, and Shaw recused himself from the vote, as is also required by state law, meeting minutes show.
A day later, DAFC published a legal notice in the Daily Report stating the authority would consider a resolution hiring Shaw at its Sept. 23 meeting.
But on Aug. 29, DAFC published another notice stating instead that the board had already voted Aug. 26 to hire Shaw, and his employment would start Oct. 1.
Shaw’s hiring was not on the agenda and was not discussed or voted on at the Sept. 23 meeting, according to board minutes. DAFC records show the authority started paying Shaw for his new job that day.
For this story, the authority provided the AJC an unsigned board resolution dated Sept. 23, 2014, noting Shaw’s hiring as director of external affairs and the creation of his staff position. The authority cannot locate an official, signed copy of the resolution, board members Steve Broadbent and Sam Bacote told the AJC.
The resolution states Shaw was responsible for training a new executive director, supporting business development and overseeing client relationships. It also said Shaw would earn salary of $6,500 per month and did not prohibit him from earning board per diems.
The board’s resolution included no termination period, but minutes from the August meeting said the job was to last “during the transition period and at the pleasure of the Authority for a period not to exceed one year,” unless extended by the board.
The AJC could find no record of the board extending Shaw’s employment. Broadbent, one of two current board members who served on the DAFC board in 2014, said “to my knowledge, the board never took another vote on the matter.”
Broadbent said he believed the executive director could “extend the arrangement.” But the board’s 2014 resolution said Shaw served at the pleasure of the board.
The authority said no contract existed for Shaw’s role as director of external affairs and it did not provide one for his tenure as executive director.
In 2013, the full year before Shaw started his job with the authority, he earned about $45,500 in per diems. His total compensation, including salary, jumped to $96,950 in 2014 and $148,750 in 2015, according to tax records obtained by the AJC.
In an email, Broadbent said he did not recall “if the payment of both per diem and salary was a discussion point during the (August 2014) meeting.”
Broadbent said the board treasurer had oversight of all payments, including compensation. The treasurer for much of the time Shaw earned a salary was Walter Metze Jr., who did not respond to a letter hand-delivered to his home.
Broadbent and Turpeau said the executive director supervised Shaw in his employee role. But as chairman, Shaw supervised the executive director, suggesting he was officially the subordinate to and boss of the same person.
In a brief telephone interview, former executive director Nash said supervision of Shaw was not his job.
“I’ve got no comment on that,” Nash said. “That’s something they’re dealing with and I’ve put it in the past. You need to talk to the board about that.”
Two sources of income
In his role as chairman, Shaw collected a per diem of up to $200 for board meetings — and for signing documents to process proposed tax breaks that came before the board for consideration. He also at times collected board stipends for the number of items on the authority’s meeting agendas and for meeting with business and political officials, all while apparently on the clock as external affairs director.
“What we’re seeing now is Bob Shaw had a very nice little number going on and there was no way he was going to say no to any of these deals,” said Julian Bene, a longtime critic of DAFC and a former member of the city of Atlanta’s development authority. “It’s an enormous conflict of interest that Shaw had, and it shows what a rogue agency this was.”
A law professor and a former district attorney interviewed by the AJC said Shaw collecting a salary and stipends at the same time raised questions about a conflict of interest, but a criminal case would face a heavy burden of proof.
“The only way I could see that is if you could demonstrate criminal fraud,” said Jessica Cino, a law professor at Georgia State University. “And criminal fraud is a high bar.”
Former Gwinnett County district attorney Danny Porter said some government officials have been prosecuted for double-dipping, but he said it might not arise to a criminal offense in this case.
“It sounds like that (board resolution) says you can break the law of the state of Georgia,” he said.
Duty to report?
Turpeau said the DAFC board was not aware of how much money the authority paid Shaw until after the AJC sought records June 16 of per diem spending and tax documents since 2011.
The authority did not disclose Shaw’s job until after the AJC reviewed the tax records and found Shaw earned approximately $78,000 more per year for several years than the authority’s per diem databases showed.
An AJC analysis of DAFC records shows Shaw earned more than $500,000 each in per diems and salary since 2011. He resigned his staff position effective Jan. 31 of this year, but continued collecting per diem until at least April.
Turpeau said he became aware of Shaw’s role as a paid employee and chairman earning per diems in November when he succeeded Shaw. Broadbent said he learned Shaw was still an employee about the same time.
The authority in November enacted its first per diem policy limiting board fees to no more than one per day, but it did not ban board members from receiving a salary and per diem until June 22, as the AJC was preparing publication of this story.
Turpeau said in an email he felt Shaw’s dual roles were “not appropriate” and the staff job unnecessary, and asked Shaw in November to resign as an employee.
But he said he did not disclose Shaw’s dual roles to other county officials.
Commissioner Lee Morris, who in May nominated Shaw for reappointment to the board, said he did not know about Shaw’s lucrative per diem payments or the paid position with the authority until a few days ago.
Credit: Rebecca Wright
Credit: Rebecca Wright
“Any one of those authority members had, in my opinion, an absolute public duty to disclose this to somebody, and that would obviously include Mr. Turpeau,” Morris said. Had he known, Morris said he would not have nominated his long-time friend for re-appointment.
On July 14, Turpeau and perhaps other authority members are scheduled to appear before the Fulton board of commissioners, where they are certain to face questions about the agency’s per diem payments and Shaw’s generous compensation for previously undisclosed work.
Amidst the scrutiny, the authority has relied on a crisis communication expert who charges up to $275 per hour for advice.
“DAFC learned of questionable practices from the past. We put policies in place to prevent them in the future,” Turpeau said in more than one exchange with the AJC. “We are ready to move forward.”
AJC reporter Isaiah Poritz contributed to this report.
Our Reporting
Reporting this month by the AJC and Channel 2 Action News showed board members of the Development Authority of Fulton County were paid per diems that may not have been legal. The AJC reported former Development Authority of Fulton County Chairman Bob Shaw collected nearly $360,000 in per diems from 2015 to April of this year, including at times for signing documents or for the number of agenda items before the board on a given day.
Tax documents obtained by the AJC later showed Shaw earned hundreds of thousands of dollars more than the authority had previously disclosed. Upon questioning about the discrepancy by the AJC, DAFC disclosed Shaw had a job with the authority for more than six years, earning both salary and per diem during this time. As the AJC prepared this story for publication, DAFC’s board voted to close a loophole in its policy to prevent board members from earning salary and per diem.
