UPDATED with statement from former Mayor Kasim Reed.
Invest Atlanta CEO Eloisa Klementich has been reprimanded, but she will not lose her job following an investigation into a $40,000 payment to cover luxury airfare for former Mayor Kasim Reed and several staffers who traveled to South Africa last year.
Mayor Keisha Lance Bottoms announced Thursday that Klementich will be stripped of her employment contract — and the protection of a golden parachute totaling more than $600,000 if the city ended her contract early.
But Klementich will remain chief executive of the city’s economic development agency as an “at-will employee.”
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Thursday’s announcement came after a nearly three-hour executive session of the Invest Atlanta board in which members discussed outside law firm McFadden Davis’ report on its examination of the payment. Bottoms’ office said the review found no criminal violations.
Bottoms launched the probe in April after The Atlanta Journal-Constitution and Channel 2 Action News uncovered the unusual transaction. Taxpayer money was donated by the city to an Invest Atlanta-tied charity that then returned the money to the city to cover the airfare.
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A federal grand jury investigating corruption at City Hall issued a subpoena for records related the charity, Partners for Prosperity, days after the AJC/Channel 2 report.
In a statement, Bottoms praised Klementich for her leadership and commitment to attracting jobs and adding affordable housing. But, the mayor said,“along with that transformational progress comes an unflinching demand for accountability.”
“Dr. Klementich is aware of the gravity of the Board’s concerns and has been strongly reminded of the expectations of transparency and fiscal stewardship in all matters with Invest Atlanta and its partners,” Bottoms said.
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The controversy arose when Reed took nine employees to South Africa during the spring of 2017 to learn about filmmaking, urban agriculture and to recruit jobs. Most flew business class. Reed caught flack for the trip's overall $90,000 price tag and promised to find nongovernmental funds to pay the $40,000 difference between coach and business-class airfare.
In April, the AJC and Channel 2 found the airfare was paid for by Partners for Prosperity, a dormant charity tied to Invest Atlanta.
City Council approved a $40,000 donation to the charity in December upon the recommendation of Reed’s office. The funds came from an account that held money from a raise Reed had deferred. But council wasn’t informed that the money would be used to pay for airfare Reed promised would be covered by private sources.
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On Dec. 29, days before he left office, Reed approved a new contract for Klementich, who also serves as a Partners for Prosperity officer and director. The same day, the city sent $40,000 to the charity.
This past March, then-city chief financial officer Jim Beard sent a city invoice from his personal email address to Klementich’s seeking $40,000 from the nonprofit. Days later,Klementich signed a check for $40,000, but Partners for Prosperity’s board didn’t formally approve the payment until early April, board minutes showed.
Though Bottoms said McFadden Davis found no criminal wrongdoing, she said the firm did fault Klementich’s lack of adherence to unspecified board governance standards of the charity.
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City Council President Felicia Moore said she would reserve judgment until she could review the law firm’s report. But Moore called it a positive step that the city and Invest Atlanta would not be on the hook to pay out another large executive contract.
The AJC requested a copy of the report but did not receive one before press time.
Klementich has defended the donation and said it was in line with the charity’s mission of job creation and aiding in development of affordable housing.
“I appreciate the mayor and the board’s ongoing support of my role as CEO of Invest Atlanta,” she said in a statement. “I look forward to continuing to serve the citizens and businesses of Atlanta.”
A spokesman for Reed said in a statement that the review confirms Reed’s contention that the use of deferred salary to donate to charities “was wholly appropriate and legal.”
“The focus of this trade mission was economic development and the city’s interest was advanced by this important work,” the statement said.
Our reporting
An AJC and Channel 2 investigation uncovered an usual transaction in which the city donated $40,000 to a dormant charity that donated the money back to the city to pay for business class airfare for former Mayor Kasim Reed and several staffers who visited South Africa last year. The city ordered a review into the matter and a federal grand jury issued a subpoena seeking information about the charity. On Thursday, Mayor Keisha Lance Bottoms office said a report on the matter found no criminal wrongdoing.
>> COMPLETE COVERAGE: Latest Atlanta City Hall investigative content
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