Some mistakes exact their costs immediately. Others take their time.
Unfortunately, Mayor Shirley Franklin has become all too familiar with the latter.
For the latest example see Information Systems and Networks Corp. [ISN], a company with which the city is likely to soon settle a high-profile, Y2K-related lawsuit for $1 million.
The tentative settlement, which must be approved by the City Council, is just another chapter in the sorry saga that's already seen five people connected to the behind-the-scenes maneuvering for Year 2000 computer contracts indicted on federal charges. And the deal comes at a time when the city finds itself looking to cut hundreds of jobs to make this year's budget work -- a fact likely not to be lost on the workers who stand to lose their jobs.
Franklin would not comment on the proposed settlement because it is considered an ongoing legal matter. And Senior Assistant City Attorney Jerolyn Ferrari says the council has the power to reject or modify the tentative agreement.
Still, after years of costly litigation, she says the settlement is "in the mutual best interest of both parties." She says Atlanta's law department will try to bring the matter before the council's Public Safety Committee Nov. 12. If approved there, it will move to the full council for a vote.
ISN sued the city in 1999, for breach of contract, fraud and defamation. The company claimed that it had a contract with Atlanta to protect its computer systems from the Y2K bug, a service that would cost the city more than $13 million. But after ISN started the work, then-Commissioner of Administrative Services Herb McCall fired it in March 1999. ISN said it was terminated because it failed to hire companies from a list of six preferred minority contractors which McCall insisted the company use. McCall had countered that ISN's work was unsatisfactory.
ISN's lawsuit was thrown out of U.S. District Court in 2000, because a judge agreed with the city that ISN never had a valid contract to perform the work and that McCall didn't have the authority to approve the computer contracts in the first place.
In February, however, the 11th U.S. Circuit Court of Appeals reinstated the suit and held that a jury would have to decide whether a contract had been established between the city and ISN.
Norman Singer, the general counsel for ISN is satisfied with the tentative agreement. "We think that is a fair settlement in addition to the almost $3 million they paid to settle the motion for injunction back in 1999."
McCall is scheduled to go on trial this month on charges of lying to a grand jury and obstructing justice in the federal investigation of the Campbell administration. Some of McCall's cohorts in the Y2K contract bonanza -- Spectronics Corp. executives Vertis McManus and Dorothy Rollins, as well as American Computer Technology Inc. (ACT) head Sam Barber and former Atlanta Chief Operating Office Larry Wallace -- also were indicted. Spectronics and ACT were both on McCall's list of preferred contractors. Wallace and McManus have pleaded guilty to charges in their cases.
It would be bad enough if the expected loss of $1 million came during the economic boom times Atlanta experienced during the late 1990s. But this is a city that faced a $90 million budget shortfall last year, a calamity that forced Franklin to raise taxes. This year, staring down another multimillion dollar shortfall, Franklin submitted a plan to the City Council to eliminate about 200 jobs to balance the budget. The workers who wind up on the wrong end of the pink slip lottery will be able to do the math. One million bucks pays for about 30 $30,000 a year jobs.
District 9 City Councilwoman Felicia Moore, who heads the council's finance committee, was still not aware of the settlement on Friday, but she wasn't surprised.
She's grown used to the steady stream of unpleasant and costly Campbell-era revelations that continue to hurt the city.
"There are a lot of things, under the rug, in the closet that we continue to discover," Moore says.
One question for the city, she continues, is whether it will be able to sue McCall to recover the money, since he acted without authority. The council passed a resolution to pursue individuals such as Jonathan Dodd, the former head of the Bureau of Motor Transport Services, who embezzled $400,000 from Atlanta between 1999 and early this year. Dodd pleaded guilty to federal charges in June.
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