Invest Atlanta: $40k spent on Reed’s South Africa trip under review

Channel 2 Investigative Reporter Belcher reports.

Invest Atlanta, the city's economic development agency, voted Thursday to review a $40,000 payment that its nonprofit fundraising arm made to cover luxury airfare for former Mayor Kasim Reed and several of his staff on a trip to South Africa in 2017.

The move came two days after The Atlanta Journal-Constitution and Channel 2 Action News disclosed that federal prosecutors sought records related to the payment in a subpoena sent to City Hall in the expanding corruption investigation.

“It’s important that we get an independent set of eyes and feedback,” said Mayor Keisha Lance Bottoms, chairwoman of Invest Atlanta’s board.

The intensifying scrutiny over the payment comes as the AJC and Channel 2 have obtained new documents that raise more questions about how the transaction was negotiated between Reed and Eloisa Klementich, Invest Atlanta’s CEO.

Reed signed a three-year extension to Klementich’s contract Dec. 29, agreeing to pay her $309,000 a year and guaranteeing her two-years of salary if the new mayor replaces her. The same day, the city wired $40,000 to Partners for Prosperity, Invest Atlanta’s nonprofit.

Four days later, the city generated an invoice asking for the money back. Chief financial officer Jim Beard sent the invoice to Klementich from his personal email account to hers March 1.

Eloisa Klementich, CEO of Invest Atlanta, was given a three-year contract extension Dec. 29. INVEST ATLANTA

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Klementich, acting in her capacity of chief financial officer for Partners for Prosperity, wrote a $40,000 check to the city dated March 5, nearly a month before the nonprofit’s board formally approved the payment.

Reed spokesman Jeff Dickerson said there was “no quid pro quo associated with Dr. Klementich’s contract and wire transfer.”

“There was no coordination between the two on the part of Mayor Reed,” Dickerson said in response to a question emailed to him by the AJC. “The first time he heard the two occurred on the same day was when informed of the newspaper’s inquiry.

“The former mayor was completely unaware that the two had occurred on the same day, and had nothing to do with the timing.”

Klementich declined to answer questions immediately after the Invest Atlanta meeting Thursday, saying she “had a couple things I need to get to” but that she would “follow up” with the interview requests. A spokesman for Invest Atlanta then took down several questions from the AJC and Channel 2, but did not respond with answers.

Reed's South Africa trip was controversial almost from the beginning. Channel 2 learned that the $90,000 trip included about $40,000 in travel upgrades for Reed's staff, and in the fallout Reed pledged to have non-governmental sources cover the difference between expensive business-class airfare and coach.

On Dec. 4, at Reed’s urging, the City Council voted to donate $77,000 to three nonprofits, including Partners for Prosperity. The donations came from an account set up to hold salary raises that Reed had declined to accept. But as the AJC and Channel 2 reported April 4, council members were not told that the $40,000 to Partners for Prosperity would be returned to the city for the South Africa trip.

Two days later, on April 6, prosecutors subpoenaed Atlanta for “all records related or associated with Partners for Prosperity and Eloisa Klementich.”

Personal email to do official business

One of the documents federal prosecutors will receive in response to their subpoena is the invoice emailed by Beard to Klementich. The email contained no subject line or a message.

Greg Lisby, a communication law professor at Georgia State University, said the use of personal email accounts make it appear that city officials had something to hide.

“Whether there’s anything wrong here or not, the appearance is absolutely damning,” Lisby said. “This is one of those things that has the appearance of impropriety but at the very least it is very unprofessional government.”

Mayor Keisha Lance Bottoms chairs the Invest Atlanta board and said Thursday that the transaction between the city and Invest Atlanta’s nonprofit fundraising arm needed to be reviewed. BOB ANDRES / BANDRES@AJC.COM

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Bottoms, who has made transparency reform a major focus of her first four months in office, said the exchange over personal email accounts didn’t violate Georgia’s open records law.

“I don’t think that in-and-of itself is an issue, how they exchanged the information,” Bottoms said. “The larger issue is obviously the public’s understanding of the transaction, and having confidence that it was an appropriate transaction.”

“Obviously, there is a very public conversation and a lot of questions surrounding Partners for Prosperity and the transaction,” Bottoms said. “It could be that everything was done appropriately and that will be the end of the discussion. Or it could be something more.”

Board chair resigns

There has also been internal fallout from the nonprofit’s actions.

Partners for Prosperity Chairman Scott Taylor, president and CEO of the Atlanta real estate firm Carter, abruptly resigned his position on the nonprofit's board April 10.

On small boards, it’s unusual for issues to move forward without the chairman’s support. Partners for Prosperity took two votes, first to accept the $40,000 from the city, and then to send it back. Taylor abstained from both.

A copy of the check Partners for Prosperity sent to the city was dated March 5. But meeting minutes show the nonprofit’s board did not gather with a quorum to discuss giving the money back to the city until March 20. (Klementich said in a prior interview that the matter was discussed earlier with individual board members.)

Minutes of the March 20 board meeting show there was “lengthy but deliberate discussion of the City of Atlanta’s economic development trip.” The minutes do not describe the trip or its location. No action was taken.

Partners for Progress, a nonprofit formed by Invest Atlanta to help promote affordable housing, job creation and economic development, cut this $40,000 check to the city of Atlanta in March to defray the cost of business-class travel for former Mayor Kasim Reed and some of his entourage for a spring 2017 trip to South Africa. In December, the city had given the nonprofit $40,000 in taxpayer money from Reed’s unclaimed salary.

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Votes were taken at a second meeting April 2 during which the board was provided an overview of the City Council’s Dec. 4 ordinance that allocated the $40,000 to the nonprofit.

The next matter involved paying money back to the city for travel costs related to the South Africa trip.

Klementich provided board members with an overview of the trip, which included a visit to a “green jobs hub,” lessons on urban agriculture and meetings about Cape Town’s booming film and start-up scene.

The meeting minutes state that Klementich told the board the payment for South Africa travel costs and Partners For Prosperity’s mission were “aligned.”

Though the mission was touted as a business recruitment and job creation trip, no one from Invest Atlanta, the city’s recruitment agency, attended.

Staff writer Stephen Deere contributed to this report.

The story so far

Previously: On April 4, the AJC reported on a $40,000 donation made by the city to a dormant nonprofit, and traced how the money came back to the city months later to cover business-class travel for city staff who accompanied former Mayor Kasim Reed on a controversial trip to South Africa in 2017.

Tuesday: The AJC reported on a federal subpoena dated April 6 seeking records associated with the nonprofit and Eloisa Klementich, the CEO of Invest Atlanta and the nonprofit's chairwoman.

Today: Invest Atlanta's board, which includes Mayor Keisha Lance Bottoms, voted Thursday to seek an independent review of the $40,000 check written by the nonprofit to cover the South Africa travel expenses.