Two months ago, Atlanta Mayor Keisha Lance Bottoms ordered an outside review of a payment by a city-tied nonprofit to cover luxury airfare for former Mayor Kasim Reed and staffers who traveled to South Africa last year on a costly jobs mission.
Now, people familiar with the matter have told The Atlanta Journal-Constitution and Channel 2 Action News the probe has stalled, as city officials balked at the cost of outside attorneys’ fees. A May 8 engagement letter from law firm Sidley Austin said the firm’s rates for senior partners are as high as $1,200 per hour, though it’s unclear if the city agreed to rates that high.
The city wants to reduce its legal costs, said the people who have knowledge of the situation but who are not being identified because they are not authorized to comment on the matter.
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Legal experts questioned by the AJC were surprised by the potential price tag, and said as the city seeks to reduce legal costs, leaders must ensure any investigation remains independent.
At issue is a $40,000 payment by a dormant nonprofit group called Partners for Prosperity, the fund-raising arm of city economic development agency Invest Atlanta.
A federal grand jury subpoenaed the city in April seeking records related to the charity and Invest Atlanta CEO Eloisa Klementich. The demand for records came after the AJC and Channel 2 outlined an unusual transaction in which the city donated $40,000 to the nonprofit, which later wrote a check for the same amount to the city to pay for the business class tickets to South Africa.
Mike Bowers, a former Georgia attorney general and partner at Balch & Bingham, said officials were right to question the cost of fees charged by law firm Sidley Austin.
“That’s a ton of money for lawyers’ fees, whether it is in Washington, D.C., or Atlanta, Georgia,” Bowers said.
But Bowers, who led the state investigation of standardized test cheating at Atlanta Public Schools, said the matter demands a thorough review.
“It’s public money, a significant amount, being spent on a public official doing something that is questionable,” he said. “Those are the sorts of elements that wave a red flag and say, ‘Look at it.’”
Bottoms’ office did not respond to requests for comment.
The controversy surrounding Partners for Prosperity is part of a cloud of scandal that’s kicked up since Reed left office in January.
The GBI opened a criminal investigation to City Hall’s handling of open records requests, and a federal grand jury probing corruption in Atlanta government issued new subpoenas, including one seeking records related to spending by Reed on his city-issued credit card.
In spring of 2017, Reed and several staffers flew business class to South Africa to learn about filmmaking, urban agriculture and to recruit jobs. Reed caught flack for the high cost of the trip — about $90,000 — and promised to find nongovernmental funds to pay the $40,000 difference between coach and business-class airfare.
In April, after an open records request by the AJC, the city provided records showing the little-known Partners for Prosperity covered the airfare difference. It was the first check the nonprofit ever wrote.
Partners for Prosperity was created in 2015 by Invest Atlanta to “promote economic development and financial sustainability in distressed areas through job training and recruitment and financial literacy programs,” and to help create affordable housing.
Last December, in the waning days of Reed’s term, his office convinced City Council to approve a $40,000 donation to Partners for Prosperity from an account that held salary Reed had deferred.
But officials with Reed’s office didn’t inform council that the money would be used to pay for airfare he promised would be covered by private sources.
On Dec. 29, days before he left office, Reed approved a new contract for Klementich, who also serves as chief financial officer of Partners for Prosperity. The three-year extension pays Klementich $309,000 a year and guarantees her two-years of salary if the new mayor replaces her. The same day, the city sent $40,000 to Partners for Prosperity.
On March 1, then-city CFO Jim Beard sent a city invoice from his personal email address to Klementich’s seeking $40,000 from the nonprofit. Klementich signed a check dated four days later for $40,000, but Partners for Prosperity’s board didn’t formally approve the payment until early April.
Reed, through a spokesman, has denied any wrongdoing. Reed’s spokesman has said the funds weren’t tax dollars, but money from a raise the former mayor earned and declined to accept. He instead devoted the money to college scholarships and economic development.
Jessica Cino, a Georgia State University law professor, said the matter deserves an “arm’s length” review, and going outside city government would be best.
Nina Hickson, the new interim city attorney, was formerly general counsel of the Atlanta Beltline before she was picked by Bottoms to be the city’s top lawyer. Invest Atlanta oversees the Beltline.
“You don’t want it to look like anyone has an interest in any particular outcome, at least not on the investigation team,” Cino said.