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Reed, city concealed secret $147K payout to fired Atlanta airport boss

Former Atlanta Mayor Kasim Reed reached secret terms in a settlement with the airport general manager he fired in 2016, agreeing to pay Miguel Southwell $147,000 more than was disclosed to the City Council and the public, an Atlanta Journal-Constitution investigation has found.

The August 2016 settlement, reached in the heat of the presidential campaign, ended public accusations of illegal conduct between Reed and the former airport boss and defused a crisis that had the potential to threaten Reed’s political future.

But the previously unknown terms raise new questions about how the deal was done and why it was kept from the public. Documents reviewed by the AJC and Channel 2 Action News do not show the source of Southwell’s proposed payout, and the city told the AJC that it can find no record of public or insurance funds being used, raising questions about who paid the money on the city’s behalf.

At the time, Reed was a key surrogate for Democratic presidential nominee Hillary Clinton, whose campaign vetted Reed for a possible senior administration job.

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A week after the settlement was reached, Reed and Southwell released a cryptic joint statement to the media disavowing their mutual allegations. The statement referenced a “resolution,” and said the remarks were released “in the interests of complete transparency.”

Neither party disclosed the terms of the settlement, and Reed’s then-communications director Anne Torres told the AJC at the time the city didn’t offer severance agreements.

“NO payment was made to Mr. Southwell,” Torres said in an email.

Only part of the agreement would become known to the public that year — a payment of $85,516, including health care and career counseling — that was approved that December by City Council. A resolution to council described the payment as a “full and final settlement” with Southwell.

City Council President Felicia Moore, who was a council member when the body approved the payment, said the council was misled. If the additional $147,000 payment came from public sources, it required council approval. If it was from private sources, she said, that too deserved public vetting.

“This shouldn’t have been done undercover. Period. Point blank,” she said. “It should have been done so that people knew exactly what was taking place.”

The city has no records of any such payments nor claims against city insurance policies beyond the $85,516 approved by council, a spokesman for Mayor Keisha Lance Bottoms told the AJC.

If private sources paid for part or all of the secret payout, it raises questions about what outside groups might have been promised or expected in return, experts said.

“Is there some kind of benefit or promise being made to them? Are they going to be thrown city business?” said Clark Cunningham, a Georgia State University law professor. “It’s very suspicious.”

Then-Hartsfield-Jackson International Airport general manager Miguel Southwell, left, gives remarks during a press conference in November 2015 as former Atlanta Mayor Kasim Reed, center, looks on. Documents obtained by (The Atlanta Journal-Constitution) show Reed reached secret terms with Southwell after he fired the airport boss in 2016. The settlement, which was not revealed in full to City Council or the public, helped end a political crisis after the men accused one another of wrongdoing. KENT D. JOHNSON/KDJOHNSON@AJC.COM (The Atlanta Journal-Constitution)

Lee Parks, Southwell’s attorney, said in a statement Thursday that “the manner in which the settlement was memorialized was dictated by the attorney for the City and Mayor Reed.”

The AJC and Channel 2 found the settlement among documents the city turned over to federal prosecutors in the pay-to-play corruption probe at City Hall and showed them to employment experts.

Joyce Kitchens, a partner at Kitchens New Cleghorn in Buckhead, said she’s never encountered having an outside party other than insurance cover a city’s liability in her 36-year legal career.

“I have never, ever seen this done in the public sector,” she said. “Ever.”

The Reed administration also withheld from the public a federal subpoena related to Southwell’s firing that the city received as part of the federal investigation. Delivered in September 2016, three days after Reed and Southwell publicly resolved their differences, the subpoena demanded airport contracts involving some of Reed’s political donors and personnel records for three of his cabinet members, including Southwell.

The AJC reported in June that taxpayers and City Council also did not know that the city spent about $1.7 million in outside legal work related to Southwell’s firing, including bills for the settlement negotiations.

‘This is getting out of control’

Records turned over to prosecutors from the Sept. 9, 2016, subpoena contain the eight-point “Terms of Resolution” that Reed and Southwell agreed to on Aug. 30, 2016. But the records do not reveal who ultimately paid Southwell the $147,000 called for in point two of the agreement.

The U.S. Attorney’s Office in Atlanta, which has been reviewing millions of pages of city documents as part of the City Hall investigation, declined to comment.

In a statement, Reed declined to discuss “confidential personnel matters” and called the AJC’s story a “manufactured controversy.”

“Unfortunately, we have reached a point where other people’s lives are merely fodder for clicks and news feeds,” Reed said. “It is sad and incomprehensible that this behavior continues to go unchecked.”

Emails from Miguel Southwell's lawyer to the city's hired attorney show there were problems with payments due Southwell under the terms of a settlement signed on Aug. 30, 2016. Through a spokesman, Scott Taylor acknowledged hiring Southwell as an airport consultant on projects outside Georgia, but denied any knowledge of the emails or discussions among the attorneys, nor was he involved in settlement discussions. (Pete Corson)

Southwell and his representatives, and former city officials familiar with the agreement declined to be interviewed.

In emails dated October 2016, however, Parks, Southwell’s attorney, complained that his client had not been paid and mentioned a prominent developer named Scott Taylor.

“Mark this is getting out of control,” Parks wrote to Mark Trigg, the attorney representing the city. “Scott Taylor now wants a contract that absolves him from payment. We have a contract with the city. It is your obligation to work with whoever is going to make the payments without our having to separately contract with them.

“Please deal directly with Scott and resolve this for us. We have still not been paid,” Parks wrote on Oct. 21, threatening to rescind the agreement and sue.

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Taylor, CEO of the real estate company Carter, supported both of Reed’s campaigns for mayor and became one of Reed’s picks for the search committee that selected Southwell as Hartsfield-Jackson International Airport’s general manager in the spring of 2014.

In 2016, the Carter firm and a partner secured a lease with the city to build an InterContinental hotel at the airport. Reed and Southwell backed the hotel project and City Council approved the deal Sept. 19, 2016, about three weeks after Parks and Trigg signed Southwell’s settlement.

Carter also is Georgia State’s lead partner in the redevelopment of the former Turner Field and surrounding parking lots. Last year, an affiliate of Carter got about $2 million in tax breaks from Invest Atlanta for a portion of the Turner Field redevelopment’s first phase. As mayor, Reed chaired the Invest Atlanta board.

Taylor and his representatives declined to be interviewed or to answer written questions.

“Scott Taylor did not know about nor was he involved in any discussions or negotiations concerning any settlement with the city as referenced by the emails and documents shared with him by the AJC and WSB,” Mark Braykovich, a spokesman for Carter, said in a statement. “He never saw the referenced emails or documents until they were shared with him by reporters. He does not know the attorneys mentioned in the emails, and has never met them or spoken with them at any time.”

On Thursday, Braykovich provided an additional statement saying that Taylor's company, Carter, employed Southwell as a consultant. The statement did not specify when Southwell was employed or how much he was paid.

"It’s no secret that we engaged Miguel Southwell after careful vetting to join an ongoing effort with other consultants to pursue work at airports outside of Georgia around the U.S.," the statement said.

Settlement terms

The Southwell settlement document contained some standard language for a typical employee severance agreement. It stated that the city would pay for COBRA health care premiums for 14 months and $65,000 for “job placement, career counseling, relocation costs, and other professional fees and expenses associated with his transition to new employment.”

The agreement also stated that Reed would provide a reference for Southwell that matched the joint statement the men released in 2016 to “prospective employers.”

In that statement, Reed and Southwell said “they both now believe that their differences were more a matter of style than substance.”

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Kitchens, the employment lawyer, said it’s not uncommon for a city to pay COBRA and job placement costs for an ex-official, though she said the $65,000 figure appeared high.

“If I were representing a municipality, I would have grave concerns about how much I have protected my client given the terms reflected herein. It looks to me like I’ve given a lot of money away and I’ve gotten no releases.” —Joyce Kitchens, a partner at Kitchens New Cleghorn

But that’s where the similarities to a normal government severance agreement end, Kitchens and Cunningham said.

The document contained a clause — requested by the city — to keep the agreement confidential.

The inclusion of a confidentiality clause was troubling and likely unenforceable under Georgia law, Kitchens said, given that all the parties were public officials and the city of Atlanta was a public agency.

Southwell also didn’t sign the document, nor did the mayor or other officer of the city. The document does not identify which attorney represented the parties. Nowhere in the document did Southwell waive his rights to sue in exchange for the settlement.

All are standard practice for severance agreements, Kitchens said.

In fact, the document states Southwell retained the right to take “civil action” if the terms weren’t met. The AJC and Channel 2 found no such legal action.

“If I were representing a municipality, I would have grave concerns about how much I have protected my client given the terms reflected herein,” Kitchens said. “It looks to me like I’ve given a lot of money away and I’ve gotten no releases.”

Though the document stated the city would pay for insurance premiums and job placement help, no source was identified for the eight payments totaling $147,333.32, which equaled exactly eight months of Southwell’s salary.

If the money came from a private source, Kitchens said, “I don’t know of a legal pathway to do that.”

Scott Taylor, CEO of the Atlanta real estate development firm Carter, shows off renderings for the planned redevelopment of the Turner Field area in January 2017. Georgia State University and a private development team led by Carter acquired the former Atlanta Braves stadium near downtown that month. HYOSUB SHIN / HSHIN@AJC.COM (The Atlanta Journal-Constitution)

A unanimous vote with no discussion

Southwell was fired with little explanation on Friday, May 20, 2016, after two years of running the world’s busiest airport. The firing sparked weeks of sparring between Southwell’s attorneys and the mayor.

Days later, Parks penned a letter suggesting Reed wanted more control over city contracts.

“Is it a coincidence that the termination came on the eve of the award of some of the most lucrative contracts in the airport’s long and difficult history of patronage-based awards?” the letter said.

It alleged airport managers were directed by the city’s procurement department to take actions that would cause contracts “to be awarded to companies other than the highest-ranked bidder.” Parks also sought records related to certain airport contracts and issues.

Reed fired salvos of his own. In a June 2016 interview, Reed told Channel 2 that Southwell “knows that not only could I have fired him, I could have pressed charges against him.”

Southwell’s lawyers demanded Reed “publicly retract these false and defamatory statements,” or otherwise be exposed personally to punitive damages.

By Sept. 6, 2016, the men issued their joint statement, negotiated in the secret settlement.

“They both now agree that neither of them engaged in any civil or criminal wrongdoing, and any statements they made that could have been interpreted to the contrary are disavowed,” the statement said.

In December, then-Councilman C.T. Martin, introduced last-minute legislation to pay the $85,516 settlement to Southwell, along with payments to three other former employees.

The council approved the settlement unanimously with no discussion.

“We’d like to move it to the mayor’s office,” Martin said, “post haste.”


READ THE SOUTHWELL-REED JOINT STATEMENT AND THEIR SETTLEMENT

On Sept. 6, 2016, former Mayor Kasim Reed and former airport chief Miguel Southwell issued a joint statement (first page) absolving one another of criminal wrongdoing, but gave no details about a "resolution" reached in their dispute. The second page, withheld from the public, contains the previously undisclosed terms of their settlement.


Miguel Southwell’s firing and settlement: a timeline

May 20, 2016: Miguel Southwell is fired by Mayor Kasim Reed after two years as the general manager of Hartsfield-Jackson.

May 31, 2016: Southwell’s attorney Lee Parks sent a letter to Reed suggesting Southwell was fired at a time the mayor’s office sought more control over airport contracts.

June 9, 2016: Reed said in a Channel 2 interview he could have had Southwell prosecuted.

June 10, 2016: Parks sends a letter to Reed demanding he retract statements made about Southwell in seven days or “failure to do so exposes you personally to punitive damages.”

Aug. 30, 2016: Parks and Mark Trigg, who represented the city of Atlanta, sign a secret document for a settlement worth more than $230,000.

Sept. 6, 2016: Reed and Southwell issue a joint statement saying they are dropping their respective disputes and retracting prior statements. Anne Torres writes to AJC that “the city does not offer severance agreements,” and that “NO payment was made to Southwell” at that time.

Sept. 9, 2016: Federal prosecutors deliver a subpoena to Atlanta City Hall for documents related to Southwell, former watershed commissioner Jo Ann Macrina, then-purchasing director Adam Smith and contracts at the airport. The subpoena’s existence remained a secret until reporting from the AJC and Channel 2 Action News in May 2018.

Dec. 5, 2016: City announces $85,516 settlement with Southwell.

The story so far

May-June 2016: Then-Atlanta Mayor Kasim fired his airport chief Miguel Southwell, triggering a war of words in which the men traded accusations of wrongdoing.

September-December 2016: The men issued a joint statement in September referencing a “resolution” and disavowed their past allegations. In December, City Council approved an $85,516 payment to Southwell for health benefits and career counseling.

Now: The AJC and Channel 2 Action News uncovered a secret agreement to pay Southwell $147,000 more than previously known. The city has no record of the payment and the source of the money is unknown.

Our reporting

The AJC and Channel 2 Action News have broken stories and followed developments related to the federal corruption investigation at City Hall since the probe became public in January 2017. Today’s story on secret settlement terms between former Mayor Kasim Reed and his former airport chief Miguel Southwell emerged from records the city turned over to prosecutors and obtained by the AJC and Channel 2 Action News. The reporting partners previously uncovered a secret federal grand jury subpoena kept hidden from the public related to Southwell’s firing and substantial legal spending by the Reed administration to uphold it.

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