Scandal-scarred company chosen to install cameras on Gwinnett school buses

An Australian company, banned from operating traffic light cameras in Chicago because of an ongoing bribery scandal there, has been approved for a contract by the Gwinnett County Board of Education to install cameras on buses for the state’s largest school district.

The company was picked without school board members being told about the allegations against Redflex Traffic Systems — that its Chicago contract was maintained because of a $2 million bribery scheme over nearly a decade.

Now the company is being investigated by federal authorities, in addition to the city inspector general’s office, according to The Chicago Tribune, which uncovered the alleged bribery in a series of stories last year.

» RELATED:  Read the Redflex internal investigation report

A spokeswoman for Redflex said the company has transformed since the Chicago incident, completely overhauling its executive leadership and putting in place new procedures and training meant to guard against future incidents of corruption.

There are no such allegations related to the Gwinnett County contract.

Still, it’s unclear whether the camera installation schedule will be kept, because the company that lost out on the bid has filed a protest, and contract negotiations with Redflex have halted while the bid award is reviewed.

The protest, filed by American Traffic Solutions, says the school board’s decision should be reversed because Redflex is untrustworthy.

“Gwinnett County will entrust — to a private contractor — the safety of its children, the enforcement of its laws, and the collection and handling of its revenue,” the protest says. “Unfortunately, GCPS (Gwinnett County Public Schools) selected Redflex — a company that failed to disclose its history of paying bribes to public officials which is the subject of an ongoing federal probe.”

School board member Mary Kay Murphy said there was no discussion of the controversy before the board’s July 18 vote awarding the deal to Redflex. Murphy said the board should have been provided the information.

Board member Louise Radloff agreed, saying it’s an issue the board should have considered “in depth” before voting on the contract.

“I think always when we’re voting on something of such import, we want to have all the facts,” she said.

The person responsible for providing that information to the board is Superintendent Alvin Wilbanks, who said Thursday that he has asked for an internal review to make sure the district’s policies and procedures were followed when evaluating the bids. Wilbanks said he didn’t know about the controversy before the school board’s vote, but he was unsure about his staff.

“If I had been made aware of it, I would have brought it to their attention,” Wilbanks said of the school board.

Articles about the Redflex bribery scandal are easily found with a simple Google search. Likewise, there is an extensive section about it on the company’s Wikipedia page.

Cameras on stop arms

The Redflex proposal calls for installation of cameras on 100 school bus “stop-arms” by Sept. 9, and on 300 buses by the end of the year.

The cameras are meant to catch drivers who illegally pass buses while the stop-arm is out. The Redflex proposal says it will share revenue generated from subsequent fines with the school district.

The district has an overall fleet of 1,900 buses and provides the second-largest student transportation service in the country, behind New York City.

A district spokesman said five companies initially submitted bids for the contract, but only two — Redflex and American Traffic Solutions — participated in a pilot project this spring. Those were the only companies considered for the contract.

The Redflex proposal says it will install and maintain the cameras at no cost to the district. It predicts the cameras will catch between one and two violations per day for every bus equipped with a camera.

Assuming a collection rate of 65 percent on those tickets, the company would make $219,000 per month and the school district’s take would be $170,000 per month after all the cameras are installed, according to the Redflex proposal. That assumes a fine of $300 per ticket.

The company's proposal also agrees to pay $160 per month to police for each bus equipped with a camera. That money is intended to cover the cost of prosecuting the tickets a provision that American Traffic Solutions' protest says is illegal because police can only recoup the exact cost of any investigation.

“It is against Georgia’s public policy for a law enforcement agency to profit from the issuance of citations in the manner that Redflex proposes,” the protest says.

Corruption findings

The company’s contract for cameras on Chicago traffic signals exploded into one of the biggest corruption cases in the city’s history, according to The Chicago Tribune.

The newspaper found that a Redflex consultant bought Super Bowl tickets and rented a luxury hotel room for John Bills, the city’s now-retired deputy transportation administrator who was in charge of awarding the contract.

Redflex eventually hired a law firm to independently investigate the relationship between its consultant, Marty O’Malley, and Bills, who have known each other since high school. The Chicago contract was the largest stop-light camera program in the country, generating $100 million a year in revenue for the company and $300 million for the city, according to the Tribune.

In March 2013, the company released a summary of its investigative findings to the Australian Securities Exchange. They included:

  • O'Mally was paid $2.03 million from 2003 through 2012, and he was probably expected to pass some of that money on to Bills, the city official. Most of the money, $1.57 million, was paid during a four-year period beginning in 2007, when the city's program was expanding.
  • The company covered expenses on 17 trips for the city official between 2003 and 2010. Expenses paid by the company included flights, hotels, rental cars, golf outings and meals, and were valued at more than $20,000.

“The investigation concluded that the arrangement between the city program manager, the consultant and Redflex will likely be considered bribery by the authorities,” the Redflex report says.

In March, the U.S. Attorney’s Office issued subpoenas in the case, which was the first indication that federal authorities had opened an investigation. No legal action has yet been taken against company officials or Bills.

Since the company’s disclosures, Redflex has announced the resignations of its president, chief financial officer, top salesman and lead attorney. And in February, Redflex asked the Australian Securities Exchange to halt trading on its stock to prevent a massive sell-off as news broke about the widening corruption probe in Chicago. Trading resumed four days later.

Redflex spokeswoman Jody Ryan said the company has 40 new contracts since its investigative findings were disclosed. The company has 10 contracts in Georgia.

“We are certainly moving forward,” Ryan said. “Gwinnett obviously is a great indicator of our ability to move forward with our products. We’re grateful for the opportunity.”