As if Capitol Hill didn’t have enough problems these days, the federal government has reportedly been investigating the state Department of Transportation (TDOT). The feds are looking into allegations that the wrong companies have been benefiting from a program that’s supposed to help construction businesses owned and managed by women and minorities.
:Meanwhile, the gremlins on Capitol Hill are stirring up more trouble. Some state government insiders are suggesting that TDOT commissioner Bruce Saltsman may himself have misused the program. State records do indicate that the program in question is one under which Saltsman and his wife, Elaine, were certified for 14 years. Bruce Saltsman has a long history in the road and construction business, but during those 14 years, his wife was listed as president of the family company.
There is little reason to think that the Saltsmans have broken the law; their business dealings are not under investigation. But critics of the Sundquist administration are raising questions, and the federal investigation has minority legislators up in arms.
Rolling with the punches
:As a rule, November and December are relatively slow news months. But the past few weeks have hardly been a time of peace and joy for the people who run the huge multi-departmental machine of state government.
Of late, the Capitol Hill spin doctors have been busier than usual, responding to media inquiries about various state officials and employees. Things began to get dramatic when Bryant Millsaps was ousted from the Tennessee Higher Education Commission. Before long, there was the controversy over whether gubernatorial aide Peaches Simpkins had misused her influence in state government to further her own business interests. (Simpkins has announced her resignation, effective Dec. 31.)
More recently, there was the revelation that state Commerce and Insurance commissioner Doug Sizemore, who apparently owned an insurance company while serving as the watchdog of the state’s insurance industry, is being investigated by the FBI.
And WTVF-Channel 5 has reported that a supervisor in the state Department of Safety’s title and registration division is being investigated for smuggling money to a convicted triple murderer at the Riverbend Maximum Security prison in Nashville. The employee, Beth Frost, got to know the prisoner while she was supervising inmate work for the Safety Department. Apparently, she and the prisoner have been romantically involved since July.
State officials taped phone conversations between Frost, who earns about $33,000 a year as a state employee, and the prisoner.
Safety Department spokesman Anthony Kimbrough says Frost’s trips to Riverbend are no longer part of her job duties, but she is still employed with the department. “We do have an internal investigation ongoing. We’ll do it just as quickly as we can,” he says.
Then, last week the Nashville Banner reported that the feds have been investigating TDOT’s Disadvantaged Business Enterprise (DBE) program. The program is designed to give a boost to women and minority-owned businesses, when it comes to getting contracts for state construction projects. The feds are responding to allegations that some companies are illegally benefiting from the program.
Word of the investigation apparently began to leak out from members of the state Legislature’s Black Caucus. Some members of the caucus are steaming because the companies being investigated are headedat least on paperby white women. What’s more, members of the caucus want to oust the director of the program, Raymon White, who is a young black Republican. There are allegations that White approved the questionable companies as “disadvantaged,” against the advice of a contract compliance officer.
Establishing the hierarchy
:The investigation has a curiously sexist edge. The feds are looking into the possibility that TDOT has given special assistance to businesses supposedly owned by white women, when the women may only have been figureheads. In some cases, the point may boil down to whether or not the woman in question actually knows anything about the construction tradeor whether her name has simply been used to circumvent the system.
While Saltsman’s former company is not among those now being investigated, files archived at TDOT’s offices in the James K. Polk Building indicate that Edna Elaine Saltsman was listed for years as the president of Rodgers & Saltsman Construction Co. Meanwhile, her husband, Bruce Saltsman, who is now the TDOT commissioner, held positions such as vice president and secretary. With that corporate structure, the company qualified for minority status under the federal standards that regulate the DBE program.
Between 1980 and 1994, the years during which Rodgers & Saltsman was qualified under the program, the company received a relatively modest $665,650 in state contracts that resulted directly from its minority status. But the company had other, more substantial, contracts too.
In fact, under the terms of the last contract Rodgers & Saltsman received from the state, the company was both the prime contractor and the designated minority contractor. That 1989 contract was for $2.9 million to widen a bridge on Interstate-40 in West Tennessee. Rodgers & Saltsman effectively ceased doing business in 1994.
:State documents indicate that, in 1974, Elaine Saltsman, together with Bill Rodgers, went into business to form Rodgers & Saltsman. State records also indicate that Saltsman bought out Rodgers several years later and became president and full owner of the company. After that date, the state qualified the company as being minority-owned.
At the time she cofounded Rodgers & Saltsman, Elaine Saltsman apparently had some business experience and may have been qualified to oversee some of the company’s operation. But it is hard to know whether she really functioned as president of the company, since it was her husband who, at the time, had most of the family’s construction company experience.
Even the state’s own files raise doubts about whether Elaine Saltsman was as active in the business as her husband was. “The 1988 and 1989 tax return [sic] show officer compensation higher for her husband than for Elaine,” says a TDOT memorandum dating from 1991. Nevertheless, the state went on and certified the company for that year.
Federal guidelines for the DBE programreferred to as Minority Business Enterprise (MBE) in federal documentsclearly state that, if women are listed as owners of firms, they must have clear and real responsibilities. “If the owners of the firm who are not minorities or women are disproportionately responsible for the operation of the firm, then the firm is not controlled by minorities or women and shall not be considered an MBE,” the federal regulations state.
According to information provided to the state by Rodgers & Saltsman, Bruce Saltsman was in charge of purchasing and submitting project estimates for the company, while Elaine Saltsman handled finances and hiring. Both shared marketing and sales duties, the files say.
The Saltsmans were out of town on vacation this week, but TDOT spokesperson Luanne Grandinetti says it’s unfair to assume that the pair listed Elaine Saltsman as company president simply to get state contracts.
In response to critics who say that the DBE program was created to help underprivileged individuals, while the Saltsmans are successful businesspeople, Grandinetti points out that Bruce Saltsman is from a Loretto, Ky., family of 18 brothers and sisters that was anything but affluent.
Nevertheless, the current edition of the Tennessee Blue Book indicates that Saltsman came to Nashville in 1959, 15 years before the Rodgers & Saltsman Construction Co. was formed. Upon his arrival in Nashville, almost 40 years ago, he took a high-level management job with a construction company, McDowell-Saltsman Inc.
:Based on the evidence of Elaine Saltsman’s business experience, it seems clear that the Saltsmans’ status as a DBE contractor was legal. They may not have been exactly the people federal and state officials were envisioning when the program was created, but it does not appear that they were breaking the law.
Still, in one of the cases currently under investigation by the feds, questions are being raised about an apparent lack of technical knowledge on the part of the two white women listed as company owners. In that case, according to a compliance officer reviewing the application of the company in questionLockwood Construction in Camden, Tenn.there was enough evidence to suggest that the two women “owners” were depending on white males to run the business.
It’s probably too late now to know how equally, or unequally, Elaine and Bruce Saltsman shared the job responsibilities when their company was formed. One thing, however, is certain.
Don Sundquist, and his cabinet members, were voted into office in the midst of a 1994 GOP landslide that called for government to get off our backs. But the evidence strongly suggests that the Sundquist administration has done very little to slim government down.
Peaches Simpkins stands accused of having used her post to try to land a job in the private sector, in an industry that depends to a large degree on federal Medicaid payments; top Sundquist ally Tom Beasley founded a company, Corrections Corporation of America, that depends on the kindness of governments to let it build prisons. And now we know that Saltsman, who oversees a $1 billion state department, collected lots of money from a program designed to benefit minorities and women.
Kind of makes you wonder what the Republicans really stand for.
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