NEW ORLEANS — Mayor LaToya Cantrell’s administration is promising more concrete steps to improve the permitting and building inspection process and hold inspectors accountable after releasing two reports detailing deep corruption and dysfunction in City Hall’s troubled Safety & Permits Department.
One report by an outside law firm found nearly every city inspector believes his or her colleagues have been taking bribes and the department is overrun by a “culture of distrust.” It says inspectors were encouraged by supervisors to ignore policies and procedures implemented by former Mayor Mitch Landrieu’s administration to make sure inspections were done completely and correctly, a critical step to ensure construction projects are safe and up to code.
The other report, an internal audit, found that even after a federal corruption probe and the collapse of the Hard Rock Hotel laid bare a widespread problem of inspectors not showing up at construction sites and using contractors’ photographs to falsify their inspection reports, those issues remained a problem for some staff members into 2021.
The most explosive findings come from an investigation by Philadelphia law firm Morgan Lewis. It was led by New Orleans native Kenneth Polite before he became assistant U.S. attorney general last year. The report was completed in March, but only released to WWL-TV this week, in response to a public records request.
The Morgan Lewis investigators interviewed 25 current or former city inspectors and the report says nearly every one of them alleged that other inspectors were involved in “bribery activity.”
One was Kevin Richardson, a former city inspector who left the city in 2015. In 2019, he pleaded guilty to bribery charges and was just sentenced to 30 months in federal prison for taking $65,000 in bribes from contractors.
Richardson admitted he took money to approve contractors' work without showing up to inspect it or to make violations go away without assuring they were fixed. Richardson also admitted bribing another Safety & Permits employee to help approve contractors’ permits. The Morgan Lewis report identifies that permit analyst as Richella Maxwell, who was fired by the city but has never been charged with a crime.
In his interview with Morgan Lewis, Richardson said he paid Maxwell $3,000 to expedite permits for certain contractors.
WWL-TV reached out to Maxwell and her attorney when she was fired in 2019 and again Friday but has not heard back.
The Morgan Lewis report says several inspectors and supervisors interviewed by Polite’s team also made bribery allegations against Randy Farrell, the owner of IECI, the biggest third-party inspection firm in the area. Contractors can hire certified third-party inspectors to perform inspections on the city’s behalf, and the report alleged Farrell made sure that happened more often.
“Richardson alleged that Farrell paid the city electrical inspectors on a weekly or bi-weekly basis to delay city inspections, resulting in builders turning to third-party inspectors,” the report says.
City Chief Administrative Officer Gilbert Montaño called that and other allegations of fraud in the Morgan Lewis report “deplorable.” He said the city is working diligently to tighten its rules and regulations governing third-party inspectors.
Farrell also granted an interview to the Morgan Lewis investigators, in which he denied soliciting or paying bribes. But the report says Farrell did admit hosting regular lunches for government electrical inspectors until the city’s inspector general told him “such meals could be viewed as improper.”
Long after the Morgan Lewis interview, Farrell pleaded guilty to federal tax fraud charges, including hiding some of his income from IECI. He was also charged in Jefferson Parish with falsifying building inspections, but he has not been charged with bribery.
His defense attorney, Rick Simmons, noted the Morgan Lewis report states that Farrell provided “helpful information regarding third-party inspections” and his interactions with Safety & Permits employees. Simmons also pointed out that the report calls the allegations of previous bribery “unsubstantiated.”
The city also released an internal audit of its Safety & Permits operation. It found 62% of all building inspections in the city in 2020 were done by third-party inspectors. Montaño said he wants to see more inspections done by city employees, but says Safety & Permits doesn’t have the staff to do them all.
The internal audit also showed the city’s in-house inspectors still need stronger oversight. The auditors reviewed GPS data from inspectors’ vehicles to determine that, in half the cases they looked at, staffers failed to park within 1,000 feet of an inspected site on the day of the inspection. That’s seen as a major red flag, though it’s not conclusive proof that an inspection was faked.
The auditors also reviewed a sample of more than 3,000 inspection reports and determined that 17% of them lacked any photographs. Photos help to prove the site was inspected in person.
The city said it’s making more explicit the requirements for inspectors to park their city vehicle within 1,000 feet of the construction site and to file detailed photographs to prove they were there. But some version of those requirements has been in place since 2014, when former Safety & Permits Director Jared Munster implemented them.
The requirements were reiterated in strident terms in September 2019, in secretly recorded audio of an emergency inspectors’ meeting. In it, the inspectors read through the 2014 policies, and Munster’s successor as director, Zach Smith, implored his staff to follow them.
“If we don't do a good job keeping those records and creating those records and doing our jobs, then everybody is relying on that and it's all gonna come tumbling down,” Smith said at one point.
Less than a month later, the Hard Rock Hotel did tumble down, killing three workers and shutting down a major downtown intersection for over a year.
A joint WWL-TV/Times-Picayune investigation a few months later tracked inspectors’ city vehicles and found three of them had failed to show up for key inspections at the Hard Rock. One of those inspectors, Julie Tweeter, was found to have conducted no-show inspections at the Hard Rock after attending the September 2019 meeting.
The Morgan Lewis report found that even after all that came out, many inspectors still said it was OK to accept photographs from contractors “in lieu of going to a job site.”
“That was probably one of my most concerning issues that came out of the audit, but I'm glad it came out of the audit,” Montaño said. “I mean, that's the whole idea. That's the whole purpose of this.”
Asked how what the city is doing now is different from what Munster tried in 2014 and Smith reiterated in 2019, Montaño said they’ve implemented “clear, articulate procedures that are actionable if you violate them. And secondly, management oversight that is clearly paying attention to whether or not those procedures are followed.”
Montaño says new hires, including Jay Dufour, who replaced Smith as chief building official, are helping to root out problems and improve the permitting and inspection process. But he admits the department is still understaffed and its inspection and permitting process is still too convoluted.
He knows it will take a while to earn back the public’s trust in a critical safety function.
“We're not spiking the football,” he said. “I won't even say what yard line we're on, frankly. But we're making forward progression.”