There are stories of men and women who start from very humble beginnings and who are able to build amazing lives of success and ethical contributions to society. Then there are stories of those who had great potential and promise and who went off the tracks and chose unethical roads. Now Ivan Valdes faces charges stemming from his procurement fraud at Miami International.
Ivan Valdes started out in his work life cutting grass. Through hard work he became the director of terminal maintenance at Miami International Airport making a nice salary of $98,000 a year. He supervised 100 people and carried a great deal of success. It was apparently not enough for him. He decided to pursue an unethical path – procurement fraud.
Luxury without work
The giveaway to this scandal might have been Mr. Valdes’ exorbitant lifestyle. While he made a good salary, it didn’t add up that he could afford hand-tailored suits, designer shoes, rent sky boxes for shows and buy a $69,000 Porsche 911 Carrera.
As the director of terminal maintenance he was given the authority to make purchases. He was trusted. He took that trust and went in a different direction. He decided to skim $5 million from the Miami International Airport through a light bulb purchasing scam – a simple form of procurement fraud that governmental entities face frequently.
He had help, of course. The scam was made in conjunction with a light bulb vendor and supplier. Together they played with light bulb wholesale pricing. Collusion in the procurement fraud arena is fairly common unfortunately.
Valdes wrote orders for 9,000 LED bulbs amounting to almost $9 million, even though at wholesale they were valued at only $3.5 million. Valdes and his cohorts at the lightbulb suppliers pocketed more than $5 million. This scam took place over a period of five years.
He got away with it because the person who was the county’s inspector general (the person overseeing airport corruption) did not realize the collusion extended to the supplier. Not only were both the director (Valdes) and his crooked suppliers benefitting, but their arrangement blocked any legitimate competitors from effectively bidding on contracts.
While Valdes faces at least a 10 year sentence because this is a federal crime, it raises an even more serious set of questions as to the entire bidding process at the airport. There is a distinct possibility that other departments who have been unsupervised could be at risk as well.
Who reported to whom?
How does it occur that the oversight and checks and balances at Miami International Airport were so lax? I think it is often a matter of no infrastructure put into place to insure fiscal and ethical responsibility. Systems are designed to keep people between the ethical lines, but when they are lax massive frauds can make it through the cracks.
An airport is not usually seen as a “money making venture.” It is part of a city’s services to enable transportation. While there are multiple vendors contributing revenues to enable the airport’s operation, we normally don’t see the airport itself as a profit center, rather a part of government.
As such, government is not trusted or valued. Far too often, government whether local, state or federal is run without regard to those who fund it i.e. citizens and private business. If there is no ethical sense of responsibility then the structure and the infrastructure are just seen as places we walk through to get from one gate to another.
It is impossible to not imagine that Mr. Valdes had no ethical sense of responsibility to the airport because he viewed the airport as nothing more than a taxpayer piggybank. Given the excesses of his lifestyle, he flaunted his disregard of behaving ethically because he might have convinced himself that no one cared and worse, no one “checked.” He essentially reported to no one, and it would seem that no one had any reporting expectations of him. Lax or non-existent systems create the foundation for procurement fraud.
In situations such as the Miami International Airport, my ethical take is that the checks and balances that needed to be in place should have been even stronger than in the “for profit” world.
There should have been a constant vendor review to ask questions as to why other vendors were locked out. Like it or not, there should have been red-flags raised when an employee making $98,000 a year was driving about in a $70,000 sports car.
This scandal might not have ever occurred had rigorous ethical training been instituted at the Miami International Airport. For now, Valdes faces a long jail sentence and the taxpayers have been bilked out of millions of dollars.
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