United May Not Be Prosecuted for Bribery Scandal, But It Did Have to Release All the Details

Remember that whole bribery saga that led to United CEO Jeff Smisek losing his job last year? Well, there is now a resolution to this whole thing, and it’s a good one if you like soap operas. United has entered into a Non-Prosecution agreement with the US Attorney’s Office that puts an end to the ongoing investigation. In exchange for this, United had to admit wrongdoing, pay $2.25 million, and Port Authority United Shakedownstrengthen its anti-corruption policies. You’d think that’d be enough, right? Oh no, and we should all be thankful. United also had to release details of everything that happened. It’s juicy.

If you’d like to read the whole thing, you can follow along here. What we knew before was that United was trying to get some infrastructure work done at Newark Airport, but the Port Authority kept stalling on the project. United loosened the logjam by magically starting a flight a couple days a week from Newark to Columbia, SC. The flight just happened to be timed exactly when David Samson, the Chairman of the Port Authority (the entity that runs Newark) wanted to fly to his home 50 miles outside Columbia. Coincidence? Of course not.

The bloodshed happened last September when Smisek was fired along with Nene Foxhall (EVP Communications and Government Affairs) and Mark Anderson (SVP Corporate and Government Affairs). Now that the details have been released, we can find out what actually happened. It’s even easier when crossing with the more detailed case against Samson (link via View From the Wing). The names of the players aren’t given, but you can draw your own conclusions…

United Employee 1 (UA1) “was a senior executive at United based at its headquarters in Chicago with authority to approve or disapprove the addition or cancellation of routes in United’s network.” Jeff Smisek was also a senior executive with this authority.

United Employee 2 (UA2) “was an executive at United based at its headquarters in Chicago who was primarily responsible for United’s interactions with public entities, including the Port Authority, and who reported directly to United Employee 1.” Nene Foxhall was the EVP of Communications and Government Affairs (communicating with public entities), based in Chicago, and she reported to Jeff Smisek.

United Employee 4 (UA4) “was an employee of United based in Washington, D.C. who interacted with public entities on behalf of United, and who reported to United Employee 2.” I believe Mark Anderson was based in DC and reported to Nene Foxhall.

Again, we don’t know for sure who these people are, officially. Now, let the story begin.

Way back in 2011, United and the Port Authority agreed on a deal for United to build a widebody hangar. Good plan, but it required approval at a board meeting. Shouldn’t be a problem, all is well.

Before any vote was taken, these execs all went to dinner with Samson from the Port Authority and a consultant who was helping with this process. At the meeting, it became clear that Samson wanted a nonstop to Columbia back. It used to exist under Continental but had been cut because it lost money. United’s team said they’d take it under consideration, looked at it, found it would still be unprofitable, and decided not to move forward. All good so far.

In November, United was expecting its hangar proposal to be voted on. It wasn’t included on the agenda. The next day, UA2 spoke with the consultant and learned that Samson was mad about the Columbia route. It was decided to revisit the issue.

On December 8, Samson put the hangar back on the agenda and it was approved, but United hadn’t agreed to reinstate the flight yet. It was still concerned about its overall relationship with the Port Authority, and Samson’s willingness to flex his muscles with the agenda must have scared the airline.

After some back and forth, UA2 took it back to UA1 to try to get it pushed through. UA1 agreed. It even went as far as UA2 asking the consultant what time Samson wanted his flights scheduled.

What’s most incredible to me is that ” At no time prior to reinstating the Newark/Columbia Route or during its operation did United consult with any legal counsel or compliance personnel or notify any law enforcement officials about the discussions regarding the Newark/Columbia Route.”

Smisek is an attorney. He should have known better. And United is lucky that it isn’t being prosecuted for this.

The route did start up in September 2012, only twice a week when Samson wanted it. In March 2014, the route disappeared once Samson was out of a job over a totally different scandal. In the meantime, he used that flight 27 times. He was probably the only one.

If you read the court docs against Samson, you might even begin to understand why United decided to go along with this. This was an old-fashioned shakedown, and United didn’t want anything standing in the way of its plans to improve its Newark operation. But there’s a little problem called “the law” that United really should have considered before going along with this.

This feels like ancient history now, but it still reads like a great soap opera and would make for a great TV movie drama. And if anyone wants to make that movie… don’t you think Alan Ruck would make a great Smisek?

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