States fight fraud in road contracts
| Tampa, Fla.
Some state governments are beginning to collect millions of dollars from road contractors in settlement of civil and criminal cases involving bid-rigging charges. But Florida's attorney general says the states can't possibly begin to recoup the money they have lost.
''Our goal is to try to recover as much money as possible for the taxpayers of the state,'' says Attorney General Jim Smith. ''But bid rigging has taken place for so many years all over the United States that it would be impossible to go back and recover it all.''
Mr. Smith estimates that collusion among contractors to set prices has increased the cost of road construction significantly. The practice has been going on for so many years, he says, that many companies considered it a standard business procedure.
The companies are charged with a variety of antitrust violations, including market sharing, bid rigging, buying materials from each other at artificially inflated prices to increase the cost to the state, and controlling essential materials and their prices to nonconspirators.
With a $9.7 million settlement against Cone Brothers Contracting Company of Florida and its parent firm Hardaway Company of Georgia - the largest civil settlement so far in the US - Florida has taken the lead in the amount of money states have collected in civil suits against road contracting companies.
Florida has collected $14.7 million to Georgia's and North Carolina's $12 million, Tennessee's $10 million, Virginia's $5 million, and South Carolina's $2 million.
These proceedings are in addition to US Justice Department investigations into bid rigging. The federal government already has resolved 182 cases through guilty pleas and taken 29 cases to trial in 17 states. It has collected $47 million in fines, and many corporation executives found guilty have been sentenced to prison terms, says a Justice Department spokesman.
In Florida, some companies have settled with the state without a trial because the attorney general has promised to allow companies that cooperate to stay in business.
''The companies that get to us first with the most information that will convict other people, and who have bank balances large enough to pay our fines, will be the ones that survive,'' Smith says.
''But we are not slapping people on the wrist and letting them walk.'' Some companies will be brought to trial, he says, and his office will try to get court rulings that will put them out of business.
While Florida has stuck to civil suits, Georgia Attorney General Michael Bowers says he has pursued criminal charges against the firms and officers. At least 18 firms and their executives have pleaded guilty without going to trial, he says.
But Smith says it would be counterproductive to Florida to put all the offending companies out of business - because not enough companies would be left to make new bidding competitive.
Florida and a number of other states have started using computers to track bidding patterns and pick out irregularities, Smith says. In addition, the state's new bidding law also has tightened up the process.
In Georgia, the price of road construction has come down since charges have been filed, says Bowers.
''I have been informed by our commissioner of transportation that, in his judgment, this has significantly impacted highway construction prices in the state,'' he says.