New Orleans, L.A. Home Depot Caught Up In Bribery Scandal
Home improvement giant Home Depot was linked to a bribery scheme with former New Orleans, Louisiana Mayor Ray Nagin in mid January that surprised even people in The Big Easy.
According to the Atlanta Business Journal, Nagin was indicted on 21 counts of corruption, including conspiracy, money laundering and wire fraud. Although many accounts of the scandal did not mention Home Depot, the Business Journal noted that the federal government had investigated the former Mayor's involvement in a new Home Depot store in New Orleans.
Home Depot needed the city to sell it several streets as part of the site where it wanted to build a new store. But one city councilwoman wanted to require that Home Depot enter into a "community benefits agreement." Home Depot resisted such an agreement, and apparently Nagin offered to help Home Depot deal with the community groups that were delaying the project. The Mayor reportedly lobbied the city councilwoman who was pushing the agreement to drop the issue. "The administration pressured me to forgo negotiations" because she was told Home Depot had labeled it a "deal killer."
According to the Times Picayune, in January of 2007, Nagin traveled to Chicago and Las Vegas on a private jet with two business associates, who lobbied Nagin to help get a deal with Home Depot. A week after he got back from Vegas, Nagin called Home Depot's CEO and left a voice mail "stating he would help us with the community groups causing us problems," according to an email from Home Depot's project manager.
Home Depot was concerned enough about the latest link Nagin to issue this statement: "We're not aware of any allegations of wrongdoing by The Home Depot, and there are none mentioned in the indictment."
Yet Home Depot is mentioned all through this story. Nagin's controversial dealings with Home Depot go back at least 5 years. In 2008, The Times Picayune newspaper reported that a company partly owned by then Mayor Naging had been given a contract with Home Depot to install granite and marble countertops from 5 Home Depot locations.
While Mayor, Nagin had helped Home Depot break ground for new store in New Orleans. During the Mayor's tenure, Home Depot got a long-term property tax break, and was sold streets needed for the site for a price considered below its appraised value. Nagin's family business with his two sons, Stone Age, LLC, a granite and marble company, had an existing exclusive deal with Home Depot to cut and install granite countertops for Home Depot customers. As the Times Picayune reported, "Competitors of Stone Age are wondering how a relatively new company could have landed a deal" with Home Depot.
The giant home improvement chain told the newspaper in 2008 that its contracts with Nagin's company were "absolutely no different than how we deal with anyone else. We review a number of things. We're looking at their capacity to provide the work, their proof of financial stability, we ask for references from customers, that sort of thing. We do background checks for anyone that's going to be at a job site or in a customer's home."
In 2008, Home Depot had two locations in New Orleans. As part of its Central City project, Home Depot was granted a tax break. Under the deal, Home Depot paid an annual tax of $149,637 for 20 years, instead of an amount based on the property's new value. The deal -- called a PILOT, or payment in lieu of taxes -- gave Home Depot $439,942 per year, or around $8.8 million less than it would have paid if its property had been assessed at market value.
This month, the FBI New Orleans Division charged that "Nagin used his public office and official capacity to provide favorable treatment, including awarding contracts, that benefitted business and financial interest of individuals providing him with bribes and kickbacks in the form of checks, cash, granite inventory, wire transfers, personal services, and free travel." The indictment charges that Nagin accepted $72,250 in bribes and $50,000 in granite inventory, and nine payoffs in the form of wire transfers totaling $112,500.
Like it or not, Home Depot's store approvals in New Orleans, and its tax breaks have become a key part of the discussion around Ray Nagin's indictments.
What you can do: Readers are urged to call Home Depot at 1-800 Home-Depot with the following message:
"Your dealings with former New Orleans Mayor and his private granite installation business sounds too familiar -- like Wal-Mart's bribery in Mexico. I suppose that's why they call New Orleans The Big Easy.
This story is likely to only get worse for Home Depot if it goes to trial. What involvement did Mayor Nagin have in your PILOT deal? What was the connection between Home Depot and Nagin's installation contracts? What about the public streets that were sold to Home Depot at a bargain basement price?
None of this looks very good for Home Depot, and a cynical public is likely to assume the worst will come out during the trial. The story appears to have conflict of interest written all over it, and the FBI charges of bribes and kickbacks have snagged your company in a story that Home Depot may hope never gets to court."