CINCINNATI -- To the Rev. KZ Smith, a police captain's lawsuit against the city isn't just an attack on government. It's an attack on African-American businesses from an officer with a history of racial allegations.
Capt. Jeff Butler filed his federal lawsuit last week, alleging, among other things, that City Manager Harry Black was running public funds through a company owned by one of Black's close friends.
Black admits the company got a direct-award contract -- in other words, it wasn't put out for competitive bid. The problem, he and others say: that "close friend," Al Foxx, doesn't own the company in question. Black says it was "strictly coincidental" Foxx worked for the company at the time, and that he retired nearly a year ago, a few months after the company got the contract.
And how the company came to be sheds light on the messy city contracting system Black says he inherited -- one, experts say, that exposed the city to significant risks and often left minority- and women-owned businesses out of the picture.
Black and the city's top lawyer argued the allegations in Butler's lawsuit are nothing more than bogus claims from an employee upset he didn't get a promotion. Butler alleged he should have become an assistant police chief, but Black and Assistant City Manager Sheila Hill-Christian retaliated because he raised concerns about the city's use of 911 funds and a Homeland Security grant. City Solicitor Paula Boggs Muething said he's trying to "paper over" his deficiencies, leaving him to "wildly speculate and make baseless claims and allegations against the city manager and other city officials."
"The complaint itself lacks merit completely," Boggs Muething said. She, Black, Mayor John Cranley, several city department heads and black business leaders spoke at length with WCPO on Tuesday about city contracts and the emergency communication funds at the heart of Butler's lawsuit.
RELATED: Here's what city says Butler got wrong
Brian Gillan, Butler's attorney, argued his client is "standing up for what's right and asking questions." He said they tried to work out the issues before suing, but the city wouldn't budge.
Butler didn't take his concerns to the Ohio State Auditor's Office or the Ohio Ethics Commission, Gillan said.
"He is using the legal system to protect his rights and respond to retaliation," he said. "This is not at all an attack on black businesses."
In Butler's lawsuit, he claimed Black required departments to use BFX LLC, a joint venture between D.E. Foxx Construction and Brown E&C Construction. State records show Al Foxx was the company's incorporator. Both D.E. Foxx and Brown E&C are minority firms that had worked with the city for more than a decade before Cranley hired Black from Baltimore. And both have solid reputations in the local business community, working for Fortune 500 companies.
BFX acts as a "third-party administrator" for facility repair and maintenance work. Patrick Duhaney, Cincinnati's chief purchasing officer, explained it this way: Let's say the city's health department wanted to renovate a dental clinic. The department would contact BFX and explain what it wanted and how much money it had. BFX would come up with a proposal; if the department and BFX reach an agreement on the scope and budget, they move forward on the project. BFX has a list of contractors capable of doing the work; the city pays BFX, and BFX pays the contractors.
Duhaney said if a department doesn't want to use BFX, it can go straight to the city's main purchasing office and put a project out for bid the traditional way.
Cincinnati has paid BFX at least $2.7 million since November, online records show. The city pays the firm on a "fee for service" basis, Duhaney said, with a maximum of 12 percent. Butler's lawsuit alleges BFX collects a 15-percent markup.
READ Black's and Duhaney's memos on BFX.
BFX's contract runs for two years, from September 2016 to August 2018. Duhaney said it got a direct award because it's helping with a pilot program to change how the city contracts for repairs and maintenance. The state of Ohio has a similar program, but Duhaney said he didn't think its contractor would be able to take on city work because it was just starting up. And his office just didn't have enough data to put out a proposal for bids, he said.
The "third-party administrator" model is an effort to replace "master service agreements" for routine construction and repair work, Black said. He and Duhaney said they found those master service agreements were being abused. Internal controls were minimal to nonexistent, and major problems included contractors not having proper bonding for a project; workers not being paid the proper prevailing wage; and construction work totally out of a contract's scope.
Another major issue: Minority- and women-owned businesses got precious little of the work done under master service agreements. The Cincinnati Park Board used master service agreements to build an entire phase of Smale Riverfront Park. As WCPO uncovered last year, less than 2 percent of the money for that work went to businesses owned by women or minorities.
Gene Ellington, an economic inclusion consultant, agreed master service agreements were problematic.
"I had an MSA; they terminated my MSA, but it was the right thing to do," he said.
The "third-party administrator" is changing those numbers, Black and Duhaney say, ensuring the city meets its economic inclusion goals.
Black says Foxx was one of his colleagues in Baltimore and they still talk every few months. "Great guy, high integrity," Black said. "He's become a friend through the years." He denied BFX got any unfair advantage because of that relationship.
Duhaney said he didn't even go to D.E. Foxx first; he said approached Brown with the idea, and Brown took it to D.E. Foxx.
Smith, pastor of Corinthian Baptist Church, wonders why Butler would bring up the allegation against Black now.
"He's attacking minority-owned businesses. As an advocate for minority-owned businesses, we can't let this happen," Smith said. "When attacks like this come, it's trying to bring the numbers down."
He also raised an issue now nearly 20 years old: Butler was accused of using a racial slur during an interview with the police department's Internal Investigations Section in February 1999. The allegation didn't come to light until five years later, when some members of Cincinnati City Council gave a copy of the tape to then-City Manager Valerie Lemmie.
The first to report its existence to Lemmie: Cranley, at the time serving his second full term on council.
"The contents are shocking and outrageous," he wrote in a Jan. 7, 2004 memo. "I realize that you have not likely known about the existence of this tape. Please let me know what actions have been taken and/or can be taken."
Butler was alleged to have said: "Can you go get my gun for me so I can go lock up some n*****s?" He denied using the slur. Instead, he said he thought he used the word "dopers" or "dealers." In 1999, he was a sergeant in the Street Corner Unit and said he worked on busting drug dealers and users.
None of the other officers in the room for the 1999 interview recalled Butler using the slur, according to an internal investigation report from March 2004. Cincinnati Police Capt. Dan Gerard, who led the investigation, said he let those officers watch the videotape before they answered questions because so much time had passed.
Two separate forensic reviews -- one by Sound Images in downtown Cincinnati, the other by the FBI -- couldn't conclude what Butler said.
Councilman Christopher Smitherman, then in his first term on council and often at odds with the police department, had an audio expert with Indianapolis-based ISA Forensics check the recording. That investigator said he believed Butler did say "n*****s," but he couldn't be sure with absolute certainty.
Suzanne Boyce, a linguistics expert at the University of Cincinnati, listened to the recording and also tried to read Butler's lips. She didn't use any audio enhancements, she said, because they might change what can be heard. But based on what she heard and saw, Boyce thought Butler most likely used the slur.
Kathy Y. Wilson, columnist for CityBeat, said she knew what she heard.
"Please believe me, Butler says (n*****) so freely in the videotape he doesn't choke, hesitate or even slur the slur," she wrote back then. "It's easy to hear (n*****) when you've heard (n*****) before."
In its March 2004 report, the police department's Internal Investigations Section recommended a finding of "not sustained." It might not have mattered: The police union contract has a three-year time limit on using city records -- in this case, the video recording -- to discipline an officer. Even if investigators found Butler did use the slur, the city couldn't have punished him anyway.
Black denied the incident was a factor in who he selected to become an assistant chief. Thirteen captains applied for three assistant chief positions, he said. A review panel -- which included Hill-Christian, Police Chief Eliot Isaac, Human Resources Director Georgetta Kelly and Assistant City Manager John Juech -- recommended three candidates to him. He agreed with panel's choices, he said.