Taking Care of Business

[February 27th, 2008]

One of Sho Dozono’s biggest selling points in his mayoral run is that he’s a businessman.

Kicking off his campaign in January, Dozono said, “With my experience in business…I think I’m more than qualified to stand for this office.”

But if Dozono wins, those same business bona fides present another problem: how to handle conflicts of interest stemming from his businesses’ public-sector contracts.

Dozono has a sizable stake in Broadway Cab, which the city regulates through both a review board whose members are appointed by the commissioner in charge of the Bureau of Licenses (that council member now in charge is the mayor.) And Dozono’s chief business, Azumano Travel, is the official travel agent for city of Portland employees and many public agencies around the state.

City ethics rules suggest a Mayor Dozono would either have to sell his ownership stakes, relinquish his existing city contracts, or recuse himself from certain official duties—including discussions on the city’s travel budget.

City code requires officials to “avoid financial conflict of interest” and to refrain from participating in decisions that could affect their personal fortunes. The code also prohibits the city from buying goods or services from any city employee, or any business in which the employee’s stake was 10 percent or more during the previous year.

Chris Thomas, Portland city attorney from 1977 to 1984, says Dozono’s stake in Broadway Cab and Azumano Travel would pose potential or actual conflicts of interest if Dozono is elected mayor.

“Typically, what the person would do would be to err on the side of caution,” Thomas says. “He would just say, ‘I can’t participate in that.’”

Dozono appears ready to sell, if elected. “I’m not the first person to face this issue,” Dozono tells WW in an email. “Innovative mayors in San Francisco and New York, for example, have been elected in part because of their business skills, and once in office they divest themselves of ownership interests consistent with the laws in their cities so as to avoid the perception of conflict of interest. I would do the same.”

For two decades, Dozono has been in charge of Azumano Travel, founded by his father-in-law, George Azumano, in 1949. Dozono, who owns the business, grew the travel company even as the overall industry was in decline, thanks to deals struck with big corporations and public agencies.

Today, Azumano claims gross annual sales of over $217 million but does not release detailed financial reports.

According to the Airlines Reporting Corporation, Azumano is the country’s 13th-largest travel agency, handling over 245,000 bookings in 2006. The prior year, nearly half of Azumano’s bookings came from its biggest client, Wells Fargo Bank, according to the Portland Business Journal.

Dozono says 6 percent of his business comes from public-sector contracts. WW’s analysis, however, of other sources such as industry group reports and public documents suggests about two-thirds of Azumano’s non-Wells Fargo business comes from public agencies.

Azumano is the exclusive travel agent for state employees in Oregon, with a contract worth at least $5 million. It is also the exclusive online booking agent for Washington state employees, a deal worth $220,000.

The original Oregon contract was non-competitive, because no other agencies responded to the state’s solicitation for bids in 2000 (see “Sho Dozono’s Rules,” WW, Oct. 30, 2002). The contract, renewed in 2006, expires at the end of this year.

River City Travel president David McElveen says his company lost its bid for the state travel contract in 2005, and that he wishes the state would consider using multiple contractors to save money. (The Port of Portland, where Dozono used to serve as a commissioner, has used River City Travel since 2006.)

The state deal also gave Dozono’s company access to many more markets. Under Oregon’s “cooperative purchase” program, cities, universities and other public bodies can avoid competitive-bidding requirements by paying a fee to participate in existing state contracts.

That’s how Azumano came to be the city of Portland’s travel agent. The city spent $1.2 million on travel in the fiscal year ending in July 2007, including air fare, hotel and meals.

Azumano is not Dozono’s only business that could pose a conflict of interest if he became mayor. Dozono has an 18 percent stake in Broadway Cab, though he says he has no day-to-day responsibilities.

Besides being regulated by the city’s Bureau of Licenses, Broadway Cab has a $730,000 agreement with Portland Public Schools from 2006 through 2009 to pick up homeless kids on an as-needed basis.

The City Council does not oversee schools. But Dozono is a board member emeritus of the Portland Schools Foundation, which some reckon to be more powerful than the School Board.