Underwood Announces Settlement In JFK Ground-Handling Kickback Case

Travelers check in for flights at Kennedy Airport on Nov. 21. AP Photo/Mark Lennihan.

Travelers check in for flights at Kennedy Airport on Nov. 21. AP Photo/Mark Lennihan.

By Jonathan Sperling

New York State has reached a $12.3 million settlement with an airport ground handling company that made undisclosed payments to executives of key clients at John F. Kennedy Airport, Attorney General Barbara D. Underwood announced on Thursday.

Amid an ongoing investigation into the contracting and procurement processes at JFK Airport in Jamaica airport ground handling company Ground Services International (GSI) agreed to pay the sum after making fraudulent kickback payments intended to influence various contracts the company had at JFK Airport and in other airports nationwide.

AG Underwood’s investigation, known as “Operation Greased Runway,” has also revealed that GSI expanded its business and won new contracts with two major companies, British Airways and Terminal One Group Association L.P. (TOGA), while simultaneously making undisclosed payments to the companies’ key executives.

Edward Paquette, the former Executive Director of TOGA, was recently convicted of crimes related to the kickback scheme. He was also required to pay a $2 million settlement.

“New Yorkers deserve safe airports where businesses play by the rules. Yet these brazen, longstanding pay-to-play tactics undermined the integrity of contracting at JFK — allowing greed to trump fairness,” said AG Underwood said in a statement. “Our investigation continues, and we’re committed to rooting out corruption wherever it exists.”

Longtime GSI President, Jeff Kinsella, secretly agreed to provide an ownership interest in GSI to a senior British Airways executive who had influence over procurement decisions at the airline, while that executive was promoting GSI’s services within British Airways, according to the investigation.

From 2009 to 2016, Kinsella made regular payments to the British Airways executive that totaled over $1.2 million, all the while British Airways expanded its business with GSI substantially. When Kinsella later sold GSI in 2016, the British Airways executive received an additional $3.6 million from Kinsella. Neither of the payments were disclosed to British Airways, the Port Authority, or any other entity in the airline industry.

GSI also made illegal payments to TOGA Executive Director Edward Paquette while he served as the “key decision maker with respect to the contract for ground services as JFK’s Terminal One,” according to the investigation. Paquette has pled guilty to first-degree commercial bribe receiving, a felony.

While secretly making these illegal payments, GSI profited in the millions of dollars from its contracts at Terminal One and Terminal Seven at JFK Airport with British Airways and TOGA respectively.

“Today’s announcement exposes a pay to play scheme that enabled Port Authority tenants and vendors to game the system and award business in exchange for payoffs and greed versus integrity and fairness,” Michael Nestor, inspector general for the Port Authority of NY & NJ said in a statement. “The Port Authority of NY & NJ Office of Inspector General and the New York State Attorney General will work vigorously to identify and root out corruption and ensure that all tenants and contractors conducting business at our Port Authority facilities do so with the highest degree of honesty, integrity, and fairness.”

In addition to the hefty monetary fine, GSI is required to implement and maintain an anti-bribery and corruption policy, and to train employees on that policy annually. The company will also establish an anonymous tip line where employees can report suspected violations of the policy.