Short-Changed!

Lack of competitive bidding likely costs POLA millions annually, new lawsuit reveals

A recent lawsuit filed by Vopak brings to light a startling reality: The Port of Los Angeles does not normally use competitive bidding to get market value from its long-term leases — its primary source of revenue — resulting in the loss of millions of dollars annually.

Vopak operates a marine terminal and storage facility at Berths 186-190 of the Port of LA, where the company handles petroleum products, chemicals and biofuels with 82 tanks and a total capacity of almost 2.4 million barrels. Vopak also has a terminal at the Port of Long Beach, with 55 tanks and a capacity of almost 350,000 barrels. These are just two of 72 terminals it owns worldwide, either in whole or in partnerships.

On May 24, Vopak filed suit against its former West Coast sales and marketing manager, Anthony Santich, alleging breach of his employee confidentiality agreement and his separation agreement, interference with a business relationship and a prospective relationship, misappropriation of trade secrets and conspiracy. All these allegations derive from claims that Santich provided information arguing that the Port of LA was significantly undervaluing the 30-year lease it was negotiating with Vopak—which would become apparent if the port opened up the lease to competitive bidding via a request for proposal (RFP). Santich also allegedly provided evidence of discriminatory practices to Joe Gatlin of the San Pedro/Wilmington NAACP.

Three days later, Judge Michael P. Vicencia denied Vopak’s application for a temporary restraining order, and on July 13, Santich filed an “anti-SLAPP” motion to dismiss. That motion stated, in part:

It is indisputable that the people of Los Angeles have a “public interest” in the operation of the Port of Los Angeles. That includes, of course, whether operators at the Port have diverse hiring practices. That also includes whether the Port’s operators are conducting business in a manner that benefits the community, or in the alternative, are seeking to extract benefits at the expense of the community. The Port conducting a Request for Proposal (“RFP”) is an excellent way to get at the heart of both such issues, providing a transparent process to assure that these valuable leases on public land are awarded to the operators that serve not just themselves, but the community’s goals as well.

Yet, plaintiff Vopak Terminal Los Angeles, Inc.’s (“Plaintiff”) complaint (“Complaint” ) seeks to silence a former employee for speaking out about these very issues…. This is the essence of a strategic lawsuit to prevent public participation, and it is for such circumstances that California’s Anti-SLAPP Statute exists.

However this lawsuit is ultimately settled, the underlying situation is profoundly troubling. The crux of the matter comes through clearly in a Jan. 13 email to Councilman Joe Buscaino’s chief of staff, Jacok Haik, from Daniel Xia, another former Vopak employee, whom the Vopak lawsuit accuses of being a go-between:

“I think the main takeaway is that the POLA is likely leaving more than $100M plus on the table with the current Vopak negotiation…. An RFP open bid process of the terminal is the best way for POLA to get their terminal assets’ real value.”