Shine sun on Va. ports

  For years, Virginia Port Authority board members have guarded the salaries of top officials at Virginia International Terminals, which runs state terminals in Norfolk, Portsmouth and Newport News.

Though the compensation of state employees who make more than $10,000 is public record under the state’s Freedom of Information Act, VIT claimed it was a private company, didn’t need to provide those details and was not subject to FOIA.

VIT general manager Joseph A. Dorto said VIT would be harmed competitively if the public knew how much he and other top VIT officials make. Shipping lines and unionized workers, Dorto said, would use the information to negotiate better concessions, and competing terminal operators would try to hire away key employees.

“We were created as a private company and it’s worked for 23 years,” Dorto told the Daily Press. “To change that would be disastrous.”

But Port Authority members are appointed by the governor, and it was the authority that created VIT.

VIT gets a federal tax exemption as a government-owned entity performing an “essential” government service. In return for that exemption, according to the former head of the IRS’ tax-exempt division, it should be revealing the salaries of its top executives.

“Under federal tax rules, they are not private companies, because they don’t have private owners,” said Marcus S. Owens, now an attorney at the Washington law firm of Caplin & Drysdale. “And since they’re public entities, their financial information should be public.”

John G. Milliken, chairman of the Virginia Port Authority’s board of commissioners, agreed that VIT needs to become more open to the public.

“More transparency in the operations of VIT is appropriate,” he said. “We need to move in that direction.”

Another board member, Mark B. Goodwin, senior vice president and general counsel at the Richmond firm of Overnite Transportation, agreed. Publicly traded companies disclose such information all the time under Securities and Exchange Commission rules, he noted.

A ports-authority consultant also weighed in, saying VIT would not suffer competitive harm if executive salaries were made public.

New disclosure rules were expected to be approved by the authority in early 2006.

Many non-profit organizations (including VCOG) have to file IRS Forms 990, requiring some financial disclosure, including the pay of top officials. But the §115 provision that VIT files under doesn’t require the Form 990. The reason 115s don’t have to file the disclosure, Owens said, is likely because Congress assumed that the states would require it. Owens said the federal government should mandate financial disclosure in cases in which the state doesn’t act.

“My concern really arises in situations where there is no disclosure mechanism under state law,” he said. Since the public is the “ultimate owner,” he said, it by right should know.

When asked how much scrutiny the IRS provides to the §115 entities, Owens said: “Virtually none.”

A Virginian-Pilot editorial said, “Claims that disclosure could lead to raids by other terminals on local staff is a red herring. Anyone looking to hire a Virginia official need only ask him to name his price.”

The editorial added, “From all indications, things are going well at VIT. But in a publicly created institution, public accountability increases the likelihood that public interests will be served.”

The editorial also suggested a FOIA amendment to allow the authority to discuss certain, specified “proprietary information” about the terminals behind closed doors.

Presently, it said, the board gets the information but is prohibited by law from talking about it.