Inspector general bars demo firms from doing business in Detroit amid ongoing probe
Detroit — A city watchdog conducting a review of potential conflicts of interest between three firms working in Detroit's demolition program issued an interim suspension this week, citing records that "strongly suggest" the companies are not independent.
Detroit's Office of Inspector General issued notices Monday to abatement subcontractor BBEK Environmental and air quality testing subcontractors Green Way Environmental LLC and HC Consulting after the city suspended the firms last month amid concerns over the potential conflicts.
The state was first flagged of the concerns in July by the Special Inspector General of the Troubled Asset Relief Program, the federal agency that's been conducting a lengthy criminal probe of Detroit's federally funded demolition program, said Katie Bach, a spokeswoman for the Michigan State Housing Development Authority.
The Michigan Homeowner Assistance Nonprofit Housing Corp., an entity created by the MSHDA to administer federal Hardest Hit Funds, then notified the Detroit Land Bank, which initiated an investigation and notified the inspector general, Bach said.
In Monday notices reviewed by The Detroit News, the city's inspector general barred the firms from conducting business in Detroit "pending the conclusion of our investigation." The city and land bank suspended the companies from doing further work in July.
"Based on our initial review of the records and information we've collected, we believe there are too many overlap of personnel and financial transactions which strongly suggest that BBEK, Green Way, and HC Consultants are not independent," Detroit Inspector General Ellen Ha wrote.
The city and land bank said last month that they'd become aware that the relationships among the Warren-based abatement-related companies might be in violation of the city's Abatement and Demolition of Residential Properties Agreement and other contracts related to abatement and demolition services.
Kamau Marable, Detroit's deputy inspector general, noted Thursday that the suspension given out in July was under the city's office of contracting and procurement and the land bank.
The interim suspension the inspector general sent to the three contractors this week was authorized under the city's debarment ordinance and "is a potential prelude to debarment," he said.
Marable declined further comment on the office's investigation, which remains ongoing.
Rebecca Camargo, an attorney for BBEK, said Thursday that the company has provided documents to the inspector general and BBEK owner, Kevin Woods, is scheduled to go in later this month for an interview.
"The bottom line is we're cooperating with the Office of Inspector General, and we are confident that we'll be vindicated," Camargo said.
In the meantime, Camargo said, the city's suspension has been "unfortunate" for BBEK, which has had to lay off about 95 percent of its workforce. BBEK employs more than 100 workers and most of them are Detroit residents, she said.
James Harvey of HC Consultants wasn't immediately available Thursday for comment. Mike Gibbons, an attorney for Green Way, also could not be reached.
Bach said the state "does not routinely inspect DLBA contracts for abatement prior to the work being done, and our database does not track who completed the air testing."
"What we do know is BBEK was used by a majority of contractors," she said. "The best estimate is that 80 percent of funded transactions in Detroit went through their office."
Woods and William Scully, who owns Green Way, told The News last month that each has no ownership ties to the other business.
Scully, who records show is an employee of BBEK, previously said that he works for BBEK as its part-time controller and has no ownership interest in either company. He said he began operating Green Way in 2018.
Federal officials this summer announced they would audit federally funded demolition activities for the risk of contaminated soil in Michigan and Detroit.
SIGTARP said it planned to update a 2017 review of oversight and technical requirements in Michigan's program at the request of Democratic U.S. Reps. Brenda Lawrence of Southfield and Rashida Tlaib, who represents Detroit in Congress.
Lawrence and Tlaib had written to state officials in April seeking more robust oversight regarding potentially contaminated soil used in the demolition program.
Rob Sholars, a spokesman for SIGTARP, said Thursday that the evaluation is ongoing.
Alyssa Strickland, a spokeswoman for the land bank, reiterated Thursday that the suspended sub-contractors can complete work they had that was already in progress, as long as the post-abatement air monitoring is done by an independent party, as contractually obligated.
Before demolishing a building, demolition contractors bring in asbestos abatement companies to perform work. After that, another company comes in to perform an air quality test.
Regulations call for the party conducting the abatement work to be independent from the party doing post-abatement air quality testing, officials said.
Since the land bank does not contract with the sub-contractors, it is "up to the main demolition contractors (who hold the contract with the DLBA) to find competent, qualified, sub-contractors to complete the work in line with contractual requirements."
The land bank, she said, had no further comment about the inspector general's ongoing investigation.
Bach said there are currently about 360 demolitions that require abatement, all of which are on hold until demolition contractors can find another organization to complete the work.
"This is not expected to be a hardship to the program as there are many other abatement contractors available," she said.