WTO Accountability Review Committee

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Attachment C

WCIT REBUTTAL OF SPECIFIC FINDINGS BY PANEL ONE

Note:

References to Panel transcripts or interviews are available from the Office of the City Clerk.

KP transcript = transcript of April�17, 2000 Kathy Paxton Interview
PS/MD transcript = transcript of May�22, 2000 Mayor Schell and Deputy Mayor Daudon Interview
CT transcript = transcript of March�26, 2000 Cliff Traisman and Keith Orton Interview
PD/RW transcript = Summary of March�26, 2000 Pat Davis and Ray Waldmann Interviews
MD transcript = transcript of June�20, 2000 Maud Daudon Interview
RW transcript = Note of March�6, 2000 Ray Waldmann Interview

I. The Invitation of the WTO to Seattle

A. Panel One's Finding: The Panel found that WCIT, acting alone, invited the WTO to Seattle (Finding�1, p.�10)
B. WCIT Response: This finding is inaccurate and misleading. It evidences a complete failure by the Panel to understand and accurately describe the nature of the private sector/public sector effort that was mounted by the entire community in support of the selection of Seattle as the site for the 1999 WTO Ministerial conference (the WTO meeting).
Evidence:

The Panel did not recognize the large coalition effort involved in winning the WTO bid.

As with any effort to attract a large-scale international gathering in the City, a broad coalition of business and community leaders were involved in the efforts to have Seattle chosen as the site for the WTO meeting.
Prior to the December�16, 1998 letter to the State Department, the Mayor, members of the Washington State Congressional delegation and other elected officials and community leaders sent letters or made in-person efforts to lobby the federal government to choose Seattle.
Late May or Early June 1998: Representative of the Trade Development Alliance calls representative of the Seattle-King County Convention and Visitors Bureau (SKCCVB) to reserve Convention Center space for November 1999.
June 21-26, 1998: Representatives of the Mayor's office report to the Mayor that the United States would be hosting the WTO meeting and that "we are trying to get Boeing to lobby the President in China."
August 1-7, 1998: Again, representatives of the Mayor's office report to the Mayor that Jim McDermott offered to lead an aggressive bid by the Washington state congressional delegation to hold the WTO meeting in Seattle and that "we are working on a draft of a joint letter by the Washington congressional delegation in support of the proposition."
August 16, 1998: Representative of the SKCCVB states: "the [WTO] is becoming a very big deal and we are being instructed to rise to the occasion."
August 14, 1998: Governor Gary Locke sends letter to President Clinton urging him to consider Seattle as the host site.
August 28, 1998: Mayor Paul Schell sends a similar letter to President Clinton.
August 31, 1998: Bill Gates, CEO of Microsoft, and Phil Condit, CEO of Boeing send a joint letter to President Clinton encouraging the selection of Seattle

SKCCVB co-signed the letter on behalf of the Seattle Host Committee (SHC).

In attributing the invitation of the WTO to WCIT, the Panel cites the fact that Pat Davis signed the final proposal letter to the State Department. However, the Panel failed to note in its finding that SKCCVB also signed the letter.

Paxton said of the letter "I can't remember who wrote it and who edited it, but it was a joint production." (KP transcript, p.�14)*

In fact, at the outset and throughout much of the site selection process Kathy Paxton and the Convention Center were the main contacts to John Dieffenderfer at the State Department and responded to the first RFP. (KP transcript p.�2)

Most of the correspondence from John Dieffenderfer during this period went exclusively to Kathy Paxton who then shared the information with others. (See correspondence.)

This coalition approach had been used successfully to attract many large-scale conferences and international gatherings, including the 1993 APEC Ministerial and Leadership Meetings (the 1993 APEC Meeting).
The City Council commended WCIT for the success of this public/private partnership structure in a resolution after the 1993 APEC Meeting. (See City Council Resolution 28836, dated November�29, 1993.)

II. "Authorization" of the Invitation

A. Panel One's Finding: The Panel found that the City did not authorize the bid. (Finding 3)
WCIT Response: The Panel asked the wrong question.

In 1998, there was no, and presently there is no, "formal" authorization process.
The relevant question is whether the City, through the Mayor's office and/or the City Council, had an adequate opportunity to (a)�learn that members of the private and public sectors were mounting a coordinated effort to have Seattle selected as the site for the WTO meeting, (b)�understand the ramifications of such an event, and (c)�voice any objections or reservations that might apply.
All levels of state and local governmental entities, including the City, were aware of and participating in the coordinated efforts to have Seattle selected �as host city for the WTO meeting.

Evidence:

There is no "formal" process for City authorization.

The Panel implies that the City normally would "authorize" a bid. This is not the case. Efforts to attract events of the magnitude of the WTO meeting to Seattle have historically been made with the awareness and informal involvement of local officials but no official action of the City has been taken. This is how the WTO meeting campaign proceeded.

Mayor Schell told the Panel, when asked who was empowered to invite the WTO to Seattle, that, "Anybody can invite a convention to the City, and it happens all the time�. We clearly understood that our role would be to provide delegate security and police." (PS/MD/ transcript, p. 8)*

In 1998, the City was formally involved with a site selection bid in connection with an Olympic bid because, in that case, the United States Olympic Committee expressly required the local municipality to pass a resolution of support. The Seattle City Council refused to do so. (See Seattle Times article of December 3, 1998.)

The City itself cannot host an event such as the WTO meeting because the State Constitution bars use of its credit or funds for benefit of an individual or private entity in this type of situation (i.e., funding "hosting" expenses). (See Washington State Constitution, Article�VIII, Sections 5 and 7.)

In light of the restriction imposed by the State Constitution, all local financial support for an event such as the WTO meeting must come from the private sector.

III. The Involvement of City Officials

A. Panel One's Finding: The Panel implied that the Mayor and City Council were only vaguely ("generally") aware that a bid would be made. (Finding 3, para 3, p.�10)
B. WCIT Response: Representatives of the City actively participated in the effort to attract the WTO meeting to Seattle.
C. Evidence:

During the first site selection visit (September 30 � October 2, 1998); the federal officials met with City Council member Sue Donaldson, Deputy Mayor Maude Daudon and Keith Orton from the Mayor's Office of Intergovernmental Relations (OIR). (KP transcript, p.�9, and First Site Selection Visit Itinerary) They also met with Seattle Police Department representatives Special Events Unit Captain Harv Ferguson and Lt. Bill Moffet to discuss security issues. (September 30 � October 2, 1998, Site Inspection Itinerary.)
During the second site selection visit (November 12-14, 1998), the selection team met with Mayor Paul Schell, Cliff Traisman and Keith Orton of the OIR, and Council members Choe and Donaldson. (KP transcript, p. 13) They also met with Seattle Police Officers Harv Ferguson, Lt. Bill Moffet and Captain Ron Mochizuki to discuss security issues. (November 12 � 14, 1998, Site Inspection Itinerary.)
Mayor's letters and conversations:

August�24, 1998 � Letter from Mayor Paul Schell to President Clinton urging the selection of Seattle (cc to Charlene Barshefsky). (CT�transcript, p.�2)*
Mayor Schell had a conversation with Secretary of State Albright when she came to town to encourage Seattle's selection. (PS/MD transcript, p. 2)

Ray Waldmann and Pat Davis testified before the Panel that they had worked with the Mayor's office throughout September and October of 1998 on the bid to have Seattle host the WTO. (PD/RW transcript, p.�1)*
Deputy Mayor Maude Daudon said that they (Keith Orton and Cliff Traisman) attended meetings of Seattle Host Organization (SHO) "from the outset of the Host Committee" (MD transcript (June�20, 2000), p.�7)*
Ray Waldmann said that Cliff Traisman, the Mayor, Jan Drago and Sue Donaldson were involved in the discussions during the fall of 1998. (RW transcript, p.�2)*
Cliff Traisman listed the following activities in addition to those previously listed:

Attendance at a meeting at the Port of Seattle to discuss the upcoming site selection team visit (August 1998). (CT transcript, p.�2)
Detailed memo (November�12, 1998) to Mayor Schell to prepare him for the site selection team's visit. It includes information on the involvement of police department officials in the visit.

IV. Nature of the December 16, 1998 Letter to the State Department Regarding Responsibility for WTO Costs

A. Panel One's Finding: The Panel stated that pursuant to WCIT's bid the SHC "guaranteed" it would "cover all of the WTO's final costs" whatever they might be. (Finding 3, para 4, p.�11)
B. WCIT Response: The Panel misunderstood the context and the meaning of the letter from Pat Davis and Kathy Paxton to the State Department on December 16, 1998.

The letter was not a blanket commitment to pay all costs including security costs.
The letter was a commitment to raise funds to pay for certain costs that were anticipated to be incurred in connection with hosting of the WTO meeting as expressly identified in the letter.
The letter was written by Davis and Paxton on behalf of SHC and was not an expression of an undertaking by WCIT or of the City, county or state.

C. Evidence:

Letter was written on behalf of SHC.
In the context of the fluid process administered by the federal government, the State Department never provided SHC with firm specifications for the requirements as to what would be required (hotel rooms, convention space, transportation, security).

Kathy Paxton explained in her testimony that the site selection people (Nancy LeMond) followed up after the second visit wanting a larger budget (to be funded locally) in SHC proposal to host the event, but did not provide any specifics as to the federal government's requirements. Paxton said "we could never get specific information out of John Dieffenderfer or the WTO about what they needed to manage the conference." (KP transcript p. 14.)
Cliff Traisman noted, that unlike the Olympic bid, "this process was totally foreign to me because there was no formal bid process, no exchange of letters or criteria. It was very informal." (CT transcript, p.�1)
Traisman also described the lack of clarity provided by the federal government as to the security requirements. He said that, in a February 15, 1999 meeting, "the USTR and WTO representatives had different ideas about requirements, and they debated in front of us. No one had ever done this before, it was the first time this had been held in the U.S." (CT transcript, p.�7)
In the absence of specific information from the federal government and the WTO, the SHC proposal's broad language was intended to convey the flexibility of the Seattle group to meet the hosting needs of the State Department. Obviously there would have to be a meeting of the minds as to the specifics. There was no open-ended guarantee and the federal government knew this.

V. Whether Commitments were Made by WCIT on Behalf of the City

A. Panel One's Finding: The Panel found that President Davis and WCIT made commitments to the U. S. Government "on behalf of the City, King County and the State of Washington which they were not authorized to make." (Finding 3, para 7)
B. WCIT Response: WCIT never spoke for the City, County or State governments.

The federal government never interpreted the December 16, 1998 letter as speaking for the City, County or State.

C. Evidence:

There is no evidence in the record that WCIT or SHC made any commitments on behalf of the City or any other governmental entity. The only basis for the Panel's finding appears to be that the Panel reasoned that, because Mayor Schell, County Executive Sims and Governor Locke were members of SHC and because (according to the Panel) the December 16, 1998 letter constituted a blanket guarantee of costs (something WCIT maintains is an untenable conclusion), WCIT was purporting to speak for the respective officials who were SHC members without their knowledge and authority. (See Finding 3, Paragraph 3, page 10.)
Quite simply, WCIT did not offer a guarantee as to all WTO meeting costs on behalf of itself or anyone else. Naturally, if asked by the Panel that such a guarantee had been tendered on their behalf, any SHC member would be surprised and deny that he/she had authorized such a commitment.
Cliff Traisman of the Mayor's office stated that "Pat Davis would never try and speak for the government. That was not her intent�." (CT transcript, p.5)
Neither the State Department nor any part of the federal government interpreted the December 16, 1998 letter as an indication that the City, County or State had made a commitment to it.
Indeed, the federal government later attempted to negotiate a separate Memorandum of Understanding (MOU) with the City.

VI. WCIT's Commitments to the City

A. Panel One's Finding: The Panel claims that WCIT President Davis gave specific assurances to the Mayor's office that the City should not be concerned about paying for any security costs since "major corporations" would be paying for these costs and that "the City's security costs would be reimbursed." (Finding 3, para 4, p.�11)
B. WCIT Response: Neither WCIT nor President Davis promised the City that SHC would pay for all security expenses.

WCIT/SHC consistently indicated to the City that they would make a good faith effort to raise money from the corporate community to contribute up to $1.5 million towards the City's actual security costs.
The City consistently acted in accordance with the understanding that it hoped it would be reimbursed for $1.5�million in security costs but recognized that if there were difficulties with fundraising, receipt by the City of the full $1.5�million would be in jeopardy.
When SHO faced fundraising problems, it notified the City that it might not be able to meet the $1.5 million target.

C: Evidence:

President Davis/SHC did not make a commitment to the City to pay for all the City's security costs or encourage the City to not be concerned about paying any security costs.

The only commitment made by SHC was a good faith pledge to raise $1.5 million to contribute to the City's security costs.

The City never acted under the assumption that SHO would pay for all of the security costs.

The City worked under the understanding that SHO would make good faith efforts to raise $1.5 million to support the City's security costs. There is no indication that the City ever expected more.
Daudon said of the $1.5 million figure, "it was also clear it was an estimate, and it wasn't a fixed number in anybody's mind." (PS/MD transcript, p. 19)
Daudon also stated: "if fundraising [went well] they could potentially provide more than [$1.5�million]. So our role was to develop a budget and continue to work with [SHO] and see how we got the two to fit together, to get federal help." (PS/MD transcript, p.�19)
Traisman said he viewed the $1.5 million figure as "a plug number," not a final security estimate. (CT transcript, p. 5)
According to Traisman, he considered the $1.5 million pledge "the private sector's contribution to the City to offset security costs. It immediately became apparent it was going to cost more than $1.5 million � we knew we would absorb costs, it wasn't a zero sum game." (CT transcript p.7) Traisman's view was that "whatever the costs were, there was never a time when security was not our primary responsibility. We never relied on the SHO or the federal government." (CT transcript, p.10)

Once security estimates began to rise, the City began intensive efforts to lobby the federal government for supplemental funds.

When it became apparent that the security costs were growing, Traisman said the City did not attempt to ask SHO for money. Instead, "we felt it was time to ask [the] federal government to pay their fair share. The $1.5 million was something we thought was an important community contribution and would help leverage federal funds. "We used it with the government: 'the private sector has helped us out, it's your turn.'" (CT transcript, p.�8)
According to Daudon, "we tried to send letters out from the Mayor saying, we're doing everything that we can to get federal support for this � and we did spend quite a bit of time and energy on the federal reimbursement�.". (MD transcript, 6/20/00 p. 2)
From its participation in SHO Steering Committee meetings, City representatives understood that SHO was making every effort to raise money for the WTO meeting but was facing difficulty given the restrictions placed on it by the federal government and might not meet the $1.5 million goal.

When SHO became concerned about its ability to raise the $1.5�million, it made the City aware of its fundraising problems and the chance that it would not be able to meet the original goal.

When SHO realized the severity of the fundraising problems it warned the City that it might have trouble meeting the $1.5�million goal. Additionally, SHO had made it clear to the City that security costs incurred by SHO would be taken out of the $1.5�million. Traisman recalled that "Waldmann told me that if they raised the money, the City would get $1.5 million � but fundraising was not going well. He also told me that any security costs they incurred would be taken out of the $1.5 million." (CT transcript, p.�9) There is no indication that the City disagreed with this proposal.
Seattle Police Department (SPD) officials were also warned. In a letter dated August 31, 1999, to Lt. Dick Reed of the Seattle Police Department, Waldmann wrote:, "If budget reductions are required, we will try to make them in an equitable and proportional manner to allow us to conduct all of the proposed activities and functions, but we must advise you now that the amount available for security to be distributed among various public safety agencies may not be the proposed $1.5 million." (See letter to Lt.�Dick Reed dated August 31, 1999.)
In the Dick Reed letter Waldmann also added that because SHO was being asked to shoulder unexpected security costs for the meeting venues, those expected expenses might be deducted from the $1.5 million. He wrote: "If SHO is obligated to incur any such costs, they will have to be deducted from the amount available for transfer to local security agencies."

SHO made a good faith effort to raise money from the private sector. However, it faced unexpected obstacles to reaching its fundraising goals (restrictions from the federal government, etc). Ultimately, SHO paid or had the federal government assume $460,000 in such local security costs, thereby reducing amounts remaining available for contribution to the City.
From the outset the SPD was aware of the potential problems of unrest. Paxton recalls that, during the second site selection visit, SPD officials participated and were first told of the problems of unrest in Geneva. Upon hearing that there had been serious violence and demonstrations, she reports that the SPD officials responded, "well, we have dealt with demonstrators before." (KP transcript, p.�13.)

VII. The Consistency of WCIT's Position Regarding Funding for WTO Security Costs

A. Panel One's Finding: The Panel claims that Pat Davis was inconsistent in connection with the extent to which the City would be responsible for security costs. According to the Panel, Davis had allegedly assured the City that security costs would be paid by "major corporations" so that the City should not raise the issue of federal support, and later took the position that the City should be able to receive federal subsidy for the security costs or alternatively that the City should pay the security costs without any assistance. (Finding 3, paragraphs 4 and 5, p. 12)
B. WCIT Response: Davis and WCIT were consistent in their position that SHO would make a good faith effort to contribute $1.5�million toward the City's security costs.

As Mayor Schell stated in his press release dated June 30, 2000, the City was not misled in any sense.
The Panel should have appreciated how the "courtship" dance with the federal government unfolded.
It is both consistent and appropriate that WCIT, on behalf of SHC, would (a)�state to the federal government during the bidding process that SHC would seek to raise funds totaling $1.5�million to help the City defray some portion of whatever security costs might be and (b)�discourage the City from raising the issue of federal responsibility for security costs during site selection visits at a time when there was a reasonable expectation in the minds of SHC that private sector support would be sufficient to meet targeted fundraising goals.
The Mayor's representatives themselves acknowledged that their own contingency plans contemplated requests to the federal government if security costs escalated.

C. Evidence:

The City and SHO all acted under the assumption that SHO would make every effort to raise $1.5 million toward the City's security costs. There is no indication the City ever relied on more. As security estimates began to rise, the City made aggressive efforts to lobby the federal government for assistance. (CT transcript, p.�8, MD transcript, p.�2)
The City always acted on the assumption that the $1.5 million would not necessarily pay for all of the WTO costs.

Traisman said that "We always knew that if costs escalated or heads of state came��we were going to seek reimbursement. Once we knew costs were escalating, we sought it early and aggressively." (CT transcript, p.�4)

Based on the APEC experience, Davis and WCIT consistently believed that the federal government was a potential source of money to help pay for the security costs associated with the WTO. However, for obvious reasons, the site selection committee visits were not the appropriate forum for raising this issue.

VIII. Involvement of the Seattle Police Department
- A. Panel One's Finding: The Panel found that WCIT failed to consult with the SPD in advance in estimating security costs and that such failure was "unacceptable." (Finding 5, para 2, p. 12)
- B. WCIT response: WCIT and SHC did not endeavor to make a final estimate as to total security costs but only sought to budget an amount which SHC would make a good faith effort to raise in order to assist the City by making a contribution to the City's ultimate security costs.
- C. Evidence:
IX. The City's Exposure to Adverse Financial Risk Regarding Security Expenses

A. Panel One's Finding: The Panel found that WCIT/SHO's failure to provide a more realistic estimate (in hindsight) exposed the City to avoidable adverse financial consequences. (Finding 5, para 3, and 4, p.�12)
B. WCIT Response: The level of disturbances and the resulting magnitude of the security costs could not have reasonably been predicted at the time of the site selection process.

No one could have predicted the level of unrest that Seattle ultimately experienced.
The SPD was involved in both of the site selection meetings and never raised concerns about its ability to cover security needs or the magnitude of potential costs.
The City and the SPD were in separate negotiations for an MOU with the federal government for coverage of security.

C. Evidence:

The State Department did not provide full information to the bidding cities on what ultimate requirements would be placed on them. As Paxton indicates, the convention that they bid on "was not the meeting that ended up coming here." She goes on to say: "so this meeting that we were invited to bid on was not the meeting that ended up coming to Seattle. And I don't mean the protesters, I just mean the meeting itself." (KP transcript, p. 6)
Paxton testified how limited the information provided to the Seattle organizers from the State Department was. She reported that "we had to create a proposal based on very unsubstantial information." (KP transcript, p. 10)
WCIT/SHO made a good faith effort to estimate the security costs. As Ray Waldmann describes it, the federal government did not provide any specifications to base security costs on. In the absence of this, those putting together the bid used the 1993 APEC meeting numbers as the basis of their estimate. (RW transcript, p. 1)
At the time of the initial bid, there was no way to predict the magnitude of the security needs.

Keith Orton explained to the panel how difficult it can be to accurately estimate costs one or two years out from an event. "It's extremely difficult to know one or two years out what costs will be � we've had other ministerials that had no costs. The driver of the costs is the number of heads of state; they bring in protestors and press attention." (CT/KO transcript, p.�9) Given that they were not expecting heads of state, it was reasonable to expect that the security costs would not be burdensome to the City.
No one expected such an explosive situation. It is not reasonable for the Panel to blame the planners for not foreseeing the magnitude of the protests.
As the Panel's report indicates groups opposed to the WTO meeting did not adopt the strategy of trying to shut it down until the spring of 1999, long after the initial security estimates were made. (finding�6, para 2)
Indicative of the fact that the federal government did not foresee the level of disturbances at the time of the site selection process is the fact that the federal government did not designate the WTO meeting in Seattle as an event for a high level of security (a National Security Event) until a few weeks before the WTO meeting.

SPD Special Events Unit Captain Harv Ferguson and Lt. Bill Moffet met with both site selection teams and never raised concerns with those making the bid about the potential costs or magnitude of security needs. When advised by the site selection team in November 1998 of the problems in Geneva, SPD representatives expressed confidence they could handle the situation. (KP transcript, p.�13)

Web Page Author: Jeffery Beckstrom
Last Updated: 10/19/2000


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