County and school officials in Albemarle said Friday that they're monitoring an unfolding scandal in Chicago involving the same traffic surveillance company that operates the red-light camera at U.S. 29 and Rio Road.
Australia-based Redflex Holdings Limited paid $2.03 million from 2003 to 2012 to a consultant and covered vacation-related expenses for 17 trips for a Chicago transportation official, the company said in a March filing with the Australian Securities Exchange.
The arrangement "will likely be considered bribery by the authorities," the five-page filing said.
The internal probe was launched following whistleblower claims that payments to a consultant in Chicago "had been passed to the city employee who ran the red-light camera program," according to the filing.
Several executives and board members quit earlier this year over the scandal, Redflex said.
Redflex conducted an earlier internal probe in 2010, a year after it signed a red-light contract with Albemarle that expires at the end of this year.
Redflex also is among two or three companies being considered for a project to add cameras to stop arms on county school buses.
Localities in states from Florida to California have quit contract talks with the company, and a Louisiana parish in March voted to refund almost $20 million red-light ticket revenues over a separate scandal.
“We are aware of the allegations,” county spokeswoman Lee Catlin said in a statement Friday. “In light of that situation, we have thoroughly reviewed our history and relationship with Redflex and received a full explanation from company representatives regarding how the company is responding.”
The county will continue to monitor the situation and consider its options, including termination of Redflex’s current contract, should circumstances warrant, Catlin said.
“We have taken a hard look at our contract and there’s nothing improprietary with our contract with them,” Supervisor Kenneth C. Boyd said Friday. “There’s nothing like that going on in Albemarle County.”
Redflex operated a pilot stop-arm camera program on two county school buses earlier this year.
“The pilot program we ran predated the allegations,” county schools spokesman Phil Giaramita said Friday. “When we contracted with them we were not aware of these allegations.”
The allegations first emerged publicly in October, when the Chicago Tribune published a story "casting doubt" on the conclusion of the initial Redflex internal probe, according to the company's securities filing.
County School Board Chairman Steve Koleszar said he'd not heard of the Chicago scandal until getting a call from a reporter Friday afternoon.
“Integrity is important to our division. We expect that from our students, we expect that from our staff, we expect that from our vendors,” Koleszar said. “If they lack that integrity, that would certainly, probably, I wouldn’t say absolutely, rule them out.”
Redflex officials say the troubles in Chicago are behind them and the company has renewed, extended or executed 30 client contracts since announcing changes in its leadership and policy in the wake of the corruption scandal.
“Earlier this year, we publicly presented the findings of an internal investigation into our corporate compliance systems,” Redflex President and CEO Robert T. DeVincenzi said in a statement Friday. “At the same time, we made dramatic changes: we replaced the executive leadership of Redflex Traffic Systems, added new board members, hired a director of compliance and instituted new governance processes.”
But the company still faces fallout.
In Orange County, Fla.; Prescott Valley, Ariz.; and San Rafael, Calif., government officials have ordered staff to abandon contract negotiations with the company. In Jefferson Parish, La., council members referenced the scandal during a March vote to refund $19.7 million in red-light tickets collected before parish officials shut down the program in 2010 amid allegations of corruption involving a lobbyist for Redflex.
Redflex operates more than 2,000 traffic systems in about 220 localities in the United States and Canada, according to its website. The company cited earnings of $25 million in its response to Albemarle's request for proposals in 2008.
However, Redflex stocks have plunged to half their value since the scandal broke last fall, closing Friday at $1.10 a share.
But the company's red-light camera system is regarded as a money generator in Albemarle: Supervisor Dennis S. Rooker once called it a "revenue enhancer."
In 2011, the cameras generated $309,350 in gross ticket revenue. That figure dropped to $282,800 in 2012. Since the county installed its single red-light camera in 2010, the device has recorded more than 20,000 incidents.
In a no-risk contractual agreement, Redflex receives up to $9,480 each month in revenues from tickets and the county gets whatever remains beyond that.
“All the money we get back from the cameras goes to traffic safety initiatives,” county police spokeswoman Carter Johnson said Friday. “We use that money to purchase bike helmets, DUI goggles, educational material for public awareness, radars for speed detection, mobile message boards.”
The program is not just about money, officials said. After almost three years of operation, Johnson said, the statistics suggest traffic incidents at the troublesome crossroads have been reduced. Cameras recorded 10,437 incidents in 2011 and 8,398 in 2012, she said.
Through May 6, incidents this year totaled 1,484, putting the county on pace for about half the number of incidents as last year.