Almost never in the FCPA world do you see an announcement as stark as the one delivered this week by United-Continental Airlines around the immediate resignation of the now-former Chief Executive Officer Jeff Smisek. A company release stated: “The departures announced today are in connection with the company’s previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey. The investigations are ongoing and the company continues to cooperate with the government.”
This resignation came out of the Bridgegate scandal from New Jersey, although it was not related to the original claim that the New Jersey Governor’s office ordered the closing of certain traffic lanes around Fort Lee, N.J. to punish the mayor for not supporting Gov. Chris Christie as he ran for re-election. Smisek resigned over an airline flight from Newark to Columbia, South Carolina. The flight was reported to be a money-losing route, yet it was reinstated by United at either the request of the chairman of the Port Authority of New York and New Jersey, David Sampson, or was reinstated by United to obtain a benefit from Sampson.
It turns out Sampson had a weekend home at Aiken, which is near Columbia, S.C. and was unhappy no direct United flight service existed from Newark. Then a direct flight appeared on the schedule. The New York Times reported that the flight was such a known money-loser it was nicknamed “the chairman’s flight.” At the time, United was in the midst of trying to renegotiate its lease at Newark airport with the Port Authority.
While it is a very large question of whether the chairman’s flight was intended as a quid pro quo for something else, the flight from Newark to Columbia was cancelled after Sampson resigned his post as chairman.
For the FCPA compliance professional, such conduct would certainly invite Justice Department scrutiny. The timing of the cancellation of the flight from Newark to Columbia alone raises a red flag that the flight was reinstated to induce a government official to influence a decision to obtain or retain business. Even if Sampson had pushed or suggested that United reinstate the flight route for his convenience, that would certainly be enough to raise a red flag that something was amiss.
Moreover when a CEO resigns, effective immediately and it in conjunction with an ongoing internal investigation; it does not take a rocket scientist to connect the dots with the results, preliminary or final, of the investigation and the resignation.