Channel 2 Investigates

Program helping minority businesses: Gamechanger or way to cheat the system?

By Richard Belcher, WSB-TV
By Richard Belcher, WSB-TV

ATLANTA — Hundreds of Atlanta companies are part of a program intended to help small businesses owned by minorities and women.

It is called the Disadvantaged Business Enterprise or D.B.E. But critics contend the program may be subject to abuse and that front companies can use race or gender to receive lucrative contracts without really having independent business skills of their own.

One Atlanta minority contractor, E.R. Mitchell, is right in the middle of the bribery scandal at Atlanta City Hall.

But Channel 2 Investigative Reporter Richard Belcher spoke with one young entrepreneur who says the program is essential.

"It has worked," Randy Hazelton, 36, told Belcher.

Hazelton is a city-certified D.B.E. working with a larger company that has food service contracts at Hartsfield-Jackson Atlanta International Airport.

He has nine years of experience and says he is no one's front.

He says the D.B.E. program is not a giveaway.

"You couldn't just go up and be a strawman that could check the right box on an application and get an award," Hazelton said.

But a 2004 lawsuit over airport advertising raised just those kinds of questions.

Lawyers for a white-owned company found evidence that the minority partner for the winning bidder didn't really seem to be an independent company.

"She didn't have any employees. She didn't have any office. She didn't have any real assets," attorney Matt Maguire told Belcher.

Maguire worked on that lawsuit.

The city settled with the white contractor but the prime and minority contractors won on appeal.

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Maguire says the case made him more skeptical about the term disadvantaged companies.

He recalls asking a city official whether successful minority businesses are still disadvantaged.

"We asked him that exact question under oath: ‘If Oprah Winfrey applied to be a D.B.E. would you certify her,’ and he said, ‘Yes, (he) would,’" Maguire said.

Maguire recalled a supposedly female-owned company that won a contract at the airport in 2012.

But was she really running the company as she claimed?

He discovered some discrepancies.

"Her husband had been there 474 times, and she went four times in an 18-month period," Maguire told Belcher.

"I think you will find bad actors among any segment, in any industry, any demographic. No one has a monopoly on fair play or integrity," Hazleton said.

One bad actor is E.R. Mitchell, a D.B.E. who has admitted paying more than a million dollars in bribes for city contracts.

Randy Hazelton admits that Mitchell's conduct could hurt the reputation of the whole program. But he notes that contractor Charles Richards, who is white, also pleaded guilty to bribery.

There's a double standard, says Hazelton.

"That same question is not asked when a majority firm participates in those kinds of activity," Hazelton said.

Hazelton says it's important to preserve a program that was created by Atlanta's first black mayor, Maynard Jackson.

In 1974, Hazelton says, Atlanta's population was two-thirds black, but when Jackson took office less than 1 percent of its contracts went to minority-owned businesses.

Hazelton says the state has no policy to encourage minority and female businesses even though Georgia's minority population is well over 30 percent.

When prime contractors are being evaluated by the city, they're given points for minority participation. Thirty five percent is the city's goal. So, for example, if your company has just 15 percent minority or female participation that reduces the likelihood that you'll win the contract.

Hazelton is convinced Atlanta’s D.B.E. program is still needed.

But he has no desire to spend years taking advantage of being disadvantaged.

"I would like to set a record on graduating," Hazelton said.

His small company now has a partnership with H.J. Russell and Company, which was at one time in Atlanta's D.B.E. program.

Cox Media Group

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