Md. official's hotel deal questioned

January 14, 1995|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

At the same time he was putting together a proposal with four other investors to buy an Inner Harbor hotel, a top Maryland port official was negotiating the state's $3 million purchase of a nearby site for a cruise ship terminal that would lure tourists to the area.

G. Gregory Russell, deputy director of the Maryland Port Administration (MPA), is one of five investors in a newly formed company that recently won exclusive negotiating rights from the city to acquire the 71-room Harrison's Pier 5 Hotel and restaurant. The group hopes to buy the financially troubled Inner Harbor facility this spring for $5.5 million.

Since early fall, Mr. Russell also has been leading the state's negotiations with AlliedSignal Inc., which resulted in the signing of a conditional agreement this week for Maryland to purchase a 3.1-acre parcel on the edge of the old Allied chrome works plant.

Located just east of the National Aquarium, Harrison's Pier 5 Hotel is within blocks of the proposed cruise ship terminal. State and city officials have long contended that the terminal, estimated to cost between $40 million and $50 million, would help attract tourists to hotels, restaurants and other businesses the Fells Point and Inner Harbor areas.

Several state leaders, who said they had been unaware of Mr. Russell's dual role, said the situation raised questions about a possible conflict for the MPA official.

But top Department of Transportation officials yesterday backed Russell, who denied that his simultaneous involvement in both deals represented a conflict of interest. "I don't think there's a conflict. If I did, I would not get involved," he said. "I don't bring my personal business to the port."

Mr. Russell said he sought an opinion from the State Ethics Commission, which has orally approved his involvement in the hotel deal.

John E. O'Donnell, director of the Ethics Commission, refused to comment on Mr. Russell's case specifically, but said:

"We are in the process of issuing an opinion that does involve a state official that is involved in a restaurant and hotel deal. The opinion says that, under the facts given, it is not a violation of the state ethics law."

Mr. Russell declined yesterday to say whether he told the commission of his involvement in the port's negotiations to buy the Allied site.

"That's private between me and the commission," Mr. Russell said.

The commission -- which is charged with upholding the state's ethics law requiring the disclosure of the financial affairs of public officials -- acted on the case Wednesday. A written opinion will be issued next week, Mr. O'Donnell said.

In his post as deputy director of the MPA, Mr. Russell primarily is responsible for overseeing the day-to-day operations of the state's five marine terminals. Before taking that job in June, he was the MPA's chief financial officer.

"There's no conflict here," said Michael P. Angelos, executive director of the MPA who appointed Mr. Russell as his deputy after he assumed the MPA's top job.

"We're involved in waterborne cargo and ships," he said. "Harrison's is a restaurant and hotel. There's a lot of hotels downtown."

Maryland Transportation Secretary O. James Lighthizer also denied there was a problem. "So long as a state employee makes full disclosure of his or her involvement in an economic enterprise, that's fine with me," he said.

"I don't see a conflict between his job as deputy director and his role as a local businessman trying to make a buck. He didn't trade on any inside information."

However, state Senate President Thomas V. Mike Miller Jr., D-Prince George's, said that Mr. Russell's role in the two deals posed some ethical questions.

"On the surface it would appear to be a conflict of interest," Mr. Miller said. "But sometimes it's very difficult to differentiate between the personal good and the public good."

Told of Mr. Russell's involvement, former Transportation Secretary William K. Hellmann, who now serves on the Maryland Port Commission, was clearly troubled.

But, he said: "I'd like to know more details. I'd certainly want to find out more about it."

Mr. Hellmann, one of seven members of the Port Commission, said he was unaware of Mr. Russell's role as an investor in the hotel group. And Mr. Angelos said he could not recall whether he told the Port Commission, which oversees the operation of the MPA, about it.

Mr. Russell, 39, is one of the investors in Pure Five Inc., which is headed by Baltimore businessman Otis Warren Jr. Mr. Warren, who developed the $36 million City Crescent office tower on Howard Street, said yesterday that Mr. Russell joined the team a couple of months ago and is an equal partner.

"He was picked up to be put on the team because I needed to get somebody real good with numbers," Mr. Warren said.

Mr. Russell, a certified public accountant, formerly worked as senior audit manager for accounting firm Arthur Anderson and Co. He joined the port in 1989 as its chief financial officer and director of finance.

Mr. Warren said he was not aware of Mr. Russell's involvement in the state's negotiations to purchase the Allied site, which would replace the current passenger terminal at the Dundalk Marine Terminal.

The site was one of several considered by the MPA during the past year for the cruise ship terminal and the one most heavily favored by local businesses.

Other members of the investment group are Stop, Shop & Save President Henry T. Baines, Watkins Security President James H. Watkins and Walter W. Hill Jr., joint owner and vice president of ESC Technologies Inc.

Since it opened, Harrison's Pier 5 Hotel has experienced financial difficulties, including failure to pay $1.2 million in city property taxes. Developed at a cost of $14 million, the hotel has an average occupancy rate of 75 percent. The city took #i possession of the hotel at the end of 1993.

The investment team said it hopes to attract a national restaurant chain to Harrison's.

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