A Black Eye Affair

A minority firm takes a hit for no good reason

"When I left the mayor's office, I didn't have an easy time finding a job," says Tim Person Jr., as he stands, all hot and sweaty, on the three-acre site of United Materials Companies Inc., the startup concrete business of which he is president. It's been four-and-a-half years since Person was unceremoniously booted out from his post as the top aide to then-Mayor Freeman Bosley Jr., after a story in the Post-Dispatch questioning Person's ethics. Person, the newspaper breathlessly reported, had served as the mayor's rep on a panel that awarded airport contracts to two companies, without disclosing to anyone that his wife had previously done subcontract work for the companies. Stung by the scandal and facing a re-election bid, Bosley announced the next day that although it pained him, he had asked for Person's resignation, and that was that. A noteworthy footnote: Weeks later, a reconvened seven-member selection panel picked the same companies.

Three months later, the Post-Dispatch had another scandal to report, this time about city officials -- including Bosley and Person (before he left his post) -- making personal calls on city-issued cell phones. A month later, in March '97, Bosley lost his re-election bid to Clarence Harmon.

Since their exit from City Hall, Bosley and Person have remained friends. When Person first left his mayoral post, he had a little time on his hands. Friends would call, knowing he was good at home-rehab projects. "I wouldn't do it," he says. "And they'd say, 'Look, man, you're not doing a damn thing. Come over and fix my bathroom. My steps are broken -- come fix my broken steps.' So, yeah, I knew a little bit about concrete, but not a whole helluva lot."

Person received a crash course in the concrete business beginning last year, when he hooked up with Bosley to form United. Bosley, who has done well as a lawyer at Caldwell, Hughes & Singleton, says that about two years ago he and Person began having conversations about starting a company and looked at "electrical supplies, plumbing supplies, sand, steel manufacturing and then at concrete, to see where the opportunities were."

They found them in the concrete business, especially with city-funded projects that had a goal of spending 25 percent of construction dollars with minority companies. They found James Lohse, a white businessman with companies of his own and years in the concrete business. He had expertise and money. They had city contacts and the right skin color. With two other minority partners -- Osagie O'Basuyi, an engineer and businessman from Ohio, and Walle Amusa (who has since withdrawn from the company) -- Bosley and Person approached Lohse and formed United Materials in April 2000. Lohse would own 49 percent of the company, and the minority partners would own 51 percent. Person would be president. To cut down startup costs, the company would own virtually nothing: The three-acre site was leased; the equipment -- a two-story-high "batch plant," which mixes sand, gravel and cement to produce concrete -- was leased; the nearby trailer that serves as the site office was leased; the trucks picking up the concrete for delivery belonged to a company owned by Lohse's wife and contracted by United.

Whereas Bosley is merely an investor in United, Person says he runs the company as president. United now has three employees besides Person -- two whites and one black.

Late last year, United sought and received certification as a minority company from the St. Louis Minority Business Council (last August, Harmon had agreed to accept certification from the MBC and other agencies as legit, to cut down red tape). Based on that certification, which United sent to the city for review, the company has done more than $400,000 in business with two city-funded construction projects downtown: the $276 million convention center hotel downtown and the $74 million city jail.

Along the way, says Person, he has learned a lot about the concrete business. "It's been a real learning process. I can run a business -- I know how to do that -- but I had to learn about the concrete industry," he says. And, yes, Lohse has been a great resource for that, he adds. By late next year, says Person, he hopes to expand the company by purchasing about 10 concrete delivery trucks and hiring 10 drivers. He speaks optimistically of doing "a few million dollars a year" in business in a matter of a few years.

The only time his tone changes, turning dark and serious, is when he is asked about the recent allegation that his company is "a front company," with him as the front man and Lohse as the white guy in the shadows telling him what to do.

At about the time when United sent its MBC certification to the city in February, Bosley was engaged in a three-way mayoral race, with Harmon trying to hold on as mayor and Aldermanic President Francis Slay as the odds-on favorite. Slay won and took office in mid-April.

United has been working on the hotel and jail projects. It never heard a word from the city about any problems or questions about its minority certification. Yet, just two months after Slay took office, the Post-Dispatch again went after Bosley and Person. A Sunday front-page story, headlined "Firm's Minority Status Has Critics Crying Foul," questioned whether United was "a front company" because Lohse owned 49 percent and had the expertise in the concrete business. Among the critics were Percy Green, who heads the city's certification program, and Eric Vickers, a longtime civil-rights activist who had successfully led the Interstate 70 shutdown in 1999, a protest that demanded more minority involvement in public construction projects. Both men have also been critical of Harmon's decision to accept MBC certification; they believe the city ought to have its own, more rigorous investigation before certifying minority firms.

The presumption of guilt was in the air. Jeff Rainford, the spokesperson for Mayor Slay, was quoted saying, "This is exactly the kind of shenanigan that gives the city a black eye."

Two days later, the newspaper reported that Slay had ordered the suspension of United from the city's minority set-aside program "to protect the integrity" of the program. He also blocked all other MBC certifications and ordered an investigation into those firms and their preferred status. The Post story was accompanied by an editorial entitled "Concrete Cronysim," commending Slay on his moves.

"That shit has been like a personal attack," Person says calmly. He pauses, then adds quickly, "But it hasn't hurt business."

Eric Vickers believes United is exactly the kind of company that a tough certification program would toss out. The city ought to look beyond the 51 percent stock ownership by minorities and the percentage of minority employees, says Vickers, to the issue of who controls the company. In United's case, he believes -- with no hard evidence to back him up -- that Lohse controls the company, Lohse has the expertise, and Lohse will profit far more than the three minority owners. He has seen the pattern before, he says. If that weren't the case, he says, Bosley and Person would have tried to set up a "joint venture," where they would have their own minority company, Lohse would have his own company, and together the two would work on a subcontract. That way, says Vickers, of a $100,000 contract given to a joint venture, only $50,000 would count toward the set-aside goal. In United's case, the whole amount gets counted toward the goal.

Person is stung by the "front company" allegation. He is the guy in charge at United, he says. He signs all checks, he signs all sales contracts, and he is there every day to make the decisions, he says. As for the "joint venture" or other legal arrangements, Person says minority firms ought to have the choice of deciding what kind of a setup is more conducive to their purpose and plans. He and Bosley decided that the 51-49 split was best suited to both learning and profits.

Vickers -- and presumably Green, who referred us to the mayor's office for comment -- would like to see the city go back to doing its own thorough investigation of all firms that apply for minority certification, including site visits. Trouble is, that ignores the very reason Harmon decided to rely on certification by other agencies: There had been repeated complaints about red tape and delays with the city's certification program, which is under the auspices of the St. Louis Development Corp., a quasi-governmental agency that reports to the mayor. At the least, the city would have to pump more dollars for staff and resources into that program.

If Slay wants to re-evaluate the city's certification process, that's fine and dandy, but it has nothing to do with United Materials.

That horse is already out the barn door, and the city held it wide open for them.

It's a legitimate question, one the Post has raised: Should the city have a tougher certification process of its own, rather than accepting certification by MBC and other area agencies? But the newspaper didn't question why Percy Green had not acted on United's application since February. Nor did it question why Green had not persuaded the Slay administration to undo Harmon's directive.

Did the new mayor really need the daily newspaper to prompt a policy review when the strongest advocate of such a review -- Percy Green -- works for the mayor? Oddly enough, Rainford's answer is yes. "We're reacting to something that was brought to us and, in large measure, as I understand it, was brought to the Post-Dispatch by the African-American business community," he says.

But neither Rainford, nor anyone else at Room 200, has been able to explain why Green and the mayor's office didn't act earlier.

For their part, Bosley and Person believe the Post story was leaked by Slay's office as a payback to Bosley for opposing him in the mayoral race, a charge Rainford flatly denies as a "conspiracy theory." Who's right is essentially a moot point, although Slay would be well advised to smoke the peace pipe with Bosley. Given the ongoing hostilities regarding the redrawing of the city ward map, Slay already has Ald. Sharon Tyus on the warpath. Having both Tyus and Bosley -- who are among the city's most high-profile black political figures, for better or for worse -- lined up against him isn't the most prudent thing for a white mayor presiding over a city that, for the first time ever, has a black majority population.

Slay's office is about to announce its decision on whether it will continue to accept the MBC certifications.

What it all comes down to is this: Bosley and Person, entrepreneurs without a boatload of cash, saw an opportunity in an industry they didn't know much about, so they partnered with a white guy who had both resources and expertise. And yes, part of their "equity" may have been their race. But they've been above board about United's ownership, its employees and the fact that Lohse had the expertise in the concrete business. They were certified by the MBC when the city's policy was to accept such certification. They got the contracts to work on the two city projects because they had the necessary certification. There's no evidence that they skirted any laws in conducting business.

It seems United is one minority company that has already been helped by the city's set-aside program and is on its way to compete in the market on its own. "We don't give a damn if they count us toward the minority goal or not," Person says.

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