The company hired to transform Miami International Airport's drab food and beverage concessions into a first-rate, brand-name operation secretly paid political insiders $1.7 million to maintain its hold on the mammoth contract, The Herald has found.

The insiders, minority partners with ties to Miami-Dade Mayor Alex Penelas, were supposed to run eight restaurants as part of a program to help disadvantaged businesses. But behind the scenes, Host Marriott Services Corp. agreed to pay them $33,225 a month so the company could keep all of the concessions - while the minority partners operated none.

State and federal investigators are examining whether the arrangement, orchestrated by lobbyist Christopher Korge, was devised to skirt federal laws on minority hiring at airports.

They are trying to determine whether the partners were used as a front for Host.

The 10-year concession contract is one of the biggest in the county, bringing in $40 million a year in sales.

When Host won it in 1998, it was required to partner with minority entrepreneurs and help them gain a foothold in the airport food industry. A third of the revenue was slated for these smaller firms.

The company joined a group of Korge's friends, who formed a "disadvantaged business enterprise, " or DBE, and promised to build eight restaurants.

Reports filed by the airport to the FAA - which requires the minority participation - appear to show that this happened right away. The airport's director of minority affairs wrote that the minority concessionaires were doing great, raking in $4.1 million in gross revenue during the first five months of the contract.

By 1999, they were apparently doing better than almost any other group of disadvantaged businesses at the airport, bringing in $12.3 million in sales from their restaurants.

In fact, they hadn't opened any.

The reports were wrong.

Host didn't give up any space to the minority partners for four full years. And the minority partners didn't open a single restaurant until last January.

VENTURE SCRUTINIZED
FBI and Miami-Dade police look for fraud, concealment

The FBI and Miami-Dade police detectives have been working to establish whether the venture committed fraud during the long delay. They are investigating whether it lied about minority involvement to get the contract and whether the airport's director of minority affairs, Esterlene G. Lewis, intentionally concealed the scheme by falsely certifying minority participation.

Lewis' reports eventually reflected reality. For 2000, the percentage of gross revenue allocated to Host's partners in her FAA report: zero. She said the wrong numbers were an accident. She was simply following her predecessor's procedure for calculating numbers. "I have not done anything wrong, " she said in an interview.

The partners deny wrongdoing as well, saying their business will ultimately prove "the greatest DBE success story at MIA."

"Yes, it is true that it has taken a long time to complete this project, in fact two years too long. But everything at MIA gets delayed, " they wrote in a statement. "It would be simply untrue for anyone to say [we are] a front for Host."

But a Herald review shows how a national company quietly maneuvered to keep its grip on a lucrative contract, and how lobbyists used a minority business program to make money for themselves.

The food contract is the most important piece of a program to bring MIA's generic and outdated shops into the modern, mall-like world of airport retailing.