RedFlex Traffic Systems Inc.: A Company in Crisis
In the middle of a red hot scandal involving allegations of bribery and corruption, notorious red-light camera operator Redflex Traffic Systems Inc. fired its executive vice president, accusing him of misconduct.
RedFlex Legal Troubles Begin
The RedFlex legal troubles in the U.S. began when a whistle-blower raised allegations of bribery, contending that the RedFlex lavished trips on the Chicago official who oversaw the RedFlex contract in an attempt to gain favor. RedFlex conducted an internal investigation and found no merit to the allegations. But RedFlex did not tell the city officials about the allegations or the internal investigation.
Chicago Tribune’s Investigation
In 2010, however, the Chicago Tribune began conducting its own investigation and running a series of articles exposing the relationship between Arizona-based RedFlex, which operated the red light cameras in Chicago, and city officials. This led to investigations into RedFlex and federal criminal charges against some of the company’s top officials soon followed.
Allegations of Bribery and Corruption
A former executive, Aaron M. Rosenberg, accused RedFlex of widespread and ongoing bribery by giving gifts and financial incentives to local officials in ten states to secure new contracts. RedFlex shook-up its internal ranks by firing a number of officers, including Rosenberg. In August of 2014, the former CEO of RedFlex, Karen Finley was indicted in connection with the bribery scandal; she was charged with multiple counts of mail fraud, wire fraud, bribery, and one count of conspiracy. She has pleaded not guilty. A Chicago city employee was also indicted and charged with taking bribes from RedFlex.
RedFlex Sues Rosenberg
In response to Rosenberg’s allegations, RedFlex sued Rosenberg for defamation, contended that he was to his “dishonest and unethical conduct” was to blame. Rosenberg responded that RedFlex was merely trying to use him as a scapegoat and to cover up a longstanding system of showering public officials with “lavish gifts and bribes.” Rosenberg filed a counterclaim asserting that he was simply carrying out orders and produced emails to prove it. Expensive meals, golf outings, even trips, Rosenberg said, were categorized as “expenses” even though they were really bribes.
RedFlex’s Consequences
In response to the scandal Mayor Rahm Emanuel banned Redflex from competing for another contract with the city and announced that it would not renew RedFlex’s current red light camera contract. A big hit for RedFlex considering Chicago accounts for 13 percent of the company’s revenue. And RedFlex’s troubles are not limited to Chicago. There have been investigations in at least two other cities and the company has faced scrutiny and rejection from other cities.