Exposed: United Airlines Executives’ Multi-Million Dollar Bribery Scandal at Newark Airport

Three former United Airlines executives engaged in a bribery scheme involving renovations at Newark airport. They accepted bribes from a maintenance and construction company to secure a restroom renovation project.

In exchange they received renovations to their own homes, electronics and jewelry and total bribes over $1.2 million. They steered the business to the most expensive contractor, who submitted a two page bid in comparison to dozens of pages for competing contractors. Then the employees inflate contract change orders to help the company recoup its bribe expenses.

These employees each face sentences up to 20 years in prison and fines up to $250,000, and they’ll be sentenced in April 2024.

According to United Airlines,

This is an unfortunate situation where the defendants are charged with the intent to defraud United of its right to their honest services. We have been fully cooperating with the investigation and will continue to do so.

The Port Authority of New York New Jersey operates Newark, as well as New York JFK and LaGuardia airports and Newburgh Stewart, Teterboro and Atlantic City.

United Airlines lost CEO Jeff Smisek in a corruption scandal involving Newark airport and the Port Authority, where PANYNJ’s chairman sought a special flight from Newark to his vacation home from the CEO and this was provided in exchange for favorable treatment of United’s agenda in front of the agency.

Ironically, the Port Authority of New York and New Jersey was created during the progressive era as a structure that would reduce corruption and increase government efficiency. It’s a poster child for both corruption and inefficiency. The ‘Fort Lee lane closure scandal’ became public and dragged down Governor Chris Christie after toll lanes on the upper level of the George Washington Bridge were reduced from 3 to 1 for four days, causing massive traffic back ups and delaying police and emergency vehicles – this was to punish one of Christie’s political opponents.

Once the FBI’s investigation into Bridgegate uncovered corruption involving United Airlines and its CEO, the United board had to replace Smisek. Jeff “Changes You’re Going To Like” Smisek was the driver behind Newspeak at the airline like ‘Project Quality’ to cut billions in expenses out of the product. The airline only rid itself of Smisek, replacing him with then-board member Oscar Munoz became CEO, because of a criminal investigation.

And Munoz, lacking airline experience, brought Scott Kirby (being terminated as President of American Airlines) into United as President. The expectation was that Munoz would become executive chairman and Kirby CEO, but this was delayed by the David Dao dragging incident the following spring.

Ultimately though the best thing that could have happened for United Airlines and for its customers (and employees) was for Smisek to get caught up in corruption at Newark airport, to bring in a short-term CEO who helped to improve employee morale and who green lit product improvements, and for that new CEO to bring in the current one.

At the end of the day, though, it’s Newark so of course there were kickbacks. And it’s Newark rather than Atlanta or Detroit, so the kickback scheme came out.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. You were dead on until the last paragraph.
    No one should be surprised when corruption at high levels is caught but there is a big difference between it involving a private company and when it is just a government official. Perhaps bribes took place in ATL or DTW but until there is evidence that involved an airline – it is not even comparable.
    Under United, there have been a series of illegal dealings w/ the PANYNJ since UA took over CO’s EWR hub that, combined w/ strategic misfires have left UA smaller in NYC relative to its primary competitor than ever.
    poor choices result in poor outcomes, to no one’s real surprise.

    And the more significant issue from a financial standpoint is ORD where the City of Chicago keeps pushing forward with a hugely costly new terminal that AA and UA will share and pay for which is way over budget and will make ORD the most expensive airport for connections in the US.

  2. United executives certainly seem to know their way around New York and Chicago.

    No way that United’s legal team and C-Suite didn’t know about or think a two page, $20M contract wasn’t remotely suspicious. It makes you wonder how many other phony property & maintenance contracts are at its other hub locations…

  3. Bob Menendez should have been there to announce this on behalf of United Airlines. Anytime that the government does something to “increase efficiency” or laughably reduce costs it’s always going to turn into a scam. Everything should be done by for profit companies because a profit motive is always better than the scams that come around non-profit and government controlled work projects. If a for profit business was paid to get homeless people off of the streets LA would be a beautiful metropolis.

    My in-laws are from New Jersey. I think it’s a joke of a state and have come up with a new map that eliminates the state from the map by dividing up and allocating parts to three different states – Delaware, Pennsylvania and an exclave of Connecticut. I’m very popular with them.

  4. Hmmm… What are the odds: New York City, Queens, Newark, Newburgh Stewart, Teterboro, Atlantic City, Miami, Atlanta, Chicago, and Detroit… All Blue, who knew !

  5. While Dallas and Ft. Worth both currently have “red” mayors, Houston, Austin and San Antonio do not.
    Blue is the “standard” color for big city mayors.

  6. Disgusting.

    I mean, how difficult is it to be en executive of an legacy airline? I mean, make some speeches, order some new airplanes, and try not to sleep with subordinates. I mean we’ve been in the jet age for over sixty years, it’s not like they have to learn how to fly. And the taxpayer bails out your inept business decisions.

    I shed no tears for low-class thugs caught in their kickback schemes and sweetheart deals.

  7. I recall being repeatedly told that Rhode Island was the most corrupt state in the union, and yet it’s been small fry compared to what flies in NJ (and NY).

    Where was US Senator Bob Menendez of NJ on this? He seems to have a corruption scandal popping up time and time again.

  8. Love your paragraph about “The best thing for United…”. Smisek was a sleezebag who was hated by CO and UA. Got caught in bed with the port authority, fired, and left with a golden parachute. Pretty good deal for him. He should have been disbarred and sentenced to jail. Why do I suspect that this deal will end similarly.

  9. So much exposure, we didn’t hear the names of the three UAL executives even once. And what about the company who paid the bribes in order to cut out competition? Today it’s a bathroom, yesterday it was a runway and a terminal. Many fly under the radar. Some land on a taxiway. C’mon it’s Newark Airport and par for the course. They’ve got so much money that, at the turn of the century, instead of demolishing a building during airport reconstruction, they moved it. Did the CEO at United Express leave any breadcrumbs on his way to Ohio? Connect the dots. Smisek wasn’t alone. Even Santa has helpers.

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