Twenty-fifteen was a tough year for Redflex, the well-known and thoroughly-loathed Australian purveyor of corruption, bribery, and traffic-ticket cameras.
Although the firm’s US arm obtained a small victory in the $300 million lawsuit filed against it by the city of Chicago, getting the case transferred to federal court, Chicago is expanding the scope of its lawsuit in response. Meanwhile, smaller municipalities are abandoning Redflex in droves — and the numbers make it easy to see why.
It’s the kind of disgraceful corruption that would have seen its perpetrators swinging from a tree in a more forthright age: an alleged $2 million bribery program that has already seen a Redflex consultant plead guilty to charges of delivering over $570,000 in cash and other bribes to Chicago’s former managing deputy commissioner of transportation. (Chicago Mayor Rahm Emmanuel, who was long, ahem, a tireless ally of Redflex before reluctantly ending the city contract with the firm when all the evidence on the issue because too obvious to be ignored any further, was re-elected in a runoff election recently.)
But the blood-soaked hands of Redflex, whose cameras often increase accidents at the intersections where they are making money for the company, have been putting money in other pockets outside Chicagoland.
Investors in Redflex Traffic Systems were resigned toward the photo enforcement vendor’s declining US performance at Wednesday’s annual shareholder meeting in Melbourne, Australia. The company has lost significant US market share and profit as more cities reject automated ticketing machines. Nonetheless, large executive compensation packages were approved without the dissent found in past meetings.
Shareholders signed off on a $324,926 salary for chief executive Graham Davie, plus $194,956 in stock for a total of $519,882 — a raise of 3.6 percent. Board member Karen Finley’s salary increased 3 percent to $318,270 plus $196,060 in stock for a total of $514,330. Finley is in charge of US operations which saw a drop in profit from the first and second half of the year of 7.4 percent.
Redflex has also lost its position as the dominant player in the automated ticketing market to American Traffic Solutions which has used funds invested by Goldman Sachs to buy out smaller competitors and take on their municipal contracts. ATS now boasts the greatest number of cameras deployed.
Opponents of red light cameras and speed cameras have had an impact on the bottom line of one of the world’s largest photo enforcement providers. Redflex Traffic Systems reported a “slowdown in the level of new contracts signed” that dragged the firm’s US traffic camera revenue down $2.4 million in the 2011 financial year. Redflex lost $1.5 million worth of US contracts this year.
Drivers often get the run around when dealing with the traffic ticket bureaucracy. When fighting city hall, individuals usually have no little hope of prevailing. Motorist Harry A. Church realized that with red light cameras, the system was outsourced from city hall to a company that could be more easily sued. After being double-billed by the Australian red light camera company Redflex Traffic Systems, Church filed a lawsuit that has been taken up by the US District Court for the Eastern District of Tennessee.
Last November, citizens of Garfield Heights, OH, banned the use of red light cameras in the city. The vote was close, 4,827 to throw the cameras out against 4,735 for keeping them. But presidencies were decided on a slimmer margin. The keeps the cams side had powerful support: A PAC called “Safe Road Ohio” lobbied for the cameras, with the requisite pictures of little children.
According to the Plain Dealer, the primary donor of this PAC is “Redflex Traffic Systems — the company that operates the city’s camera program and pockets $35 from every speeding ticket issued.” The Garfield Heights Council doesn’t seem to hold democracy in high esteem. Last week, the Council moved to bring the cameras back into the city.
The largest operator of red light cameras and speed cameras in the United States experienced essentially no growth in the first half of the fiscal 2011. Melbourne-based Redflex Traffic Systems told Australian investors Friday that its revenue increased by a three-tenths of a percent over the same period last year — less than the rate of inflation. In 2009, Redflex sales were booming with the activation of 445 new systems. In 2011, Redflex only boasted eight new contracts.
“As a result of the macro economic challenges facing the US market throughout 2010, and the current politically challenging times, new contract executions have declined,” the Redflex filing explained. “The number of installed systems includes some cameras that may not be generating revenues for various reasons including: warning periods; delays in going live; legislative issues; road work; or maintenance actions.”
Redflex shareholders on Friday approved big pay hikes for the photo enforcement firm’s top management at the annual meeting in Victoria, Australia. Redflex has cornered 44 percent of the red light camera and speed camera market in the US, although Arizona-based rival American Traffic Solutions (ATS) is catching up to its down under competitor with a 41 percent market share.
A federal magistrate on October 20 set the schedule for a five-day jury trial to decide whether red light camera vendor Redflex Traffic Systems owes the city of Minneapolis, Minnesota $3 million. US Magistrate Judge Susan Richard Nelson set a February 1, 2012 date for the showdown with motions and pleadings to be served by February 1, 2011.
The city is furious that it had to refund $2.6 million in red light camera tickets after the Minnesota Supreme Court ruled the program was illegal ( view decision). The city wants to extract that money back from the Australian ticketing firm, but Redflex is fighting the suit.
Morale at Redflex Traffic Systems, the Australian photo enforcement company with more contracts in the United States than any other firm, has never been lower. Yesterday, the company faced the real possibility that the state government in Victoria, Australia would sue for the recovery of $15 million in citations issued by a faulty Redflex freeway speed camera system. Although the government currently refuses to issue refunds, it issued equally stern denials before giving in to public pressure by refunding $26 million worth of tickets over a high-profile accuracy failure in 2003.
A team of experienced class action lawyers is taking on California’s red light camera industry, and photo enforcement companies are expressing unease. Last month, the law firm of Pearson Simon Warshaw and Penny, LLP filed suit in San Mateo County Superior Court arguing that tickets issued throughout the Golden State since January 1, 2004 should be refunded where the photo enforcement contracts violated a state law mandating flat-rate compensation to companies like Redflex Traffic Systems. Redflex referred to the case as a particular business risk in an August 25 filing with the Australian Securities Exchange.
Despite collecting A$137 million in revenue from automated traffic ticketing, the Australian photo enforcement giant Redflex Traffic Systems yesterday announced its net profit before tax had fallen to a mere $442,000 for the first half of 2010. Redflex remains the number one player in the US market with US motorists providing 79 percent of the company’s ticket revenue. Redflex management, however, blamed recent losses primarily on “considerable public opposition” to photo radar and red light cameras in the US.
Officials in Tasmania, Australia last week reluctantly admitted that some of its speed cameras produced unreliable readings. The automated ticketing machines on Tasman Bridge were found to be issuing speeding tickets to vehicles that were not speeding, forcing a refund of 440 tickets issued between June 5 and July 5. According to The Mercury, a test of the device against a handheld speed gun showed inaccurate readings.
According to AZfamily.com, Arizona’s controversial freeway speed cameras will come down this week, as a result of governor Jan Brewer’s decision to not renew the state’s contract with Redflex. In addition to public opposition to the cameras, a lack of revenue flowing to the state appears to have been a factor in the decision to shut down the cameras. Apparently, the cameras generated over 7,000 tickets in their first year of operations, but because so many motorists simply ignored the tickets and the state didn’t have enough process servers, only about $30m of the estimated $90m in fines that should have been generated by those tickets was actually paid to the state. Arizona’s freeway speed cameras should be deactivated by this Friday.
Toll road giant Macquarie Bank this week announced its intention to acquire the leading operator of red light cameras and speed cameras in the US. Macquarie, known for its skill in harnessing government guarantees to make itself a “millionaire’s factory,” made an offer to purchase Redflex Traffic Systems of Australia at the bargain price of A$2.50 a share.
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