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Are Cuomo's steps to address alleged bid rigging enough?

Posted by Karen DeWitt on

Governor Cuomo is making some changes to prevent any future bid rigging in some of his major economic development projects. But critics on both the left and the right say the governor is failing to address the bigger picture , whether the $8.6 billion dollars’ worth of  programs is an effective use of public monies.

The secretive nature of awarding contracts for major projects like the Buffalo Billion led to an alleged  bid-rigging scheme by some of  Governor Cuomo’s associates. At least, that’s what US Attorney Preet Bharara is charging in a criminal complaint against nine Cuomo associates and real estate developers.  

Critics say the use of a unique private not for profit company to arrange the bids was a formula for potential corruption. The criminal complaint alleges that SUNY Polytechnic used the Fort Schuyler and Fuller Road management companies, to steer tens of thousands of dollars to contractors who were key Cuomo campaign contributors.  In addition, the complaint says, the former head of SUNY Poly, Alain Kaloyeros, and long time Cuomo associate and lobbyist Todd Howe personally profited through bribes and kickbacks.

EJ McMahon, with the fiscal watchdog group The Empire Center, says Governor Cuomo actively sought to limit oversight of the contract awards process. In 2011, along with the legislature, he approved a law to bar the State Comptroller from auditing any contracts signed by SUNY, CUNY and their related entities.

“He’s done everything he can to kind of remove oversight from the executive branch ,” McMahon said. “And the legislature has generally accommodated him. They’ve been completely AWOL on this whole thing.”

While McMahon’s group is fiscally conservative, Richard Brodsky is a liberal Democrat and former Assemblyman. He headed a key oversight committee, set up to police public authorities and other entities related to the powers of the governor. Brodsky agrees that the private not for profits Fort Schuyler and Fuller Road management were the perfect set up to create opportunities for corruption.

“Some very shrewd lawyers found a loophole,” Brodsky said.  

Brodsky says when he was Chair of the oversight committee, he sponsored a law to close a previous loophole that also led to secret economic development contracts and potential corruption. At one point , under former Governor George Pataki, a contributor to the then-governor made a deal to buy key portions of the Erie Canal for just $30,000. The deal was later scrapped.

Brodsky says once the loophole allowing local development corporations to negotiate contracts was eliminated, new ways were created, like using the private not for profits Fort Schuyler and Fuller Road to award contracts.

“We closed similar loopholes,” Brodsky said. “They found a new one, and exploited it.”

Governor Cuomo seems to have realized belatedly that the use of the private not for profits to oversee public contracts is flawed. He announced a day after the criminal charges were filed against his associates that he’s yanking all contract authority for economic development projects  from SUNY Poly and giving it to his own economic development agency.   

“We’re now transferring the responsibility to the Empire State Development Corporation,” Cuomo said on September 23rd.

That system will be based on advice from the firm run by the private investigator that Cuomo hired to look into the scandal, Bart Schwartz. Swartz’s firm, Guideposts, said in a report that there were “problems with the approval, review and inspection processes” including a lack of transparency for the Buffalo Billion  and contracts related to expanded SUNY Poly’s nanotech-related  projects. It recommends better documentation and continued monitoring of the companies who are awarded public money.

Cuomo also deflected blame for any corruption , saying it was SUNY who was ultimately responsible for the contract process, and that, until recently, he hadn’t heard any criticisms, although several newspapers had detailed potential conflicts of interest and questionable timelines of campaign contributions to the governor and the awarding of key contracts. Several reform groups also raised questions in September of 2015.

“It was working well and there had been no complaints,” Cuomo said.

Cuomo admits that he now knows the process was deficient.

Former Assemblyman Brodsky says  it’s not enough, though, to simply shift the contract authority elsewhere, he says the loophole needs to be closed.

“Institutional reform is not transferring power from one remote, semi-private corporation to another,” Broadly said. “It needs a law.”

He says otherwise there’s nothing to prevent “bad behavior” from happening again in a few months after everyone has moved on to other issues. 

On Tuesday afternoon, a spokesman for the governor indicated that Cuomo is now looking more broadly at revising procurement contracts in New York State, and going beyond the scandal in the executive chamber to address problems highlighted in recent corruption cases in the legislature as well. Former Senate Leader Dean Skelos and former Assembly Speaker Sheldon Silver are facing prison time after corruption convictions.

“There's no doubt that after these cases we need to examine procurement of all executive and legislative contracts, outside income loopholes -- which were laid bare in the Silver case -- and even family member income that was central to the Skelos case.” Said Cuomo spokesman Rich Azzopardi.

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