Mired in bid-rigging scandal, Cuomo alters procedures

Sep 28, 2016

Gov. Andrew 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 Cuomo is failing to address the bigger picture — whether the $8.6 billion worth of programs are an effective use of public money.


Critics are blasting Governor Cuomo for his response to the latest scandal to hit Albany.
Credit WBFO File Photo

The secretive nature of awarding contracts for major projects like the Buffalo Billion led to an alleged bid-rigging scheme by some of Cuomo’s associates. That’s what U.S. 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 nonprofit company to arrange the bids was a formula for potential corruption. The criminal complaint alleges that SUNY Polytechnic Institute 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 said, former SUNY Poly head Alain Kaloyeros and longtime Cuomo associate and lobbyist Todd Howe personally profited through bribes and kickbacks.  

E.J. McMahon with the Empire Center, a fiscal watchdog group, said 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 form 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 agreed that the private nonprofits Fort Schuyler and Fuller Road management were the perfect setup to create opportunities for corruption.

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

Brodsky said that 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 Gov. 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 said once the loophole allowing local development corporations to negotiate contracts was eliminated, new ways were created, like using private nonprofits to award contracts.

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

Cuomo seems to have realized belatedly that the use of private nonprofits 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 Sept. 23.

That system will be based on advice from the firm run by Bart Schwartz, the private investigator Cuomo hired to look into the scandal. Schwartz’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 that 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 2015.  

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

Cuomo admits that he now knows the process was deficient.  

Brodsky said it’s not enough, though, to simply shift the contract authority elsewhere. He said 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 said 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.