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Queens Chronicle

Report slams prior racino bidding process

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Posted: Thursday, October 28, 2010 12:00 am

Many residents of New York have long held a cynical view of how business is done in the state capital.

“Albany dysfunction” is a term so often heard that it has practically entered everyday use when discussing state politics.

But never before has a picture been painted so vividly and clearly of the failure of state government to serve the public interest than in the report released last week by state Inspector General Joseph Fisch about the process that led to the short-lived selection of Aqueduct Entertainment Group to operate a casino at Aqueduct Racetrack.

The scathing report claims that the selection of AEG was rigged from the start by Senate Democratic leaders, whom the IG report says at best engaged in political cronyism, and at worst in criminal activity.

The report particularly slams Senate Conference Leader John Sampson (D-Brooklyn) and Majority Leader Malcolm Smith (D-Jamaica) for giving AEG lobbyists inside information during the bidding process.

Gov. Paterson, along with leaders of the Senate and the Assembly, selected AEG in January to operate 4,500 electronic slot machines at the racetrack.

In March, amid claims of political favoritism, Paterson rescinded the selection. After another round of bidding, Genting New York was selected last month to operate the Aqueduct gaming franchise.

The report claims Smith remained secretly involved in the process even after recusing himself because of his ties to an AEG partner, pastor and former Congressman Floyd Flake.

“Contrary to his claims, the Inspector General determined that Smith was briefed on several occasions regarding the Senate’s analysis of the Aqueduct bidders, spoke to lobbyists from AEG on numerous occasions, and advocated on AEG’s behalf to the governor,” the report states. “The Inspector General finds Senator Smith’s testimony to be misleading, at best, and designed to conceal his efforts on behalf of AEG which were laden with the appearance of conflicts of interest.”

A call to Smith’s office for comment was not returned as of press time.

The report also accuses Senate Secretary Angelo Aponte of releasing information to AEG partners, and then lying about it to investigators afterward.

But the Senate was hardly the only Albany institution excoriated by the Fisch’s report.

Though he was not accused of criminal behavior, Gov. Paterson is portrayed as being disengaged from the process to the point that his staff withheld information from him about what was going on.

And Assembly Speaker Sheldon Silver (D-Manhattan) also did not escape criticism.

The IG report claims that Silver delayed the process unnecessarily. After AEG was selected, Silver, who the report says was the “most informed” about the entire process, knew about weaknesses in AEG’s structure and its proposal and instead of flat out rejecting the bid, he imposed conditions that effectively accomplished the same end.

“Despite the urgency of approving this franchise so that revenues would begin flowing to the state, the speaker permitted the process to continue knowing that it was a doomed selection that would further delay a much needed revenue stream,” the report states.

Blair Horner, legislative director of the New York Public Interest Research Group, said the report would likely confirm residents’ most cynical views of Albany.

“I think this further inflames anger at Albany and the political leadership, and highlights the unsavory aspects of Albany decision-making,” he said. “It paints a picture of chaos and incompetence on the governor’s side, and political opportunism on the Senate Democrat side. The public has a right to be angry.”

Horner said the dynamic that allowed the process to occur was a specific change to the state’s procurement law made several years ago by former Gov. Eliot Spitzer, Silver and former Senate Majority Leader Joe Bruno. That change allowed the governor, Assembly speaker and Senate majority leader, the oft-criticized “three men in a room” of state governance, to award statewide contracts. The report accuses Bruno of pushing for the change to have more control over the selection of VLT operators because his district included Saratoga Raceway.

Community Board 10 Chairwoman Betty Braton said that process is what led to the AEG fiasco, and she praised the open process by which Genting was selected by the state Lottery division.

“The process was a disaster,” she said. “There was no information coming from the government.”

Braton said she didn’t take any issue with the nuts and bolts of the proposal AEG made, but she didn’t agree with “the machinations of the process.”

In the report, the IG claims that Braton had email correspondence with Karl O’Farrell, a controversial member of the AEG consortium who eventually dropped out of the group’s bid due to legal problems that state regulators thought might be troublesome if he remained involved.

The IG claims that Braton appeared to act on behalf of AEG and supplied O’Farrell with information to aid AEG’s bid.

“Braton’s activities on behalf of AEG provides yet another example of the problems inherent in removing a procurement from the confines of standard procurement practices and lobbying restrictions as contributing to a selection made through private conversations rather than objective assessment,” the report states.

Braton, however, denied that she favored AEG or worked on its behalf, and that she had been in contact with all the bidders in an effort to get as much information on all the proposals as possible.

“The board took no public position, and we had to work with whomever got selected,” she said. “We tried to develop relationships with all the different companies and tried to learn as much as we could learn about them.”

State Sen. Joe Addabbo (D-Howard Beach) said he had “expressed frustrations to the leadership” about the bidding process.

“Only the governor could have made a change in the procurement process. and he didn’t do that,” Addabbo said.

The senator said he doesn’t believe the aspersions cast on members of the Senate leadership will affect his re-election bid against Republican Anthony Como when voters go to the polls next week.

“My people know that I fought for them throughout this whole process,” he said.

Como this week called on his opponent to return campaign contributions he has received from Adams and other Senate Democratic leaders involved in the Aqueduct scandal.

Como also called for Addabbo to step down as chair of the Senate Racing and Wagering committee.

“There are still many unanswered questions concerning the degree of Senator Addabbo’s role in the Aqueduct scandal, but it’s clear from the inspector general’s report that his involvement demands further scrutiny,” Como said.

Addabbo said he would not return campaign money, nor relinquish his committee chair.

“The DSCC gave me money, just like my opponent has received money from the Republican leadership,” he said. “That’s what we do during campaigns, we raise money. He wants me to deplete my resources.”

Assemblywoman Audrey Pheffer (D-Ozone Park), who is facing Republican Harold Paez for the 23rd Assembly District seat, said she doesn’t believe her race would be affected by the report.

Pheffer said she “was not a recipient of any money” from AEG.

“I met with all the bidders to try and determine which one would be the best for the community,” she said.

The inspector general said the report was forwarded to state and federal prosecutors for possible criminal charges.

Welcome to the discussion.