10/21/2010 5:04PM

Report criticizes Aqueduct casino process


Companies seeking a 30-year contract to operate a casino at Aqueduct racetrack in Queens contributed $100,000 to politicians during a failed process to select the operator earlier this year, according to a report prepared by New York Inspector General Joseph Fisch.
The report cited numerous instances of political influence in the late January selection this year of Aqueduct Entertainment Group to operate the casino, including leaked bids and disregarded advice from experts who evaluated the bids. AEG was selected by Gov. David Paterson, Senate Democratic Conference Leader John Sampson, and Assembly Speaker Sheldon Silver, but the selection was scrapped after an outcry about political influence in the decision-making process.
“This process was doomed from the start, and at each turn, our state leaders abdicated their public duty, failed to impose ethical restraints and focused on political gain at a cost of millions to New Yorkers,” Fisch said in a release. “Unfortunately, and shamefully, consideration of what was in the public’s best interest, rather than the political interest of decision makers, was a matter of militant indifference to them.”
The contract to operate the casino was aggressively sought by developers and gambling operators because of the casino’s prime location in New York City. After a restarted process later this year, the State Lottery selected Genting New York, a conglomerate with gambling interests in Malaysia, the Philippines, and Singapore, to operate the casino, a decision that was swiftly approved by legislative leaders.
The report cited the decision in 2008 to allow then-Governor Eliot Spitzer, then-Senate Majority Leader Joseph Bruno, and Silver to be solely responsible for selecting the winning vendor as corrupting the process by removing lobbying restrictions on potential operators. As a result of that decision, the three companies bidding for the casino contract – AEG, SL Green, and Delaware North, and what the report called the company’s “associates” – made more than $100,000 in campaign contributions during the selection process.
“Under a standard procurement practices, such acceptance of money by a decision-maker would be legally prohibited,” the report said.
According to the report, an assistant to Secretary to the Senate Angelo Aponte leaked competitive bid data to a consultant working for AEG in May 2009. In addition, Sen. Sampson “disclosed inside information” to a former state senator working for AEG in November, 2009. The report also said that Sampson insisted that AEG include a developer, Don Cogsville, in its partnership.
The report also said that Senate President Pro Tempore Malcolm Smith lobbied for the selection of AEG despite a vow to recuse himself from the deliberations due to a personal relationship with an AEG partner, the Rev. Floyd Flake. Gov. Paterson later met with Flake in the days following AEG’s selection to seek his endorsement in the 2010 New York gubernatorial election, a meeting that “was ill-advised,” the report said, although the inspector general said its investigation “found no evidence of a quid pro quo” in Paterson’s request for the endorsement.
Fisch said that he has forwarded the report to U.S. Attorney Preet Bharara and New York County District Attorney Cyrus R. Vance “for appropriate action,” and that he has referred Senators Smith and Sampson and Senate Secretary Aponte to the Legislative Ethics Commission.
“The report strongly recommends that the ‘three men in a room’ process used to select AEG never be repeated and that New York State impose stringent procurement restrictions on all major contracts to ensure that they are competitive, transparent, and fair,” the report said.