An investigation by state Inspector General Catherine Leahy Scott found ethical misconduct, irregularities in the process for obtaining goods and services and financial mismanagement at the New York Power Authority—a state public power organization—in 2009 and 2010. She has referred her findings to the state Joint Commission on Public Ethics for review.
Scott said now-former NYPA President and CEO Richard Kessel had apparent conflicts of interest that he failed to review, in violation of state ethics law and the authority’s code of conduct. Kessel recommended NYPA didn’t disclose that he had an ongoing personal legal relationship with a firm that he recommended NYPA contract with for legal services, the report said.
“Public officials have a responsibility to conduct themselves in an ethical manner consistent with New York State Public Officers Law, and each of our agencies and authorities has a responsibility to the taxpayer to ensure it conducts business in an effective, ethical, and lawful manner,” Scott said in a statement. “My investigation revealed serious misconduct and ethical lapses, and in response, NYPA has taken substantial and meaningful steps to address these findings and improve its operations.”
Following the investigation, the NYPA administration has strenghtened its ethics policies and conducted an audit of its operations, Leahy said. Kessel resigned in 2011.
Other findings from Leahy’s probe:
—A process during Kessel’s tenure to hire law firms for matters beyond the expertise of the authority’s legal department was deficient. The firms were chosen through a “poorly managed procurement process that involved inadequate record keeping and failed to provide sufficient guidance to staff reviewing the proposals.”
—Kessel solicited and accepted a $15,000 loan from a subordinate in 2009. They didn’t report the loan on their financial disclosure statement.
—A former NYPA trustee inappropriately solicited a job at the authority in 2010, while serving as a voting member of the board of trustees.
—NYPA, under Kessel, made charitable contributions that were unrelated to the authority’s powers, duties or purpose between 2009 and 2010. NYPA has effective policies and procedures to monitor its charitable contributions, but there was no formal review and approval process to monitor what the authority calls “business expenses,” but which are contributions, the report said. Both charitable and business-related contributions increased during Kessel’s tenure, both statewide and specifically the area of Long Island where he lived.
Scott said NYPA is implementing her recommendations, which include conducting a management audit of procurement policies and procedures and organizational structure; a policy prohibiting active board members from seeking employment with NYPA; a policy for business-related contributions and disclosure of any ties between the NYPA employee and funding recipient; and disclosure of actual or potential conflicts of interest when issuing and reviewing requests for proposals.