Who Can You Trust?

Challenged Winner

Of VLT Concession

Makes New Pledges





By Henry J. Stern
February 8, 2010

For some time, we have been reporting on the deteriorating situation in Albany. The Legislature has for years been a national model of dysfunctionality. Unbelievably, the situation worsened in 2009 with the Senate so closely divided that neither party could do much business. People now look back at the Bruno administration as a model of productivity. The three men in a room were at least able to approve legislation when they were in agreement.

The Senate deadlock, resulting from the Espada-Monserrat defection to the Republicans on June 8, lasted for over a month and was only broken after an agreement awarded the defectors the leadership positions they wanted, including the majority leadership for Senator Pedro Espada, Jr. That agreement was kept, except that real power (and press) went to Senator John Sampson of Brooklyn, the conference chair. Espada retained his title, staff, and lulu, which were duplicated for Sampson.

After the upheaval, and its costly (to the taxpayers) resolution, it became extremely difficult to transact any business. Since the approval of all 32 Democrats was required to pass anything, each of them had veto power over the majority. The three men in the room were reduced to two and a half men, and that is a generous estimate.

In recent weeks, Governor Paterson has been increasingly frustrated as support for him has failed to materialize, and the presumption that Andrew Cuomo will win the Democratic nomination becomes increasingly irrebuttable (or irrefutable, if you prefer). In that context, Paterson's attempt to award the Aqueduct video lottery terminal contract to a group including former Congressman Floyd Flake and Senate president Malcolm Smith is understandable, if not acceptable. If he wants to appear on the primary ballot in September, Paterson needs enough political support to gain 25% of the vote at the Democratic state convention in May. Otherwise he would be required to collect 15,000 signatures throughout the state, an arduous and expensive task.

For ten days it has been rumored that a newspaper is preparing an expose of the governor's private life. True or false, these rumors have the effect of discouraging support for Paterson. Rats leave a sinking ship, they do not climb aboard. The Post state editor, Fred Dicker, although discounting the rumors of personal scandal, wrote a highly critical column in todays Post about the award of the racino contract. You can link to it here.

BTW, racino may be a new word for you, it is a portmanteau, combining racing and casino. A racino is a facility at which horses run and people bet, but not only on the horses. If portmanteau is new to you, it is the combination of all or parts of two existing words to form a new word, e.g., brunch and motel.

The Times weighed in Saturday with a strong editorial questioning the selection of an Aqueduct operator. We quoted the Post and News editorials on this subject extensively last Thursday. Here is what the Times had to say:

"For years now, New York State has been trying to upgrade the facilities at the deteriorating Aqueduct raceway in Queens. Then last month, Gov. David Paterson suddenly handed the lucrative contract for video lottery terminals to a company called Aqueduct Entertainment Group. The company has promised jobs, a $300 million bonus for the state and 'a casino concept that celebrates New York.'

"We don't see a lot to celebrate. Indeed, this contract seems designed primarily to boost Governor Paterson's political fortunes and enrich at least one important friend.

"One of the investors in Aqueduct Entertainment Group is the Rev. Floyd Flake, who is among New York's most influential and politically savvy black pastors. Only a week before the announcement, Mr. Flake had been saying nice things about Attorney General Andrew Cuomo, who is likely to be Mr. Patersons main competition

"Then, three days after awarding the contract, Governor Paterson invited the pastor in for a chat about whom Mr. Flake plans to back for governor. Both men deny any connection between the Aqueduct deal and the election. But heres the next reason to worry: Given the secretive contracting process, who's to know the truth?

"Governor Paterson's aides are quick to point out that the process was set in place before he took office and was intentionally crafted to give all three of Albany's top political leaders -- the governor and the leaders of the Senate and Assembly -- the final say. But Mr. Paterson never objected to the process and reportedly overruled analysts inside the administration who rated other bidders higher than Mr. Flake's group.

"The Aqueduct deal begs to be investigated. Mr. Cuomo; the Commission on Public Integrity; the state's inspector general, Joseph Fisch; the comptroller, Thomas DiNapoli -- at least one of them should be on the case."

You can link to the complete Times editorial here.

As the Aquagate (a word that has some similarity to the original gate) facts roll out, the process appears to be increasingly flawed, if indeed there was any fixed process at all. If the prosecutor can't prove the underlying acts to be criminal, he can go for perjury if the stories told by the participants differ sufficiently.

In any event, no one (not even the State Comptroller) should have sole authority to award contracts of that magnitude without an objective review of competing offers. The latest contract is egregious, considering the politics involved. But how many other contracts has the state entered into on the basis of personal friendships, campaign contributions or even baser considerations?

AEG is attempting to comply with Speaker Sheldon Silver's conditions for his approval. They have dropped Darryl Greene as a participant because of his conviction for defrauding New York City. They have promised that neither Malcolm Smith nor any other state officials involved with the contract will go to work for AEG. They will increase their deposit to the $300 million demanded from them.

We are in the midst of exposing this transaction. The changes made today are the result of public outcry. But how can we believe that even the laundered transaction now on the table will be in the public interest, or that it is any better than the other five proposals that the governor rejected? Several questions occur to us: the Senate Democratic conference chair, Sen. John Sampson, concurred with the governors decision to choose the Aqueduct Entertainment Group over competing bidders. Rule 10: "I wonder why."

And Speaker Silver, the wisest of the trio, has made additional demands which appear reasonable. Were they made before or after AEG was selected, and did the other bidders have the opportunity to revise their own?

The public deserves answers to these questions, before a contract is approved and signed.







StarQuest #643 02.08.2010 1121wds