BY Terese Loeb Kreuzer
A scathing report from the New York State Inspector General’s office issued last Friday condemned the Battery Park City Authority for wastefulness, favoritism in promotions and compensation and sloppy internal accounting practices.
The B.P.C.A. is a public benefit corporation created by New York State in 1968 “to plan, create, coordinate and maintain” Battery Park City’s 92 acres of residential and office buildings, retail stores and park space on the Lower West Side of Manhattan.
The 31-page report (pdf of report here) which states that the B.P.C.A. squandered an average of more than $45,000 a year on holiday parties and picnics for employees and gifts for departing employees, also states that the Authority spent an average of $3,500 a year on flowers and cakes for employees “to acknowledge events such as birthdays, bereavements and to extend get-well wishes.”
Joseph Fisch, the inspector general, castigated the Authority for paying for lunches during in-house business meetings and also took it to task for paying for restaurant meals such as those enjoyed by then-chairman James Gill and former president James Cavanaugh.
“From late 2006 through 2008, Cavanaugh and Gill had lunch together at the Authority’s expense a total of 32 times,” the report states, at an average cost of $70 per meal.
The report also accused the Authority of contributing approximately $4.2 million to non-profit organizations from 2004 to 2008, including some that “did not directly relate to the Authority’s mission.” Ten of these organizations with a tenuous relationship to the Authority’s mission received a total of approximately $25,000 a year from the Authority, the report says. These contributions and others were said not to have been correctly or adequately reported on financial filings.
James Gill, who served as the unpaid chairman of the Authority for 13 years until his retirement in February 2010, was criticized for making use of a State vehicle and drivers, and not reporting his usage, estimated at $19,000 from 2006 to 2008, as income for tax purposes. Rather than disputing this finding, Gill has agreed to repay the estimated sum.
The most serious allegations in the report have to do with the termination of the Authority’s controller, Debra Bogosian, who was fired by Mr. Cavanaugh in October 2008 despite having previously, and very recently, received commendations for her performance and a merit raise. The report states that Bogosian’s supervisor, Robert Serpico, objected to her termination. Cavanaugh testified that Bogosian had had abrasive relationships with other staff members, which is why she was fired.
When the Inspector General interviewed Bogosian under oath, she stated that her termination was, in the words of the report, “improperly influenced by Wilson Kimball, whom she believed Cavanaugh favored.” Kimball, senior vice president for operations, reported to Cavanaugh and there are allegations in the Inspector General’s document that the two were romantically involved.
Bogosian asked to be reinstated. Instead she was offered severance pay of $56,304 and required to sign an agreement stating that she would not disparage or criticize the Authority.
Bogosian did not instigate the Inspector General’s investigation. It was the result of an anonymous e-mail and electronically submitted complaint form received in November 2008 on the Inspector General’s website, which alleged “fraud and corruption” at the Battery Park City Authority and stated that Cavanaugh and Kimball, his subordinate, were in a romantic relationship.
During the Inspector General’s investigation, neither Cavanaugh nor Kimball would answer questions about this under oath. Cavanaugh resigned from the Authority effective Oct. 1, 2010. Kimball is still on staff. The Inspector General implied that Mr. Cavanaugh’s departure was because of the investigation. Cavanaugh denies this. According to Cavanaugh, he (along with six other senior executives with many years of service) took a generous buy-out offer from the State. “This was a long-planned retirement,” Cavanaugh said, “not a forced resignation.”
Regarding Bogosian’s termination, Cavanaugh said that “numerous employees had submitted written complaints” about her and that outside employment counsel — the firm of Harris Beach — was consulted prior to her termination and concurred that termination was warranted.
As for the report in general, he commented, “The question for the public, is why more than $750,000 was spent on an investigation that questions spending that, in total, amounted to less than half that.”
In a telephone interview, Cavanaugh elaborated that the $750,000 was the cost of legal fees incurred by the Authority and did not take into account staff time or the costs on the Inspector General’s end.
“All in,” said Mr. Cavanaugh, “this investigation has probably cost a million dollars to date.”
In September, the Battery Park City Authority Board of Directors adopted policies to address most of the major concerns in the Inspector General’s report. These policies pertain to financial contributions to non-governmental organizations, seasonal Authority events and meal allowances. Policy regarding “non-fraternization” adopted in September specifically states that “consensual romantic and/or sexual relationships or platonic living relationships between a supervisor and employee in which the supervisor has the ability to impact the progress or assignments of another employee are strictly prohibited.”
William Thompson, Jr. the current chairman of the Battery Park City Authority, issued a statement in response to the Inspector General’s report. “While this investigation predates my appointment as Chairman,” he said, “I have taken seriously the Inspector General’s preliminary findings and recommendations and have taken several steps to institute appropriate changes at the Authority since my appointment. The Board of the Battery Park City Authority and I are committed to ensuring that the Authority adheres to the highest standards of conduct. The actions we have taken over the last several months will ensure the Authority is operating at the highest levels and is prepared for the future. I want to thank Inspector General Fisch for his excellent work.”
Nevertheless, there has been a hue and cry from members of the Battery Park City community who decry the “wasteful” spending when ground rents are slated to increase for many Battery Park City buildings, and from Julie Menin, chair of Community Board 1.
“Having read the Inspector General’s report, I think the findings in the report are obviously shocking,” she said in a phone interview. “The idea that a public authority – the Battery Park City Authority – would spend money as itemized in the Inspector General’s report on all these different items not having anything to do with Lower Manhattan when they are charged with rebuilding that neighborhood after 9/11 is really shocking and a breach of public trust.”
