Free dinners, free luncheons and barbecues, even a free $4,000 honeymoon in Istanbul – three city officials overseeing construction of Manhattan’s High Line received these and more from the chief contractor on the project. The company, Kiska Construction Corporation, had more than $60 million in contracts with the city’s Economic Development Corporation to “pretty much build 75 percent of the High Line,” Kiska vice president Alp Baysal told The New York World, “from the structure holding it all up to the finishing touches on the rails.”
In 2008, the officials who took those goodies from Kiska received something else in addition to full stomachs and a hotel room: thousands of dollars in fines from the city’s Conflicts of Interest Board (COIB).
City employees are barred from receiving gifts in excess of $50. Yet the arm of the city’s ethics law does not reach to private citizens, developers, contractors and companies, like Kiska, which repeatedly induce city officials to commit ethics violations. Kiska continues to be eligible to serve as a contractor on city projects, including the future third phase of the High Line, to be built north of 30th Street. Planning for that final section of the elevated park is now underway.
According to Baysal, Kiska carried out its work on the High Line until last year, when the second section of the park, from 20th to 30th streets, opened to the public. It also went on to garner almost $80 million in contracts with the state Department of Transportation, one of which is still in effect.
As to whether Kiska should have been allowed to maintain and gain city and state contracts back when the violations occurred, Baysal responded, “Of course it would not have been okay with me if I had been in power then as vice president.” Reminded that he had assumed the vice president position in 2007, before the High Line gifts, the executive had no response save to emphasize that Kiska’s “internal code of conduct is more strict than anything the laws can come up with.”
“It’s not infrequent that someone or a vendor repeatedly induces or causes a public employee to violate the gift law but then goes on to suffer no penalties,” said Mark Davies, executive director of the city’s Conflicts of Interest Board. “It’s unfair, and a loophole in the current laws that we’re trying to close.” Davies stresses that many cases never come to the conflicts board’s attention it the first place.
In the wake of the fines for the three city officials who fell for Kiska’s enticements, as well as similar incidents involving others doing business with the city, in 2009 the Conflicts of Interest Board proposed changes to the city’s ethics rules that would, for the first time, give the board the power to penalize and even blacklist companies that have repeatedly been tied to improper transactions with city employees.
The proposals would require changes to the City Charter, which can only be altered through public referendum or a special vote by state or local legislators. The city’s Law Department is still determining which course to pursue.
“Cases like Kiska are exactly the reason why we’ve proposed amendments,” said Davies.
Ross Sandler, professor at New York Law School and publisher of CityLaw, a bimonthly journal on the city’s regulations and their enforcement, says there are no legal reasons the city can’t penalize or ban companies that ply city workers with gifts even as they do business with the city. Under state and federal laws prohibiting bribery, said Sandler, the city “has authority not to contract with those who don’t follow the rules,” but that “there certainly is a gap” in existing regulations, especially for cases that do not warrant criminal prosecution but require COIB enforcement.
As of now, the Mayor’s Office of Contract Services only provides a loose warning about past improprieties by a company. Its VENDEX computer system lists “caution” items, but city agencies are free to disregard the information provided there.
In the case of Kiska Construction, the company’s VENDEX file includes three notes indicating that federal agents and the New York City Department of Investigation investigated the company in 2008, regarding union payroll records and gift giving to city employees, respectively.
The file also notes that a Kiska foreman on a Goethals Bridge project was brought before a grand jury in New Jersey four years ago. He is still in federal court fighting accusations of engaging in wire fraud to provide no-show or low-show jobs.
Baysal said that no action had been taken by the city Department of Investigation, after Kiska adopted a new code of conduct for its employees that established a “zero-tolerance” policy toward gift giving.
“If the investigators had really thought that Kiska was guilty, they would have done something, but questions were asked, we co-operated, and it was all dismissed after,” said Baysal. Asked if it was fair to only have public officials penalized, he insisted that Kiska had suffered sufficiently by having been investigated, and added, “Obviously those people in EDC were also involved.”
The Economic Development Corporation did not respond to inquiries sent last week by The New York World.