Thursday, July 31, 2014

MORE ETHICS PROBLEMS : Cuomo's corrupt budget machinations intersect with state and local prosecutors

REUTERS EXCLUSIVE : Gov. Cuomo intervened in BNP Paribas settlement deal to get $1 billion more for New York state fund

Gov. Cuomo has claimed that the state is broke, that it can neither afford to support community hospitals, nor fully finance the construction of a new Tappan Zee Bridge ; meanwhile, the state is rolling in new billions in Wall Street fines

In an update to a blog post from last December about the Hunger Games behind the New York City and New York State budgets gimmicks, now comes Reuters with an exclusive story detailing the billions in windfalls from Wall Street corruption settlements.

The biggest revelation in the Reuters article was that Gov. Andrew Cuomo (D-NY) had bullied Manhattan District Attorney Cyrus Vance out of an extra $1 billion from his original $2.2 billion share of the mammoth $9 billion settlement paid by the French bank BNP Paribas to end investigations into the bank's violation of banking sanctions against the nations of the Sudan, Cuba, and Iran.

Gov. Cuomo won the additional $1 billion on top of a $2.24 billion slice that the state was already set to receive, bringing Albany's cut of the BNP Paribas settlement to a whopping $3.29 billion. For the office of the Manhattan DA, Mr. Vance kept $449 million, and the government of New York City kept $447 million. The balance of the BNP Paribas settlement, $4.5 billion, was kept by the U.S. federal government. The settlement has already been paid and divided up, according to the Reuters report.

New York State's haul of $3.29 billion is in addition to the IPO-sized $8 billion Medicaid waiver that the Obama administration granted to New York State following Gov. Cuomo's scorched earth campaign of austerity cuts to the state's Medicaid program. Gov. Cuomo's Medicaid cuts were so draconian, leading to healthcare service cuts and hospital closings, that some Medicaid patients are suing the state in a federal class action lawsuit to roll back some of Gov. Cuomo's cuts. The $8 billion Medicaid waiver is expected to be paid, in the form of extra budget allocations, over a period of five years, according to Capital New York. The Reuters report referred to another possible $500 million that New York State received in settlements from Standard Chartered Bank and ING Bank NV. A further $700 million, not included in the Reuters report, was received by New York State after banking giant Credit Suisse pled guilty and paid to end an investigation into the bank's controversial tax evasion operations.

Gov. Cuomo, a neoliberal Democrat, is facing a tough reelection this year following endless controversies surrounding the political machinations at play in his decision to prematurely close a corruption-fighting panel, the Moreland Commission. As a result of a pattern of interference with the investigation panel, Gov. Cuomo is vulnerable to a possible federal criminal investigation for obstruction of justice, amongst other likely charges. Under normal circumstances, the governor would use these extra state resources for pork barrel projects to buy up large voting blocks he needs to win a glorious reelection by a margin of victory wider than his father's, which has been said is his goal. But nobody knows what the governor is doing with the approximately $12.5 billion in new-found revenue.

Some of the Medicaid waiver is meant to go for healthcare services, presumably to help fund the state's expansion of Obamacare under Medicaid, but when the governor recently announced a plan to bend back the infection curve for HIV/AIDS in the state as part of a landmark effort to effectively end the AIDS crisis, his politically-timed announcement only promised to allocate a measly $5 million for this effort, an amount that some AIDS activists do not believe in enough to do outreach in some of the hardest-hit communities. If there is an $8 billion pot of dedicated healthcare resources available that is supplemented with another $4.5 billion in Wall Street settlement monies, why is the governor only allocating $5 million in next year's budget to ending the AIDS pandemic in New York State by the year 2020. Achieving this noble but ambitious goal in less than 6 years with a kick-off budget of only $5 million seems unrealistic.

It doesn't add up.

In the last year, the Cuomo administration kept saying that New York State could not afford to bail out Long Island College Hospital, or LICH, in Brooklyn, but yet here is the governor sitting on a pile of billions while hospitals are closed and Medicaid home care services are uniformly being cut for people most in need. More generally, when New York State planned to build a new $4 billion Tappan Zee Bridge, the governor initially proposed funding some of the construction costs with a controversial loan of over $500 million from a state environmental fund in a bizarre budget maneuver. Government reform activists were horrified by the governor's budget gimmicks. Activists demanded to know how the governor planned to really pay for the costs of the new bridge, and the release of the financial information was stalled until finally the state government released redacted financial plans, keeping voters in the dark about how Gov. Cuomo intended to pay for the new bridge -- in spite of having billions in resources.

Similar criticisms can be made of New York City Mayor Bill de Blasio, who has garnered hundred of millions of dollars in Wall Street settlement monies for the city's coffers. The city is also poised to raise approximately $1 billion from the proceeds of the sale of zone-busting air rights around Grand Central Terminal. With these resources at hand or on the horizon, the mayor did nothing to bail out LICH, either, and as progressives demand all the resources to finally end homelessness for youths in the city, the mayor keeps stalling, afraid to part with the city's millions, and, like Gov. Cuomo, refusing to account for his plans for these jackpots.

Of the hundred of millions of dollars of the Wall Street settlement monies remaining with the Manhattan DA's office, some of that money is being allocated for costly tech contracts to upgrade police capabilities, whilst other parts of the Manhattan DA's proceeds will be used to pay to upgrade security at public housing developments. These two areas are plagued by corruption. New York City has a history of approving and funding outsourced technology projects, like CityTime and the ECTP 911 emergency call system that have led to combined cost over-runs nearing $2 billion, because there is no oversight. The security at the city's public housing developments is grossly inadequate, and even after millions of dollars are allocated to improve security doors, security cameras, and other measures, those improvements never seem to materialize. Since there is no taxpayer oversight of the city's five district attorneys' offices, taxpayers have no watchful eye supervising these gargantuan settlements. Former Brooklyn District Attorney Charles Hynes, for example, faces city, state, and possible federal investigations over using funds seized from criminals to pay for a campaign consultant.

As the Reuters piece pointed out, Gov. Cuomo saw these billions, and he sent his loyalists to upset sensitive settlement negotiations until he managed to enlarge his cut. Even New York State Attorney General Eric Schneiderman has clashed over proceeds in respect of still yet another settlement, that one involving $613 million (not reflected in the amounts indicated above) from JPMorgan Chase, only to be similarly challenged by Gov. Cuomo, too. But nobody knows what really happens to this money, or to the budget offsets that they create, once politicians become involved. At first, DA Vance had planned to send his office's entire $2.2 billion (before the governor slashed that by about half) to a federal asset forfeiture fund, which appears to be some kind of slush fund of the U.S. Treasury.

Do Gov. Cuomo, the district attorneys, and the mayor plan to account to voters where all this money is going to, and who can account to voters how this money is actually being used ?

Where is the transparency ?

As federal prosecutors continue their possible criminal investigation into the governor's interference with the Moreland Commission, government reform activists wonder why the state attorney general and local prosecutors have been loath to serve as a check on the governor's political over-reach. Perhaps Gov. Cuomo's heavy-handed budget machinations, which intersect with the budgets of state and local prosecutors, serve as one possible explanation. If all things were equal (and they are not), is Gov. Cuomo trying to starve prosecutors of the resources they need with which to investigate political and campaign corruption ?


Gov. Cuomo intervened in BNP Paribas settlement deal to get $1 billion more for New York state fund (Reuters)

Inquiry Widens Into Hynes’s Spending as Prosecutor (The New York Times)

Gov. Cuomo pleas for federal help on Brooklyn hospital closures (The New York Daily News)

New York State board approves scaled-back loan for Tappan Zee Bridge project (The New York Daily News)

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