By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
*Last year, Bloomberg LP's radio channel, WBBR, started supplying the news on WQXR, the classical music station owned by The New York Times, in what a Times spokeswoman described as a "barter" arrangement that allowed the Times to shut down its own news operation in a cost-cutting move. Bloomberg LP also cut a deal in 2004 to distribute the lifestyle features of WQXR, which the Times recently announced it is selling. In 2005, the mayor declared that four city agencies would use the Times station as a launching pad to announce cultural and other events in shows featuring city commissioners.
The city's rules sanitizing the management of the mayor's plentiful assets, variously estimated at between $16 billion and $20 billion, were approved by the only watchdog explicitly charged under the city charter with inspecting the crossed hairs in this thicket, the Conflict of Interests Board (COIB). Bloomberg appoints all five of its members. The agency described its own weaknesses in a March 2009 report, noting that New York "appears to be the only large municipality in the United States that has granted its ethics board the power to sanction violations, but not the power to investigate such violations." The same internal document points out that the COIB "regulates the very people who set its budget," meaning that "the Board invariably has before it matters involving high-level officials at the same time those officials are passing on the Board's budget, an unseemly situation."
If the board was viewed as toothless before Bloomberg's terms, its advisory opinions, when confronted with the myriad of cases involving this mayor, have raised questions about the health of its gums as well. When Bloomberg took office in 2002, the COIB, consisting of two holdover Rudy Giuliani appointees and a new chair installed by Bloomberg (a fourth member had to recuse himself because he was a lawyer for Bloomberg LP and the fifth seat was vacant), issued a comprehensive 16-page decision about the mayor's potential conflicts. It forced him to release a list of LP's 100 biggest clients, but the list was alphabetical instead of in ranked order, and the board concluded that the mere release of the names made "the risk" that he could use his position to benefit the customers "minimal."
The opinion—negotiated for months with city and Bloomberg LP lawyers—then picked a number out of a hat, saying that a customer would have "to constitute 10 percent or more of Bloomberg LP total sales" to trigger any conflict concerns and force the mayor "to seek further advice" from the COIB. Since this requirement remains in place today when revenues exceed $6 billion, a customer could do more than half a billion dollars' worth of business with Bloomberg LP and still walk into the mayor's office to get a land use or contract approval without tripping an alarm. Discussions with COIB staff turned up no rationales for the 10 percent threshold, and the opinion allows Bloomberg to police this vast and potentially troublesome terrain himself.
In 2002, Bloomberg told the COIB that the largest customer on the list accounted for less than 4 percent of total revenue, but no one knows how much that might have changed since then. (When the board got a fresher list of the top 100, still unranked, in December 2007, it says it mistakenly forgot to post it.) Bloomberg LP customers like Goldman Sachs, Bear Stearns, AIG, Citigroup, Credit Suisse, Deutsche Bank, HSBC Bank, J.P. Morgan Chase, Lehman Brothers, Bank of New York, Tullett & Tokyo, Morgan Stanley, GFI, State Street Bank, and Merrill Lynch have all hired lobbyists to lobby the Bloomberg administration, with several specifying the mayor's office. Of the 124 companies on one or both of the Bloomberg LP lists, 33 appear on the Campaign Finance Board's list of companies doing business with the city.
Citigroup, which was the only other office tenant in the Bloomberg LP headquarters building and is now subleasing its vacated space to Bloomberg LP, even lobbied City Hall—and Doctoroff, in particular—on behalf of the Alternative Investments Group, the very unit located in the Lexington Avenue tower. Goldman Sachs had so many issues before the administration that it took seven pages to list its lobbying activities in the city clerk system (it spent almost a million dollars). When the city and state approved $1.6 billion in low-cost, tax-exempt bonds for Goldman's new downtown headquarters in 2005, Doctoroff justified it by saying that Wall Street's top firm might otherwise leave the city. Last year, the Daily News editorialized that Bloomberg was "taken to the cleaners" in the Goldman deal. The city and state "are in line to forfeit a whopping $321 million to Goldman because the governor and mayor agreed to contract terms that were downright foolhardy." Because of the meager demands of the COIB opinion, no one knows how big a Bloomberg customer Goldman was when it won this largesse.
The botched and deadly demolition at the Deutsche Bank site had been rushed by Doctoroff to clear the way for a new headquarters for another Bloomberg LP client: J.P. Morgan Chase. While the Goldman and Morgan projects are unquestionably projects any city administration would support, their worthiness is irrelevant to the conflict questions, which revolve around the appearance of impropriety at the highest levels of administration, the core question that the COIB routinely deals with aggressively when it fines lower-level city officials.