Category Archives: Conflict of Interest

Buffalo Billion developer flouted New York State disclosure laws

Buffalo developer Paul Ciminelli was legally required to file annual financial disclosure statements with New York State during his four-year tenure on the public authority controlling Buffalo Billion spending, Empire State Development (ESD). But Ciminelli’s forms are extremely deficient for the first two years he served on the board and missing for the second two. And New York State’s ethics watchdog appears to have done nothing to compel Ciminelli to file an accurate statement.

The statements require disclosure of income, contracts, assets, and other financial interests and in Ciminelli’s case could have shed some light on the nature and scale of his interests – and conflicts of interest – as a major Buffalo developer and ESD board member. As we reported last week, Ciminelli has benefited significantly from the Buffalo Billion, which is now under federal investigation (LPCiminelli, run by his brother Louis, has received a subpoena in that investigation). In his position on ESD’s board, Ciminelli recused himself from Buffalo Billion funding votes but never disclosed the nature of his conflicts.

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Paul Ciminelli and Ciminelli Real Estate’s conflicted Buffalo Billion roles

Though much of the reporting around Andrew Cuomo’s Buffalo Billion project has focused on Buffalo construction firm LPCiminelli, relatively little attention has been paid to another major beneficiary of Buffalo Billion spending: Ciminelli Real Estate.

Owned by Paul Ciminelli, the brother of LPCiminelli chairman & CEO Louis Ciminelli, Ciminelli Real Estate has been involved in four Buffalo Billion projects to date, three of which were awarded while its executives held governance positions at state agencies and donated generously to Governor Cuomo’s campaigns.

While these projects were procured by Fort Schuyler Management Corp (FSMC), a non-profit affiliate of SUNY Polytechnic, their funding came from Empire State Development. Ciminelli Real Estate’s president, CEO, and sole owner Paul Ciminelli sat on the Empire State Development board from 2010 through 2014. The land for the SolarCity project was sold to Fort Schuyler by the Buffalo Urban Development Corporation, where Ciminelli Real Estate Executive Vice President Dennis Penman is vice chair.

Though Ciminelli recused himself from votes that benefitted his and his brother’s companies, he did not leave the room during the deliberation and voting process. Penman raised his affiliation with Ciminelli Real Estate, but was permitted to participate in voting and discussion without recusing.

Neither executive disclosed their participation in LPCiminelli’s bid to the boards they sat on as they were making decisions on the project.

Continue reading Paul Ciminelli and Ciminelli Real Estate’s conflicted Buffalo Billion roles

New York Times runs Michael Hayden pro-drone op-ed; fails to disclose ties to drone manufacturers

In its Sunday Review section on February 21, 2016, the New York Times ran a column titled “To Keep America Safe, Embrace Drone Warfare.” The article’s thesis is summarized in its second-last sentence: “Civilians have died, but in my firm opinion, the death toll from terrorist attacks would have been much higher if we had not taken action;” and it was written by Michael V Hayden, who directed first the National Security Agency and then the Central Intelligence Agency under George W Bush. Hayden currently serves on the board of several defense industry corporations, including drone manufacturers.

Though the Times identified Hayden’s past government positions at the end of the article, the newspaper failed to disclose Hayden’s present role on the board of Motorola Solutions, a military and defense contractor that recently made an investment in CyPhy Works, which produces unmanned aerial vehicles – drones. Motorola Solutions paid Hayden $240,125 for his service on its board in 2015.

The Times also did not mention that Hayden served, until last year, on the board of Alion Sciences, a information technology firm that serves the US military. Hayden joined Alion’s board in 2010 in a term that ended in 2015. In 2012, Alion was awarded a $24 million contract to develop the US Navy’s unmanned and automatic weapons systems. From Alion’s press release:

Alion’s NSWC PCD work includes technical engineering to increase unmanned and automated weapon systems capabilities for such tasks as the implementation of unmanned systems payloads on “commercial off the shelf” or existing non-developmental unmanned underwater vehicles (UUVs) with limited modifications. Under the contract, this work can include UUVs, unmanned surface vehicles (USVs), unmanned ground vehicles (UGVs) and unmanned aerial vehicles (UAVs).

In 2014, Alion issued a notice that it was suspending its filings with the SEC because it had fewer than 300 security holders, so Hayden’s compensation from that firm is not available.

It is also noteworthy that Hayden is a principal at the Chertoff Group, a consulting firm that advises defense industry clients on how to obtain government contracts, another detail that went unmentioned in the Times.

Hayden’s positions on the boards of the defense contractors whose business he advocated for in the Times can be seen in the map below:

The Times’s failure to disclose Hayden’s ties to the industry he was advocating in its pages is the latest example of a trend of media outlets running commentary by defense experts that also have a financial stake in perpetuating warfare. PAI reported on this phenomenon – and Hayden’s involvement – in 2013 with respect to President Obama’s proposed war in Syria.

SUNY kickback controversy prompts changes in presidential pay scheme

Last week, the Albany Times-Union reported that the board of trustees of the State University of New York (SUNY) system unanimously approved a proposal to reform the current compensation structure for the Chancellor, campus presidents, and senior SUNY officials. The reforms, proposed by Chancellor Nancy Zimpher, were presumably prompted by a recent scandal at SUNY Upstate Medical University where several top administrators, including the president and a senior vice president, were being paid by two companies that received millions of dollars in business from the school.

Zimpher’s proposal would require that executive pay come only from state sources and that outside income be vetted for conflicts of interest by New York’s Joint Commission on Public Ethics. Under the current regime, SUNY campus presidents and other high-level administrators are paid a portion of their salary by SUNY, an agency of the State of New York, with top-ups from various private not-for-profits affiliated with SUNY, such as the SUNY Research Foundation or one of the campus-specific foundations.

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Ecology & Environment: IOGA-tied DEC contractor

Ecology & Environment (E & E), the New York Department of Environmental Conservation (DEC) contractor whose membership in the lobbying group Independent Oil and Gas Association (IOGA) of New York set off alarm bells, “clarified” its relationship with the organization last week.

In a letter released April 24, E & E asserted that it was never a member of IOGA, though it had previously paid an employee’s membership fees “in order to attend IOGANY’s Conferences and receive its newsletter to be kept apprised of new technical developments in the industry and develop industry contacts.” The environmental consultant castigated IOGA for not obtaining authorization to name Ecology & Environment in its letter to Andrew Cuomo pushing to move forward with fracking in New York State. E & E also declared that it had directed its employee to terminate his IOGA membership.

According to the April 24 letter, “E & E’s nationwide policy has been to not take any position on fracking and only provide objective environmental consulting;” however, the company has a financial interest in New York’s approving the practice evinced in corporate financial reports and past work for oil and gas companies. E & E has also been criticized for its overly optimistic prediction of fracking’s economic effects written on contract for the DEC and further has ties to a now-defunct fracking research institute at the University at Buffalo that incorrectly reported that the incidence of major environmental citations had declined in Pennsylvania.

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Penn State faculty refuse to co-author frackademic report

The Marcellus Shale Coalition has canceled its series of economic reports formerly issued through Pennsylvania State University when no Penn State faculty would agree to put their name on it. The reports, primarily authored by the frackademic Timothy Considine and widely cited in the campaign against a gas severance tax in Pennsylvania, painted a rosy picture of the economic benefits of Pennsylvania’s hydrofracking boom, though jobs numbers have not reflected Considine’s predictions. Bloomberg reported today that gas drilling has actually created and supported fewer than half of the jobs predicted in Considine’s 2009 report. His 2010 and 2011 updates of the original study were even farther off than that. Penn State retracted the 2009 report when the Responsible Drilling Alliance revealed that Considine and Seth Blumsack, his co-author, had not disclosed that the Marcellus Shale Coalition had commissioned and paid for it. The report was reissued with a notice of its funding, which was also carried on the 2010 and 2011 updates. The three studies cost the Marcellus Shale Coalition $146,000.

According to William Easterling, dean of the College of Earth and Mineral Sciences, the study cannot be researched or published under the school’s imprimatur if no full-time faculty will associate with it. Among the people who were asked to take part in the study and declined are Seth Blumsack, co-author of the 2009 study; Michael Arthur, co-director of Penn State’s Marcellus Center for Outreach and Research; and Terry Engelder, the geologist and industry cheerleader who discovered the perhaps 141 trillion cubic feet of natural gas in the Marcellus.

“I would speculate that some of them have just made a calculated decision that getting out there and being involved in this report isn’t the best thing for the way they would like to be seen by the outside world.” Easterling told Bloomberg‘s Jim Efstathiou.

Frackademic backlash

The Penn State development comes in the context of a greater crackdown on gas industry influence over the science that shapes public policy around hydrofracking, a phenomenon that has come to be known as frackademia. In August, the University of Texas named a panel to review a February study from its Energy Institute that PAI revealed may have been influenced by author Chip Groat’s financial interest in Plains Exploration and Production, a fracking company operating in the area the report studied (though it should be noted that the scope of the review may not be as wide as UT originally made it out to be).

Last month, the trustees of the State University of New York unanimously called for the University at Buffalo to report to them on the role of the gas industry in the founding, funding, and staffing of the university’s Shale Resources and Society Institute and in the issuance of its controversial first report on environmental violations in the Pennsylvania Marcellus. That study, which was cited in Congressional testimony by Pennsylvania Secretary of Environmental Protection Michael Krancer, had a number of problems identified by PAI, including the fact that two of its central conclusions were not supported by its data, entire passages had been copied verbatim from a previous report, and that the data itself was of dubious value due to possible political interference and misreporting of violations by the Pennsylvania Department of Environmental Protection.

The report on SRSI’s creation, which the university has completed, has not been made public, though a SUNY representative says that once it has been reviewed it will be. Meanwhile, the UB administration is standing behind the report. In a speech to the UB faculty senate, provost Charles Zukoski attributed the problems with the study to “wording errors” and insisted that “there have been no concerns regarding the report that have been raised by the relevant scientific community.”

Despite the UB administration’s confidence in the SRSI study’s rigor, the frackademic backlash is mounting. UB CLEAR, a group formed to insist on transparency in the institute, collected more than 600 signatures in support as well as a letter signed by 83 University at Buffalo faculty and staff. The Middle States Commission on Higher Eduction is considering a request to look into Penn State’s accreditation over the Considine reports. All of this spells out bad press for the universities involved as the public becomes more aware of the policy implications of industry-influenced science when it comes to a practice as dangerous as hydrofracking.

The Scope of the University of Texas Fracking Review

Last week, the University of Texas at Austin announced that “three nationally renowned leaders in science, public service and higher education” would review the industry-friendly report issued in February by its Energy Institute that has been the center of a controversy over the gas industry’s influence on academia and, by extension, public policy. That day, PAI revealed that review panel chairman Norman Augustine has his own industry ties, formerly serving on the board of directors of fracking company and UT benefactor ConocoPhillips and currently receiving payments from the company for $3.1 million of deferred stock awards.

According to last month’s press release announcing the review, the panel was convened “to review the scientific credibility of the report and to examine any related issues that the panel members believe are relevant,” a point Andrew Revkin reiterated in the comments of his New York Times blog post on panel chairman Norman Augustine’s industry ties: “Keep in mind this is not an ethics review, but a review of the findings in the report, as the university stated in July.”

A look at the letter Leslie wrote charging the panelists in their review reveals that they were not asked to evaluate the content of the report, but rather to evaluate the effect of lead author Chip Groat’s financial stake in Plains Exploration and Production:
Continue reading The Scope of the University of Texas Fracking Review

Frackademics: The Ohio Shale Coalition Team

With the University of Texas assembling a panel to review a February study from the Energy Institute at UT Austin following PAI’s report “Contaminated Inquiry”, there has been a flurry of media attention to gas industry’s capture of scientists and economists, using the independent brands of and public trust in universities to promote a gas-friendly message, often using misleading information or low-quality scholarship – a phenomenon we have termed “frackademia.” This week, Climate Desk, a collaboration between Mother Jones, Slate, Wired, the Guardian, and other outlets, released an article drawing attention to a report commissioned by the Ohio Shale Coalition and released with the logos of Cleveland State University, the Ohio State University, and Marietta College on its cover. The Climate Desk story featured Dr. Robert Chase, a Marietta geologist who co-authored the study, and his ties to the natural gas industry and government.

Source: Climate Desk
Source: Climate Desk

Chase runs a consulting firm to negotiate leases between landowners and gas companies. His firm Chaseland LLC was the subject of an inquiry by the Ohio Ethics Commission after landowners contested a permit granted to Chesapeake Energy by the Ohio Oil and Gas Commission, a five-member body on which Chase serves. Chase’s history consulting on lease negotiations with Chesapeake led him to recuse himself from that case, and the Ethics Commission ruled that Chase must recuse himself from any case involving companies or people he had done business with at his consultancy.

“An Analysis of the Economic Potential for Shale Formations in Ohio”, the Ohio Shale Coalition-commissioned study that Chase worked on paints a rosy picture of hydrofracking, promising “65,680 jobs and $3.3 billion in labor income, or an average income of $50,225 per job” and a nearly $5 billion increase in Ohio’s GDP from 2011 to 2014 thanks to fracking in the Utica Shale, numbers that the authors call “very conservative.” Researchers at the Ohio State University’s Swank Program in Rural-Urban Policy have criticized these estimates as overestimating job creation by “about 400%”. Also, in addition to Chase’s conflict of interest in writing a report endorsing fracking while running a consulting firm that takes a share of the bonus payouts for every gas lease it negotiates, the report itself was commissioned by a pro-fracking group and some of its authors and contributors exhibit similar conflicts. These conflicts raise the question of whether the study’s results were determined before it was conducted.
Continue reading Frackademics: The Ohio Shale Coalition Team

Frackademics: Timothy Considine – Analyst or Advocate?

Businesses in controversial industries often turn to the academy for evidence exculpating them for the harm that they do, with trade groups funding “scholarly” reports claiming that their products and business practices are safe for the public. In much the same way that Big Tobacco funded research claiming that secondhand smoke is not harmful, natural gas associations such as the Marcellus Shale Coalition have been paying for research that exaggerates fracking’s economic benefits and downplays its environmental risks both by funding individual studies and by donating to myriad shale gas research institutions, such as the University at Buffalo’s Shale Resources and Society Institute and the University at Wyoming’s Center for Energy Economics and Public Policy.

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Libertarian Elites to “Dethrone” Obama’s New Corporate BFF

Not many people know that General Electric has been a huge beneficiary of recent bank bailouts via its financial subsidiary GE Capital, which would be America’s eighth largest bank measured by total assets. Regulators changed banking rules to guarantee $340 billion in GE Capital debt, and the bank received $16 billion in cheap emergency loans from the Federal Reserve, according to Fed data released in December. All the while GE’s CEO, Jeff Immelt, was on the board of the NY Fed (along with another former GE executive) and a member of Obama’s economic advisory board. The conflicts of interest are obvious and, as one Fed historian put it to the NY Times, “ugly”.

Immelt and Obama walking in a GE factory in Schenectady, NY
Immelt and Obama talking business in a GE factory

After $40 million in lobbying last year, more than any other company, the returns on GE’s political investments are still flowing. Immelt was with Obama in India a few months ago when he negotiated a $10 billion export deal benefitting GE, and Obama stood at a GE plant in New York as he named Immelt to lead his new economic advisory council, which looks like it will focus on making America’s laws, taxes, and labor force even more business-friendly.

Interestingly, the deep conflicts surrounding Obama’s promotion of Immelt have provoked the strongest criticism from libertarian think tank FreedomWorks, which has close ties to the billionaire brothers Charles and David Koch. The Kochs are energy moguls notorious for their financing of dozens of free-market political forces, from free-market think tanks to Tea Party affiliates. Jane Mayer’s New Yorker article about the Koch brothers shows how their influence through political and nonprofit financing is both unequalled and self-interested. The Kochs are fiercely opposed to bank bailouts, economic stimulus, and climate regulation. Immelt has been a high-profile supporter of all of these — perhaps because they’ve profited GE — and GE’s campaign contributions have leaned Democratic in recent years. That’s probably why he’s so close to Obama, and why the Koch brothers and groups like FreedomWorks want him to go away.

FreedomWorks and the NCPPR, another free-market think tank, have launched a campaign to “dethrone” Immelt from GE, calling him the “king of crony capitalism”, and are running ads attacking Immelt’s conflicts of interest as a blatant sign of corruption. “It’s time to break up the unethical romance between government and big business,” said FreedomWorks President Matt Kibbe in a statement. “For too long, corporate elites have lobbied to profit from the size and growth of government at the expense of hard-working Americans.”

FreedomWorks has it wrong. It’s not the size and growth of government that ensured minimal financial regulations and generous bailouts for well-connected banks like GE Capital, it’s the size and growth of finance and its influence over government. Relative to expanding financial markets, regulations and regulatory bodies are not growing, they’re shrinking. Still, FreedomWorks can apparently exploit anger about Obama’s dirty dancing with bailed-out corporate elites to rally support for further dismantling of government oversight and regulation.

The beast of corporate power is feeding off its own corruption.