Attorney General William Tong announced Thursday that an investigation into the Connecticut Port Authority is already underway and is based on whistleblower complaints made in 2019.
In concert with the Auditors of Public Accounts, the legislative agency that audits other state agencies, Tong said attorneys in a whistleblower unit, part of the Antitrust and Government Fraud Section, are in the process of probing possible violations of laws and the state Code of Ethics.
Tong’s announcement is a response to a request earlier this month from state Senate Republican Leader Pro Tempore Paul Formica and state Senate Republican Leader Kevin Kelly for an investigation into the CPA that is in part based on new revelations of the $700,000 to Seabury Capital, which signed a contract with the CPA in 2018.
Seabury was the firm hired to, among other things, find an operator for State Pier in New London. State Pier is the site for a planned $157 million to $200 million reconstruction project funded jointly by the state and business partners Ørsted and Eversource. Under the plan, the pier would be upgraded to be used for pre-assembly of wind turbine generators in support of future offshore wind farms.
The payment to Seabury included a $523,500 success fee approved by the CPA as part of a settlement in 2020.
Tong said the contract with Seabury Capital is among other issues raised in the auditor’s review of the whistleblower complaint.
“We are aware of public allegations concerning the so-called ‘success fee’ paid to Seabury Capital and possible conflicts of interest and we will investigate those allegations,” Tong wrote.
Formica, during an interview on Thursday, said he was pleased the attorney general seemed to be taking the matter seriously. “All in all, I thank the attorney general for his response to the letter and am looking forward to the results,” he said.
Formica has introduced two bills related to the Connecticut Port Authority, one that would give the New London mayor a seat on the CPA board and another that would provide a yearly $400,000 payment in lieu of taxes to New London, as the state-owned State Pier property is exempt from local taxes.
The Connecticut Port Authority issued a statement on Thursday saying the CPA is “neither surprised nor alarmed” about the review. “The CPA is committed to cooperating fully and providing timely responses to any requests for information,” the statement reads.
Formica said he also is heartened to see the attorney general take an interest in issuing a legal opinion on how much authority the State Contracting Standards Board has in its review of contracting and procurement by the CPA.
The State Contracting Standards Board is conducting a review of several CPA contracts and agreements and had questioned how far its own authority extends. The group earlier this month had raised questions about the CPA’s payment to Seabury. Questions were subsequently raised about a Seabury employee who was on the CPA board just prior to the contract being signed.
CPA Board Chairman David Kooris, following the CPA vote on the $523,500 payment in 2020, said the payments to Seabury were based on the CPA’s agreement with port operator Gateway and its commitment to make $30 million in capital improvements at the pier and also related to the capital contribution promised by Ørsted and Eversource. The partners have promised $77.5 million toward the State Pier project.
Kooris has said the payment was a negotiated settlement, since Seabury had argued for a higher fee. He also recently has said that the former CPA member who works for Seabury, Henry Juan III, was not on the board when the recommendation was made to hire Seabury and he did not represent his employer before the board.
The Connecticut Port Authority faced a wave of criticism in 2019 following a whistleblower complaint and a state audit that revealed ballooning expenditures and problems that included a lack of basic accounting practices and oversight. The scrutiny led to a change in leadership positions and legislative hearings that ended with state oversight.
Former Senate Republican Leader Len Fasano of North Haven had filed a request for an investigation by the attorney general in 2019.
Tong said whistleblower complaints and any matters related to “corruption, unethical practices, violation of state laws or regulations, mismanagement or gross waste of funds in quasi-public agencies” fall within the jurisdiction of the Auditors of Public Accounts and not the attorney general’s office.
He said “in this extraordinary situation,” his office did at the time offer assistance to both the Office of Policy and Management and state auditors. The review by his office started at the conclusion of auditors’ review.
“We take this matter seriously, as we do all whistleblower complaints forwarded us by the Auditors and will continue to exercise our statutory authority to review all related matters within our ambit. Additionally, we will continue to collaborate with our partners across state government that can review actions by quasi-publics, as we each faithfully execute our prescribed duties. I will take whatever action I am authorized to take to enforce state law, and I will assert claims that are supported by facts and the law. We share the same goal of restoring the public’s trust in CPA and look forward to partnering with you in doing so,” Tong said.
The Connecticut Port Authority, in its statement, said, “Since the summer of 2019 there have been several operational shortfalls brought to our collective attention by whistleblowers, the state auditors, and members of the public and press.”
In September 2019, the CPA executed a memorandum of understanding with the state Office of Policy and Management that provided for OPM to oversee all financial decisions made by the CPA and oversee and evaluate the CPA’s “fiscal, organizational and administrative practices and activities and to recommend and assist in the implementation of needed improvements in the CPA’s organizational and business practices.”
“After 18 months of close collaboration with OPM, the Department of Administrative Services and other supporting agencies, we are confident that the Board and staff (have) taken those actions necessary to fill any policy, procedural, and training gaps to position us for uncontroversial success,” the CPA said in its statement.
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