Report Critical of Aqueduct Casino Process

Contract later rescinded after revelations that the process was being investigated.

Details of competitors’ bids were leaked, timely campaign contributions flowed and key expert advice was ignored when New York officials earlier this year tapped Aqueduct Entertainment Group to run the casino at Aqueduct racetrack, a probe has found.

"This process was doomed from the start, and at each turn, our state leaders abdicated their public duty, failed to impose ethical restraints and focused on political gain at a cost of millions to New Yorkers,’’ state Inspector General Joseph Fisch said Oct. 21. "Unfortunately, and shamefully, consideration of what was in the public’s best interest, rather than the political interest of the decision makers, was a matter of militant indifference to them.’’

The AEG award, made in January, was later rescinded after revelations that the process was the subject of federal and state investigations. Genting New York has since been awarded the final bid in a separate procurement process and is set to begin construction in a matter of weeks.

The 300-page report by Fisch portrays a politics-driven attitude by top officials in the administration of Gov. David Paterson and the Legislature. It also noted more than $100,000 in campaign contributions flowed to state officials from the different bidders during the process.

The findings by Fisch have been turned over to the U.S. Attorney’s office in Manhattan, as well as the Manhattan district attorney and a legislative ethics committee.

The selection process was unusual and went outside regular procurement rules, thereby permitting the campaign donations to flow. The secretive selection process required only a sign-off by Paterson, Assembly Speaker Sheldon Silver and Senate Democratic Conference Leader John Sampson.

Fisch said top Paterson administration officials ignored the expert advice from the governor’s budget division and state Lottery Division that AEG was not fiscally fit to be given the exclusive rights to operate the casino for the next 30 years. They also said a top Paterson aide apparently failed to pass along some of those concerns to the governor.

The report also said details about bids by AEG’s five competitors were leaked by Angelo Aponte, the top Senate staffer, to Hank Sheinkopf, an AEG consultant.

Besides Senate officials handing over important competitive information to AEG, the report said that Sampson "likely’’ pushed to make sure that a specific developer be included by AEG in the casino construction project.

Silver, the Assembly leader, should have vetoed the AEG award, the report concludes, because he knew the bid was flawed.

The problems continued even after the award. The night the announcement was made in January, Carl Andrews, a former senator who was then lobbying for AEG, had a celebration party at his home, whose guest list included Sampson, David Johnson, a former top Paterson aide since charged in a domestic violence case, Senate racing committee chairman Eric Adams and Senate president Malcolm Smith.

Smith, the report said, was heavily involved in the selection process, even though he said publicly that he had recused himself because of his friendship with Rev. Floyd Flake, an influential Queens Democrat who had a financial stake in the AEG bid.

Three days after the AEG selection, Paterson met with Flake to try to get his political backing for his fledgling gubernatorial campaign, which later evaporated. The IG called the meeting "ill-advised’’ but that he could not find any illegal quid quo pro.