Wednesday, November 16, 2011

Whistleblowing and ESD: Culture and the Questionable Spirit In Which the State Agency Most Responsible For Atlantic Yards Wields Omnipotent Powers

Penn State University football coach Joe Paterno was recently fired (as was university president Graham Spanier) for his inadequate whistleblowing in connection the sexual abuse scandal involving minors. In a National Notice article I contrasted Paterno’s firing for insufficient whistleblowing with what lawyer and Salon columnist Glenn Greenwald is saying happens to whistleblowers in government which is essentially the opposite. Greenwald is saying that government whistleblowers, at least federal government whistleblowers within the Obama administration, are being punished for effective whistleblowing. (See: Friday, November 11, 2011, Damned If You . . . WHAT? Deep Doo Doo (or Don’t Don’t) Questions For Whistleblowers: Does All It Hinge On Private vs Public Sector Employment?)

(Picture of fired Penn State football coach Joe Paterno above from Wikipedia.)

Is this a difference between the private sector and government?: Is it that in the private sector you are damned if you don’t blow the whistle effectively while in government you are punished if you do? Possibly. And possibly the explanation is found in another thesis that Greenwald argues and has set forth at length in his new book, With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful: That there is now a club, a political and financial class, that is above the law, essentially the 1% Club. By virtue of that thesis the elimination of effective whistleblowing within government simply follows from the fact that for all practical purposes there is now an identity of interest between government and the 1% Club. Greenwald referred to Simon Johnson’s Atlantic Magazine article “The Quiet Coup.”

Whistleblowing and New York Agencies: Presenting ESD

When I wrote the National Notice article referred to above I could not help thinking back to the earlier Noticing New York article about whistleblowing I wrote about effective and ineffective whistleblowing in New York government agencies, particularly state authorities. One of my focuses was the Empire State Development Corporation (aka The New York State Urban Development Corporation) which, with a new name shift, is now calling itself by the further abbreviated moniker “Empire State Development.” (See: Wednesday, February 3, 2010, Two Things About the Pataki Administration and a Hope About What Is Secretly Going on Behind the Scenes Respecting Atlantic Yards.)

One of the things I wrote about ESDC at the time was that:
. . the Empire State Development Corporation, the state agency theoretically most responsible for Atlantic Yards, does not have a whistleblower protection policy even though it was legally required to have adopted one by the Public Authorities Accountability Act of 2005, the provisions of which were signed into law on January 13, 2006.
And ESDC's noncompliance was being lapped by a new change in law because:
More whistleblower requirements that ESDC is supposed to follow are coming effective March 1, 2010 with the amendments to the Public Authorities Reform Act of 2009.
Crime Scene Return

I figured I would return to the scene of ESDC’s crime of noncompliance with the law to find out whether the state agency was finally getting around to complying. ESDC is belatedly coming into compliance with the law but it can easily be said that it does not look as though there is enthusiasm for a spirit of encouraging whistleblowing at ESD or at its coadministered sister agency, the Job Development Authority.

Fully on notice about its noncompliance given my February 3, 2010 Noticing New York article, ESDC finally adopted the whistleblower policy it was legally required to on April 26, 2010 (i.e. also missing the March 1, 2010 deadline of the second law).

It was on the agenda for April 26, 2010 for administrative action as Agenda item #4. According to the minutes, when one of the board members asked, they were told that this was the first time the agency had such a policy but there is no mention recorded in the minutes or in the memo presenting the policy to the directors that the agency had been improperly without such a policy for many years.

JDA, ESD’s coadministered sister agency that was involved in issuing the (rather questionable) bonds for the Atlantic Yards Prokhorov/Ratner “Barclays” arena did not act to adopt the required whistleblower policy until more than a year after ESD, June 28, 2011. (Interesting to note: In terms of government operating in a fancifully pure world, there is apparently, as of yet, absolutely no reference on the entire ESD site to “Prokhorov.”)

Inert Policies: No Periodic Reporting

The responses I received after inquiries to the ESD press office inform me that the policies, since their adoption, have been essentially inert.

The ESDC whistleblower policy requires that periodic reports be given to the board of directors and that those reports be no less frequent than annually. Specifically:
Periodically, but not less than once annually, the Audit Committee, in consultation with the Senior Vice President-Legal and General Counsel, shall provide a written summary to the ESDC Board(s) for the period setting forth the status of pending matters reported pursuant to this Policy Statement, including all claims of whistleblower retaliation.
That would mean that the first such report to the ESD directors would necessarily have been required by April 2011, at least. There was no such report furnished to the directors.

The ESD press office offered the interpretation that no report has been required because, to date, no “claims have been received for whistleblower retaliation.” This is not an impossible interpretation for a way in which the policy could, under its terms, be administered at ESD and JDA. Yes, the required reports could be interpreted as nonrequired in such a situation, but it is not the way to administer the policy if you want to create a consciousness that the whistleblower policy is important. Is it too lawyerly on my part to point out that the more conservative dot-the-“i”s and-cross-the-“t”s way to do this would be to provide the required regular periodic reports reminding the directors of the policy and affirming in those reports the negative, that no matters are pending.

Minimalist Policy Covering Only Retaliation

As it is, as written, very little is required to be reported under the ESDC whistleblower policy because the ESD policy constitutes only the very minimum required by the law it is finally complying with. The policy in all respects focuses exclusively only on prohibiting retaliation against whistleblowers and does not in any other respect encourage, require or provide structure for whistleblowing or employees to report information concerning acts of wrongdoing, misconduct, malfeasance, or other inappropriate behavior that they discover, know about, or otherwise obtain information about. If it did, the periodic reports would have more to cover.

At this point, were it to be assumed that ESD is now in compliance with both the law and its policy, the absence of required reports under the policy can be interpreted only to mean that no employees have complained of retaliation for their whistleblowing. It does not mean that no employees have blown the whistle about internal ESD misconduct. It does not even mean that employees who have blown the whistle are not being retaliated against, only that if they are being retaliated against they have not yet complained about it (if they even know they are being retaliate against).

No Duty to Report Internal Misconduct: Misconduct Not Proscribed

It is instructive to compare the whistleblower policy of the state housing and finance authorities that was included in my earlier Noticing New York article about whistleblowing.

Those agencies have an express policy of not condoning the misconduct itself:
It is the policy of the Affiliated Agencies . . . . that illegal or unethical activity, including but not limited to corruption, fraud, criminal activity, abuse and conflict of interest, by the Members, Officers or employees of the Agency or any person having business dealings with the Agency, will not be permitted, tolerated or condoned.
The ESD/JDA policy expresses no such equivalent. The policy for these other state agencies call for the reporting of internal misconduct:
Employees discovering or otherwise obtaining information concerning acts of wrongdoing, misconduct, malfeasance, or other inappropriate behavior by an employee or Member with respect to investments, travel, the acquisition of real property and the disposition of real and personal property and the procurement of goods and services shall promptly report such activity directly to: [then follows a list of reporting options.]
The ESD/JDA policy has no such requirement for its employees to report internal misconduct. (A sleepy ESD board director would probably not have noticed this by reading the description in the memo presenting the policy for adoption.) Does the policy therefore permit (even hope for) such nonreporting, the kind of government model Glenn Greenwald was apparently talking about vs. the kind of proactive spirit everyone, in retrospect, now feels should have been exhibited by Joe Paterno?

Spirit of Whistleblower Access and Assistance As Possible Alternative

What kind of spirit should an agency be showing with respect to whistleblowing? The Public Authorities Reform Act of 2009 (“PARA”) has provisions about the establishment of a “Whistleblower Access and Assistance Program” and that law also was supposed to involve the State Attorney General in commenting upon the Whistleblower polices of individual authorities like ESD and JDA. That bespeaks a spirit that favors encouraging and assisting whistleblowers but as technically written the program is to be implemented at a statewide level: a public authority such as ESD is not legally required to partake in that spirit. If it wants, an authority like ESD can apparently do the very minimum ESD has done.

And it appears that the ESD policy, as minimally compliant as it now may be, is sinking out of everyone’s consciousness given the absence of things like regular reports to ESD directors that could remind those directors that there are standards extant and applicable to the reporting of misconduct.

Reporting Agency Misconduct Externally

Are there any ESD employees mulling over reporting internal misconduct? Or are there even employees who have reported misconduct at ESD/JDA internally and are now noticing that their reports are not being followed up on? There is one piece of good news for them in the ESD whistleblower policy: It appears that the ESD policy protects ESD employee whistleblowers who report misconduct externally “insofar as the actions taken by the employee are legal” and/or the employee is disclosing the information “to a governmental body.”

Could the policy have been even clearer in saying that such external reporting is an option open to employees witnessing internal misconduct? Probably. The policy of the other state agencies says:
Where appropriate, employees may also, in addition, report such activity to outside local, state and federal governmental authority having jurisdiction over the illegal or unethical activity.
Should ESD employees consider reporting misconduct at ESD externally? For a possible answer we can come full circle to the Paterno and Penn State scandal.

The Culture of Cover-Up vs. Natural Moral Values

(Chris Matthews on Real Time above.)

Chris Matthews on last week’s Real Time With Bill Maher had some harsh words for those who think that just reporting misconduct internally is sufficient and harsh words for those who allow themselves, when it comes to their whistleblowing decisions, to get inculcated with the values of the organization where they work rather than the natural values with which they grew up. His remarks came about 42 minutes into the program:
You know what I think? I said this at college graduations— I believe in it so much! When you grow up as a kid and you join an organization, whether it’s the U.S. Congress or Penn State College, as you call it, you’ve got to have your values before you walk in the door, you’ve got to know what’s wrong and what’s right because they ain’t gonna teach you there. All they teach you there is how to win football games, how to cover your butt. You’ve got to have those values. That guy, McQueary [assistant coach Mike McQueary]— he said he was a young guy— he’s twenty-eight years old: OK?— He’s the guy they we’re all talking about, the guy, the guy they put on PAID LEAVE today. Paid leave! Give him a break? This guy should have known the minute he saw what you just described. The minute he saw it he should have gone to the cops; he shouldn’t have said, `talk to Dad about it.’ Because his first instinct was, `My God! This is horrible!: I can’t believe I am seeing it!’ Then he allows himself to be propagandized into the system— `Oh, well we really don’t want to tell anybody outside of the system.’ And he begins to ask the system to teach him the value system: AND THEY TAUGHT HIM IT: Cover it up! You never ask a system to teach you values because the values of the system is always cover-up.

His first impulse was right: `I can’t believe what I saw!’
Can Anyone Believe What We Saw With ESD’s Handling of Atlantic Yards?

Is the misconduct at Penn State so much worse as to defy comparison with the misconduct people envision occurred as state officials shilled for Forest City Ratner, bending procedures and protocol and bending the letter and spirit of laws, so as to favor a rigged deal for developer/subsidy-collector Forest City Ratner over the interests of the public? The acts alleged to have occurred at Penn State involving sexual abuse of very young minors are truly terrible. The abuse of minors is all the more terrible specifically because minors are understood not to be in a position to protect themselves. But when it comes to what people suffered at the hands of state officials were community members in a position to protect themselves?

The ESD officials wielded virtually omnipotent powers as they abused eminent domain, together with ESD’s other vast abilities to supersede conventional legalities for Bruce Ratner. In what kind of culture were all these powers wielded? I agree with and think that Tom Ziller (at has accurately described the Prokhorov/Ratner basketball arena as “simply Vaseline for a real estate project [and, I add `accompanying land grab'] in Brooklyn that will make his company billions more than an NBA team could ever be worth.”

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