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Contractor in NYC's CityTime Scandal Avoids Prosecution with Record $500 Million Fine

StoryMarch 15, 2012
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Guests
Juan González

award-winning journalist, author, New York Daily News columnist and Democracy Now! co-host.


A New York City corruption case exposed by Democracy Now! co-host Juan González has led to a major fine for the main contractor involved. Science Applications International Corporation (SAIC) has agreed to pay $500 million in penalties for the scandal surrounding the computerized payroll system called CityTime. In what prosecutors call "the single biggest fraud ever perpetrated on the city of New York," SAIC employees and other consultants used shell companies and overseas bank accounts to funnel kickbacks and inflated billings, defrauding taxpayers of hundreds of millions of dollars as the budget for the project ballooned from $73 million to $700 million. "For the company, it’s like in Monopoly," González notes. "You pay $50 to get out of jail; they paid $500 million to stay out of jail." [includes rush transcript]


TRANSCRIPT
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: A New York City corruption case exposed by Democracy Now! co-host Juan Gonzalez in the New York Daily News has led to a major fine for the main contractor involved. Science Applications International Corporation has agreed to pay $500 million in penalties for the scandal surrounding the computerized payroll system called CityTime. The CityTime fraud cost New York City taxpayers more than $80 million.

This is Democracy Now! And those are the headlines. Democracynow.org, The War and Peace Report. I’m Amy Goodman.

JUAN GONZALEZ: And I’m Juan Gonzalez. Welcome to all of our listeners and viewers around the country and around the world.

AMY GOODMAN: So, Juan, it’s you who exposed this story, and you wrote yet another column in the New York Daily News today about CityTime and SAIC, one of the largest military contractors in the world.

JUAN GONZALEZ: Yeah, there was an astonishing press conference that was held yesterday by the U.S. Attorney for the Southern District Preet Bharara, Mayor Bloomberg and the commissioner of investigations announcing this settlement with SAIC, one of the largest defense contractors in the country, basically to prevent SAIC from actually facing criminal charges. The company agreed to pay $500 million. It’s the largest recovery of a—by a local government or a state government in the history of the United States.

AMY GOODMAN: What did they do?

JUAN GONZALEZ: Well, they were engaged in a massive scheme of paying kickbacks to city consultants and also inflating bills over a 10-year period for a payroll system that started out at $70 million and ended up costing $700 million. And it was all basically people being paid $400,000, $500,000 a year to delay and delay the creation of a payroll system for the City of New York.

And after—I started writing articles in late 2009, early 2010. By the December of 2010, the U.S. attorney indicted a bunch of people. It’s now 11 people have been indicted on a variety of fraud and money laundering, because they were setting up shell companies and accounts all around the world to funnel all this money. Two people fled to India. They are now fugitives in India. And two have pleaded guilty. So it’s a massive corruption scandal that occurred all under the watch of the Bloomberg administration, without anyone in the government apparently knowing anything about it. But the investigation is continuing to see whether any city officials were actually involved directly in the cover.

So, but SAIC not only agreed to pay $500 million, they agreed to accept a federal monitor of the company for the next three years, all in an effort to save billions of dollars in contracts. Ninety percent of their work is with government agencies around the country, so if they were convicted of criminal charges, the company itself, they would have been banned from being able to get any other kind of public contracts in the future. So, for the company, it’s like in Monopoly: you pay $50 to get out of jail; they’ve paid $500 million to stay out of jail and to save all the rest of their contracting work.

AMY GOODMAN: Well, congratulations on your remarkable exposé that has really ultimately led to this.

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