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Vast Corruption in Information Technology Contracts in Spotlight as CityTime Trial Begins in NYC

StoryOctober 18, 2013
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The trial has begun in the largest corruption case in New York City history. Private consultants are accused of siphoning tens of millions of dollars in kickbacks from the scandal-ridden $700 million CityTime payroll project. Last year, the project’s main contractor, SAIC, was forced to repay the city $500 million as part of a deferred prosecution agreement. Juan González, who broke the story, discusses the latest developments.


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

AMY GOODMAN: Juan, you have a piece today in the New York Daily News about the largest corruption case in city history, that you actually exposed. It’s going to trial this week.

JUAN GONZÁLEZ: Yes, the CityTime scandal. Three people are—started trial in U.S. District Court in Manhattan this week. They’re the last of 11 people that were indicted by federal prosecutors in 2010 and 2011 over this massive information technology contract called CityTime. It was a payroll system that the New York City government, the Bloomberg administration, was instituting. And the amazing thing is, of the 11 people originally charged, one died, two fled to India with millions of dollars that they stole from New York City taxpayers, and the rest of them have already pled guilty. So there’s only three left, two of whom are accused of being the masterminds of the—of the plot.

The most fascinating thing in the first days of testimony is that a key city official, who has never been indicted, the former head of Mayor Bloomberg’s payroll agency, was repeatedly raised in testimony as the person who allowed this massive fraud, kickbacks of millions and millions of dollars to the—to the contractors. The main company, a defense giant, SAIC, has already reached a deferred prosecution agreement with the government and repaid the City of New York the astounding figure of $500 million, because this payroll project started at $60 million, and it ended up costing over $700 million. And so, the company paid back $500 million, and one of its—one of its executives has now been a chief witness in the case. And he testified that the city payroll director basically allowed these fellow workers of his to develop the fraud, to continue to hire people and charge outrageous rates to the city, even when the company itself knew that he shouldn’t be doing it, but they weren’t able to prevent him from doing it.

So that the—we’ll see how the testimony unfolds over the next month, because the trial is expected to take a month. But it really is sort of a way to look at what I’ve considered for years to be the prime form of corruption in modern governments in the United States today, which is information technology contracts. It’s the new form of patronage and corruption in local, state and federal governments.

AMY GOODMAN: You know, it makes me wonder a little bit about the exchange websites.

JUAN GONZÁLEZ: Absolutely. It’s the same kind of problems. These companies come in—

AMY GOODMAN: Get hundreds of millions of dollars.

JUAN GONZÁLEZ: They get hundreds of millions of dollars, promising you this new computerized system. And inevitably they charge an enormous amount of money, and they don’t deliver what they promise, and then the taxpayers end up with the problems.

AMY GOODMAN: Well, we’ll certainly continue to follow this trial that’s just begun this week.

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