No More Bad Apples: Legislation Would Prohibit N.Y. from Contracting with Fraudulent Companies | Citizens Against Government Waste

No More Bad Apples: Legislation Would Prohibit N.Y. from Contracting with Fraudulent Companies

Press Release

For Immediate ReleaseContact:  Mark Carpenter
June 19, 2003(202) 467-5300

 

(Washington, D.C.) The 54,200 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in New York today applauded the introduction of bi-partisan legislation that would bar companies who have committed corporate fraud from receiving state or local contracts for five years. 

“Thousands of New Yorkers have lost billions of dollars in retirement savings and investments from Enron, MCI, Adelphia Communications, and other corporate scandals,” CCAGW President Tom Schatz said.  “This bill ensures that New Yorkers will not have their tax dollars placed at risk by doing business with a fraudulent company.”

“The New York State Contract Disqualification Act” was introduced in the Assembly by Assemblywoman RoAnn M. Destito (D-Rome) and in the Senate by Sen. Chuck Fuschillo (R-8th District).  It prohibits state contracts with companies that have filed for bankruptcy as a result of committing accounting fraud, perpetrated securities violations, been fined $5 million in a criminal matter, or paid $500,000 in a civil settlement within the last five years.  Although today was the last day of session, a special session may be called later this summer where the bill could be passed.

“Sen. Fuschillo and Assemblywoman Destito should be commended for addressing this issue.  It is essential that the legislature follow through and pass this bill,” Schatz continued.  “Others states need to follow suit and enact similar legislation to protect their taxpayers.”

The federal government has rules for debarring fraudulent companies from conducting business with it.  Both Enron and Arthur Andersen were debarred as a result of their recent scandals.  For a yet-to-be determined reason, MCI has received no such punishment even though it committed the largest corporate fraud in history.  In fact, the government awarded MCI $770 million in contracts last year.  To date this year, federal contracts include $45 million from the Pentagon for a cell phone network in Iraq, and $7 million from the National Oceanic and Atmospheric Administration for satellite data communications.

New York State also contracts with MCI.  In May 2002, shortly before the company’s accounting fraud became public, the state signed a three-year agreement with MCI, AT&T, and Verizon for the Aggregated Telecommunications Services, which provides voice services to state agencies.  The estimated value of the contract is $25 million.

“New York needs to show MCI and other fraudulent companies that crime doesn’t pay,” Schatz concluded.  “Refusing to award such companies new contracts is a common sense practice, and taxpayers in New York deserve nothing less.”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.