http://www.nytimes.com/2005/06/16/sports/othersports/16racing.html

June 16, 2005
State Issues Blistering Audit of NYRA
By JOE DRAPE

The New York Racing Association has been the "poster child for mismanagement and corruption" because it has cheated taxpayers and not followed state laws, according to the state comptroller, Alan G. Hevesi, who released a financial audit yesterday of the troubled agency that runs Aqueduct, Belmont and Saratoga Race Course.

The audit, which encompassed a two-year period ending last December, said the racing association violated state law and its own policies by awarding no-bid contracts, including one for $797,913 to a Web services company owned by the daughter and son-in-law of Barry K. Schwartz, the former NYRA chairman and chief executive, who remains a member of the board.

"NYRA takes the cake - this is the worst agency of all, in my experience," Hevesi said at a news conference in Albany. "It's a remarkable agency for mismanagement and corruption for operating in the wrong way, to the detriment of the people of this state."

But Hevesi acknowledged that most of the abuses occurred before federal monitors were installed and that the racing association's current management team was in place. The monitors have overseen NYRA's operations as part of a plea agreement for its role in a 2003 tax-evasion scandal involving several mutuel clerks.

Perhaps as early as August, the monitors will issue a report to the United States Attorney's Office for the Eastern District of New York assessing whether the association has implemented anti-corruption measures and good business practices. If it has done so, the charges will be dropped against the association, which has already paid a $3 million fine.

By the end of the year, Gov. George E. Pataki is expected to appoint a nine-member committee to devise a process to put Belmont, Aqueduct and Saratoga out to bid when NYRA's franchise on the tracks expires after 2007.

"In the ideal world, the work of the monitor and the new management of NYRA will reform this agency sufficiently that it will be able to compete in a public process, a bidding process which I hope occurs," Hevesi said.

Still, while Hevesi expressed satisfaction with the association's new management team, he suggested that NYRA board members, including Schwartz, should resign if the agency was going to correct an impression that it has been out of control over the years. Hevesi was especially critical of the more than $384,000 the agency spent to ship horses, some owned by its board members, between racetracks.

Of the Web site contract awarded to Schwartz's relatives, Hevesi said, "Draw your own conclusions as to whether that was the only firm that could provide Web services to NYRA."

Charles E. Hayward, the president and chief executive of the association, said that NYRA offered no excuses for its past behavior and that it had improved its business procedures across the board.

"Mr. Hevesi acknowledges that with the help of the monitor, that NYRA is heading into the right direction," Hayward said yesterday. "I showed up on Nov. 4, and it would be inappropriate for me to comment on the past. We acknowledge there were some significant problems, but we've also made some dramatic changes in the way we do business."

Michael Cooper contributed reporting from Albany for this article.




Edited 1 time(s). Last edit at 06/15/2005 10:29PM by nicely nicely.