SUNY Foundations Given Conflict of Interest Guidelines
by Buck Quigley - posted 1:08 pm, September 20, 2011
In the middle of inauguration week for incoming UB president Satish K. Tripathi, SUNY Chancellor Nancy Zimpher has released a memo dated today calling for conflict of interest guidelines to be followed by SUNY campus-related foundations.
Click here to read the three-page memorandum.
Guidelines for Conflict of Interest Policies,
Campus-related Foundations of State-operated Campuses
The campus-related foundation of each State-operated campus shall adopt a conflict of interest policy applicable to such foundation and its affiliated corporations. Such conflict of interest policies shall provide (i) as a general principle, that service as a board member or officer of such foundation or affiliated corporation shall not be used as a means for private benefit or inurement for the board member or officer, a relative thereof, or any entity in which the board member or officer, or relative thereof, has a business interest; (ii) no board member or officer who is a vendor or employee of a vendor of goods or services to the foundation or its affiliated corporation, or who has a business interest in such vendor, or whose relative has a business interest in such vendor, shall vote on, or participate in the administration by the foundation or its affiliated corporation, as the case may be, of any transaction with such vendor; and (iii) upon becoming aware of an actual or potential conflict of interest, a board member or officer shall advise the chair of the foundation or its affiliated corporation, as the case may be, of his or a relative’s business interest in any such existing or proposed vendor with the foundation or its affiliated corporation.
For purposes of such conflict of interest policies, (1) a board member or officer has a “business interest” in an entity if the individual (i) owns or controls ten percent or more of the stock of the entity (or one percent in the case of an entity the stock of which is regularly traded on an established securities exchange), or (ii) serves as an officer, director or partner of the entity; and (2) a “relative” of a board member or officer shall mean any person living in the same household as the individual and any person who is a direct descendant of that individual’s grandparents or the spouse of such descendant.
The UB Foundation has been around for nearly fifty years. Why the need to include conflict of interest guidelines now?
In late June, Artvoice editor Geoff Kelly interviewed State Senator Mark Grisanti. Here’s an excerpt:
AV: I noticed that there’s new language in the SUNY 2020 bill tightening conflict-of-interest policies for the directors and officers of SUNY foundations and affiliate entities—the UB Foundation, for example. Any insight on how that language was introduced?
Grisanti: Basically, there was some talk in Buffalo, some articles that said we weren’t sure where things were really going in certain situations, so we said, if that’s the case, let’s look at it and see what some of the problems. We put that language in there so there wouldn’t be a problem with people saying, “You need more transparency.”
Click here to read “The Great UB Heist,” published 3/30/11. Here’s an excerpt:
The membership of the UB Council, the UB Foundation, and the various affiliate corporations reads like a Who’s Who of Western New York government, law firms, and corporations, many of them with substantial UB business. Their dealings with UB and the State of New York are overseen by themselves, their family members, and their friends and associates.
For example, Frank L. Ciminelli is an owner of Ciminelli Development and senior vice president of LP Ciminelli Inc., the largest construction group in Western New York. He is also an emeritus trustee of the UB Foundation and an active member of its Properties Committee. Frank and his three sons (Louis, Paul, and John) have had a long and profitable relationship with UB. In 2004, Louis and Paul formed non-union GPS Construction Services LLC. Louis named his cousin, Robert Savarino, as its president and CEO. UB named GPS the general contractor for the Alfiero Center at UB’s School of Management, on the North Campus. At the building’s dedication, UB’s Simpson said, “In important ways, the Alfiero Center is the visible manifestation of the dynamic partnerships that have contributed to its construction.”
Foit-Albert Associates was the building’s architect. Beverly Foit-Albert is also a director of the UB Foundation and a member of its Properties Committee. Her firm also drew up the plans for relocating over 150 families from McCarley Gardens, the moderate-income housing development that occupies a piece of land coveted for development in the downtown medical corridor. In 2010, the UB Foundation offered $15 million to buy the property, relocating the residents over several city blocks in new builds.
UB also picked GPS as the contractor for two off-campus UB housing projects. Frank’s son John became president and COO of GPS in 2008. The following year, LP Ciminelli Inc. reabsorbed GPS, and John planned to “come over to LPCiminelli as senior vice president in charge of the housing business,” according to an April 4, 2009 story in the Buffalo News.
Frank’s son Louis is a director of the Buffalo Niagara Partnership—which has once again made passage of UB 2020 its number one legislative priority this year—and chairman and CEO of LP Ciminelli, Inc., where his son Frank L. Ciminelli II is senior vice president. Frank’s brother Paul is president and CEO of Ciminelli Development Company, Inc., a director of the Empire State Development Corporation, a director of the UB Foundation, and a member of its Properties Committee.
The most significant constructions currently underway on the UB North Campus are the Greiner-Hadley projects, which include the $57 million William R. Greiner Residence Hall, named after the former UB president. Greiner’s son, Kevin T. Greiner, secured and managed over $45 million in new development projects when he worked for Ciminelli Development as senior development project manager.
The bond for the residence hall, dated May 20, 2010, is valued at $82,865,000, and lists LPCiminelli Inc. as the construction manager.
The UB entity that drew up and authorized the bond is the UB Faculty-Student Housing Corporation. Tax forms show that at least as far back as 2007, Frank Ciminelli and his son Paul have both been directors of this corporation, along with the UBF Corporation, FNUB, Inc., and the UBF Incubator, Inc. According to the UB website, they still hold these positions today. They were there when the construction contracts were okayed and remain on right through construction.
So when UB, through the UB Faculty-Student Housing Corporation, contracted for this enormous and lucrative project, there were Ciminellis on both sides of the table. The only person missing was a disinterested steward of the money’s true owner: the people of New York State.
This sort of thing goes on all the time in the corporate world, but the money-handlers are not usually helping themselves to public money quietly transferred to a private corporation. We call it “nepotism” when an ordinary person gives a job to a family member. What do we call it when a UB corporation director gives his company, or a family member, or himself a multi-million-dollar contract? Was there even a show of competitive bidding? Because the UB Faculty-Student Housing Corporation—along with the other myriad related organizations—claim to be private entities, the public and press can’t find out. If someone recused himself, then he may have been standing outside the door, but we can’t know this until we get access to meeting minutes. Already UB’s foundations argue that they are immune to Freedom of Information Law. If the UB2020 legislation ever passes, that immunity will be codified.
Although the story was harshly attacked by the UB press office in a “Fact Sheet” that was distributed to the western New York delegation in Albany and UB officials on April Fool’s Day, the day after the story appeared, those attacks were dismantled by The Spectrum student newspaper at UB.