Momentum grows to curb irregularities and improprieties at quasi-public agencies such as the CT Lottery and Port Authority [Courant]

Article as it appeared in the Hartford Courant

Gov. Ned Lamont, top legislative leaders and state auditors appear fed up with problems caused by the relative lack of scrutiny and loose restraints enjoyed by Connecticut’s quasi-public agencies.

Well-publicized messes have plagued some of the more than 10 semi-autonomous agencies, such as the Connecticut Lottery Corp. and the Connecticut Port Authority, which have some characteristics of private businesses including high executive salaries.

And Wednesday brought the latest episode of troubles as state auditors criticized the quasi-public Connecticut Green Bank for granting “questionable severance agreements” to employees it has terminated in recent years.

“During the audited period” — July 1, 2015 to June 30, 2017 — the Connecticut Green Bank “eliminated 3 positions yet made corresponding severance payments equal to 26 weeks of salary for all 3 employees, totaling $148,526. The employees received benefits in addition to salary while employed,” Auditors of Public Accounts Rob Kane and John Geragosian said in their report. “CGB informed us that it eliminated the positions as part of a reallocation of resources within the marketing department.” The audit report also cited a transition agreement that enabled one of the three terminated employees “to maintain employment until vesting for retirement benefits.”

The auditors published their findings a day after Lamont said he’d assigned two top aides to investigate problems at the lottery and port authority agencies that had been disclosed by The Courant and The Day of New London, respectively.

“[T]he governor is directing his Chief of Staff, Ryan Drajewicz, and Chief Operating Officer, Paul Mounds, to examine the management and operations of the two agencies and work closely with their leadership to make sure both organizations deliver all the benefits they were created to provide on behalf of Connecticut residents while following the highest standards of ethics and management,” Lamont’s press office said in a statement emailed to news organizations.

“Both the Port Authority and Lottery provide great benefits to the citizens of Connecticut,” Lamont said in the statement. “Their quasi-public governance structure, and that of other quasi-public agencies, is meant to make them nimble and effective at responding to opportunity, but also at rapidly taking corrective action when necessary to maintain the public’s trust and confidence. Sometimes intrusive leadership is required to make sure that happens, and now is one of those times.”

Lamont, GOP leader agree scrutiny needed

The Democratic governor and Senate Republican leader Len Fasano often disagree, but not this time. Fasano commended Lamont “for taking the first steps to investigate” the lottery and port authority, and for “his openness to reviewing the actions of all state quasi-public agencies.”

“I think an extensive review by the executive branch is a positive and long overdue first step,” Fasano said. “Past administrations never made a serious effort to address the problems associated with our quasi-public agencies. Year after year, Republicans have proposed reforms to increase transparency and oversight of quasi-publics, only to be rejected by the majority. … I am hopeful that Gov. Lamont wants to be different … and take real action to get control of the organizations I have found to be out of control.

“We have seen questionable severance payments before in the state’s quasi-publics. We all remember the debacle surrounding the departure of [former President/CEO] Anne Noble from the Connecticut Lottery Corporation, the $250,000 severance payment made to the former president and executive director of the Connecticut Housing Finance Authority and the severance payments totaling over $376,000 for four senior level managers at Access Health CT, with some of these agreements including questionable nondisclosure language. These arrangements are what led Republicans to propose legislation requiring more oversight of such contracts. While these bills were repeatedly rejected by the majority, we will continue to push for reforms.”

Here are some additional details on the audit of the Connecticut Green Bank — which offers financing on favorable terms to developers of what are judged to be clean energy projects — and on the new attempts to address problems at the port authority and lottery corporation:

• The severance agreements at the Green Bank involved an $85,589-a-year associate manager, a $93,920 senior manager and a $117,542 associate director. The first two were terminated as of June 30, 2016, but the associate director was permitted to stay until Jan. 31, 2017, which the auditors said was a 10-year retirement-vesting milestone. The Green Bank submitted a response that “[f]or the Associate Director position, the individual was allowed to stay on board through a transition agreement to complete the closure of a program (i.e., Clean Energy Communities Program).”
• Lamont recently called for, and received, the resignation of port authority board Chairwoman Bonnie Reemsnyder, after columnist David Collins of The Day disclosed that the authority paid $3,000 for six photographs that had been taken by Reemsnyder’s daughter and were displayed at the agency’s office in Old Saybrook. Also, the authority’s executive director, Evan Matthews was put on paid administrative leave after an email clash with an outspoken critic of the authority. Lamont’s office said Drajewicz and Mounds will work with the board’s new chairman, David Kooris, who also serves as deputy commissioner at the state Department of Economic and Community Development.
• As to the lottery corporation, Lamont said he has “become increasingly concerned with the recent reports of leadership strife … and an unfortunate trend of other management mishaps that threaten to undermine the public trust in our state’s gaming operations, which provide hundreds of millions of dollars in revenue.” He said that “Lottery players and taxpayers have to be able to trust the leadership and management of the Connecticut Lottery.”

The governor’s office said Lamont staffers “recently met with Connecticut Lottery leadership and requested an independent review of the Connecticut Lottery’s operational and management practices, [to] which they agreed. Governor Lamont believes such review must include — at a minimum — regulations that govern operation of the Connecticut Lottery and its games, a review of the board’s management practices and recommendations for improvements, and an assessment of whether the Lottery has in place, and follows, procedures for reporting suspicions of unethical or improper conduct.”

That last topic — about reporting suspicions of misconduct — has grown in importance in the weeks since the lottery corporation’s $190,000-a-year vice president, Chelsea Turner, testified under oath at a July 9 state administrative hearing that around 2014 she contacted a friend of hers in the FBI about what she considered to be suspicious actions by Frank Farricker, who then was the CLC’s governing board chairman. In addition, she testified that then-lottery CEO Anne Noble was also suspicious of Farricker, and they both talked to the FBI, which then had Noble secretly record Farricker in at least one meeting — using a small recording device concealed inside Noble’s eyeglass case. The criminal investigation apparently went nowhere.

Repercussions increase

Reaction has been swift to Turner’s testimony, which came when she was questioned by the attorney for former lottery security chief Alfred DuPuis during a July 9 hearing on DuPuis’ whisteblower’s complaint against the lottery corporation. On June 15, the lottery’s current president/CEO, Gregory Smith, placed Turner on paid administrative leave under provisions of a state personnel regulation that “permit investigation of alleged serious misconduct which could constitute just cause for dismissal.” One possible issue is whether she followed proper reporting procedures.

Fasano and state Rep. Joe Verrengia, D-West Hartford, who has conducted investigative hearings into the lottery’s problems in recent years, wrote a joint letter to Turner after she testified, asking questions about why she contacted the FBI. They say they received no answers from her. But now they’ve received a July 22 response from Smith, to whom they sent a copy of their letter.

“As you know I placed Ms Turner on administrative leave, effective July 15, 2019. On July 16 … Ms. Turner submitted a request to be placed on sick leave. On July 20 … I learned that Ms. Turner, exercising her rights to take a leave under the Federal Family Medical Leave Act (FMLA), will have an estimated absence from the Connecticut Lottery Corporation (CLC) of approximately 12 weeks,” Smith wrote. “Federal law prevents the CLC from requiring Mrs. Turner to work during her FMLA leave. … Accordingly, I will be unable to direct her to timely submit a response to your letter.”

Smith went on: “I have reviewed the questions posed in your letter, which are strikingly similar to the same questions I plan to ask her when she is next available. Unfortunately, without her active participation, I am unable to answer the questions contained in your letter directly.” He said he’ll keep the lawmakers informed.

It’s also unclear how Turner’s FMLA leave might affect another investigation, which the state Department of Consumer Protection (DCP), the lottery’s official regulator, has said it plans to conduct into Turner’s conduct in the FBI incident. DCP says”there may have been a failure, by certain personnel … to report incidences or allegations of legal violations in accordance with regulatory requirements … or other licensing requirements.”

These current troubles date to a 2015 scandal over fraud by some lottery retailers that forced cancellation of the popular 5 Card Cash game. That was followed by the departure of Noble as president/CEO in 2016 under a controversial severance agreement crediting her with four months’ employment that brought her to a 10-year retirement vesting threshold.

Then came a million-dollar mistake in a Jan. 1, 2018, New Year’s Super Draw drawing, and the whistleblower’s complaint in mid-2018 by DuPuis, who claims Turner and others unfairly targeted him for possible discipline for “gross neglect” in the Super Draw blunder, in retaliation for his past role in bringing the 5 Card Cash problem to light. Turner and the lottery corporation deny that.

Meanwhile, Farricker says he never been contacted by the FBI and is “flabbergasted” to learn he’d been under suspicion.

The governor’s office has said Lamont intends “as soon as possible” to appoint a permanent chairperson for the lottery’s board of directors that’s been vacant since late last year. Lamont is also “considering the makeup of the Connecticut Lottery’s board and carefully evaluating who can practice the intrusive leadership needed to safeguard the public trust in a significant organization,” his press office said.