In the News: Formica calls for state AG to probe Connecticut Port Authority

February 16, 2021

Senate Republican Leader Kevin Kelly of Stratford and Deputy Senate Republican Leader Pro Tempore Paul Formica of East Lyme on Tuesday formally requested an investigation of CPA business in a letter to Gov. Ned Lamont and Attorney General William Tong.

The request is a response to revelations by the State Contracting Review Board of a 2018 CPA contract with a subsidiary of Seabury Capital for work that included managing the process of finding an operator of State Pier in New London. The CPA paid Seabury more than $700,000 for its work. The size of the contract has raised questions.

“It’s just been an ongoing drama,” Formica said, a reference to past problems at the CPA that included allegations of misuse of funds and mismanagement and led to legislative hearings, an audit and state financial oversight of the CPA.

Formica said while he recognized the CPA has new leadership and has worked to enact reforms, the public deserves answers and transparency.

“The revelations that came out are seemingly an exorbitant finder’s fee, almost double what the CPA’s annual budget was,” Formica said.

The State Contracting Standards Board raised questions about the Seabury contract earlier this month as part of its ongoing review of the CPA. Responding to complaints, the board has formed a special committee to look at the CPA’s contract with State Pier operator Gateway as well as a concession agreement between the two. It also is reviewing applicable statutes regarding the authority.

The agreement in question was executed on May 15, 2018, and provided for Seabury, a venture capital company, to perform advisory and financial advisory services, development of a request for proposals for an operator of State Pier, and other duties. The CPA paid Seabury $219,500, plus out-of-pocket expenses. The contract included a provision for a success fee, later calculated at $523,500.

“My question is, was it a reward?” asked Bruce Buff, a member of the State Contracting Review Board, at a meeting earlier this month.

“It is difficult for me to understand why it is necessary or advisable to pay an additional fee to a consultant as a reward for providing a service (for) which they were already paid,” Buff said. “Every time we look into a quasi-public agency … we find the same issues, questionable behavior, lack of oversight, lack of accountability. None of this is in the best interests of the people of the state of Connecticut. So I believe it’s up to the state legislature, who created this mess, to fix it.”

Formica and Kelly, in the letter to Lamont and Tong, said the state legislature, through several bills proposed this session, is already asking for policy reforms to make the CPA more transparent and accountable.

“Action taken by the Attorney General’s office, we feel, would send a strong and positive signal to middle-class families of Connecticut that the Executive Branch values their tax dollars,” the letter reads. “An Executive Branch-led review of CPA practices will show that potential systemic problems at any state taxpayer-funded government agency will receive a comprehensive examination. Your findings could also lead to additional legislative reforms aimed at creating more transparency and accountability at CPA.”

As previously reported by The Day, CPA Chairman David Kooris explained in 2020 that the $523,500 payment was part of a settlement with Seabury related to the calculation of a success fee based on the capital contributions promised by offshore wind partners Ørsted and Eversource.

Kooris recently addressed concerns raised by Day columnist David Collins about a previous CPA board member, Henry Juan III, who worked at Seabury. Juan was not a CPA member when the board recommended hiring Seabury, Kooris said.

Ørsted and Eversource, which plans to expand and use State Pier for the pre-assembly of wind turbine generators, are contributing $77.5 million toward the redevelopment of State Pier. The state is paying the balance of what early estimates determined would be a $157 million price tag. Costs are expected to rise, however.

Under the harbor development agreement, the two companies will pay the port authority $20 million in rent to sublease the pier from Gateway for a minimum of 10 years. Preliminary work at State Pier is expected to start next month.

A public hearing on the CPA’s permit request from the state Department of Energy and Environmental Protection for major work at the pier has been set for March 23, CPA Executive Director John Henshaw announced Tuesday.

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