By Julie Shapiro
BATTERY PARK CITY — The Battery Park City Authority poured more than $300,000 of taxpayer money into open-bar parties, pricey executive lunches and gifts for employees, an investigation by the state Inspector General’s office revealed Friday.
The Authority also fired an employee who complained about favoritism and paid her to keep quiet, the report said.
"Such excessive spending by a state Authority was outrageous," Inspector General Joseph Fisch said in a statement.
The Authority sunk $13,000 a year into lavish themed picnics for employees between 2005 and 2008, including $1,000 for pony rides, $600 for face painting and $460 for a clown, the report said.
The Authority also threw a $14,000 holiday party each year, with an open bar and a $2,000 DJ.
Former Authority chairman James Gill and president Jim Cavanaugh both resigned earlier this year in response to the investigation’s preliminary findings, Fisch said.
Although Cavanaugh often urged his staff to save money, he oversaw "the authority’s extravagant spending practices" between 2005 and 2008, Fisch said.
Cavanaugh called the report "nonsense" in a conversation Friday and said his decision to leave the Authority was unrelated to the findings.
The report "is a poor attempt for Joe Fisch to justify the $750,000 in legal fees that BPCA spent during the two years of his investigation," Cavanaugh said in a statement.
Former city comptroller Bill Thompson took over the authority’s board last March and he named Gayle Horwitz president of the Authority last week.
In a statement issued on behalf of the Authority Friday, Thompson said he took the Inspector General’s findings seriously and had already made changes to the authority’s policies, including entertainment expenditures.
"The board of the Battery Park City Authority and I are committed to ensuring that the Authority adheres to the highest standards of conduct," Thompson said in the statement. "The actions we have taken over the last several months will ensure the Authority is operating at the highest levels and is prepared for the future."
Fisch’s statement commended Thompson for his "prompt and positive response to our recommendations.
"I am confident that Battery Park’s policies are now in line with state guidelines," Fisch continued.
Other questionable expenses mentioned in the report include a car and chauffeur for Gill, valued at $19,000. Gill was supposed to serve without compensation, and Authority staff fudged the figures to make it difficult to see the total benefit he received, the report said.
Daniel Horwitz, Gill’s lawyer, said Gill resigned from the Authority voluntarily and cooperated with the investigation. Horwitz called the Inspector General’s allegations "ludicrous" and said Gill used the car only for work purposes.
Gill has begun repaying the Authority for the use of the car, the report said.
Additional hefty expenditures by the Authority include $163,000 on travel and entertainment between 2005 and 2008, mostly on fancy lunches, the report shows. Gill and Cavanaugh lunched together 32 times over about two years, racking up a bill of more than $2,300.
The Authority also made a slew of questionable charitable donations to groups unrelated to Battery Park City, including Alabama’s Auburn University Foundation, the Queens Botanical Garden, Staten Island Development Corp. and many more.
Cavanaugh said the Authority curtailed its charitable expenditures after receiving new rules from the attorney general’s office in 2006, and he said the authority’s semiannual parties were not out of line with the spending of other authorities.
Speaking in his own defense, Cavanaugh also said he decreased the Authority’s operating budget from $31.8 million in 2005 to $28.6 million in 2010. The Authority’s travel and entertainment budget also decreased, from $153,220 in 2005, before Cavanaugh became president, to $48,300 in 2009, he said.
The allegations that led to the Inspector General’s investigation surfaced after Cavanaugh fired former controller Debra Bogosian in the fall of 2008. Bogosian had strong performance reviews, but Cavanaugh allegedly dismissed her because she did not get along with Senior Vice President of Operations Laura Wilson Kimball, who was close to Cavanaugh.
The Authority then inappropriately paid Bogosian $56,304 to sign an agreement promising not to say anything that "disparages, criticizes or detracts from the character or reputation of BPCA," the report states.
In a memo to Authority board members, Bogosian accused Cavanaugh of playing favorites with Kimball. She said Gill, Cavanaugh and an "Inner Circle" of employees created a "hostile work environment [and] spared few people in their campaign to harass, intimidate, and marginalize staff."
Kimball lost five vacation days as a result of the investigation, the report said.
To conduct the investigation, Inspector General’s office interviewed 16 people under oath and reviewed thousands of documents, including budget reports, credit card statements, employee manuals, performance reviews, and e-mails.