In the midst of the pandemic in early 2021, New York state officials were hashing out how to build a mobile app to display users’ vaccination status when an unfamiliar face suddenly started joining the conference calls.
The new participant, Michael Balboni, was a former state lawmaker and appointee of three previous governors, and more recently had been working as a lobbyist in Albany for Google, Oracle and other prominent clients. He was also a close friend of a top official in the budget office, the agency overseeing the app’s rollout.
Soon after, one of the contractors overseeing the app’s development, Deloitte Consulting, signed Mr. Balboni up as a consultant, then as a lobbyist, paying him more than $300,000 over the next two years.
It was just one example of how the top state budget official, Sandra L. Beattie, and another high-ranking state leader aided Mr. Balboni and his lobbying firm, RedLand Strategies, according to a letter by New York State’s inspector general, Lucy Lang.
The letter, which was sent to the state ethics commission and has not been previously reported, details how the relationships between the officials and the lobbyist were at the heart of a state investigation that Ms. Lang’s office completed in March.
Throughout its 16 pages, it offers glimpses of the inner-workings of high-dollar state contracting during the desperate years of the pandemic — and how two officials apparently helped a savvy political operator make the most of it.
It said investigators found no evidence that the state officials had engaged in “self-dealing” or had sought to enrich themselves. But it found that their actions at best created the appearance of a conflict of interest, and at worst represented a violation of the New York law prohibiting agency employees from using their office to benefit themselves or others inappropriately.
From the investigation, it emerged that Ms. Beattie had vacationed with Mr. Balboni and his wife in Florida and the Caribbean on at least three occasions while he or his clients had business pending before the budget office or the state — and that she had failed to disclose the trips or seek agency approval for them. The investigators, however, found no indication that Mr. Balboni had paid for the trips.
The review also revealed that the other high-ranking state official, the then-chief technology officer, Rajiv Rao, had supplied Ms. Beattie with a cellphone that was not connected to the state’s monitoring system, an apparent violation of state rules, and that she had wiped the device clean before surrendering it at the end of her tenure at the state budget office.
In referring the findings to the state’s ethics commission, Ms. Lang asked the panel to determine whether Ms. Beattie and Mr. Rao violated the state law in their dealings with Mr. Balboni. She did not ask the commission to make a determination on Mr. Balboni’s actions.
The commission has jurisdiction over sections of the Public Officers Law, which covers conflicts of interest, the conduct of state employees and lobbying regulations. It was not clear whether the commission had taken any action on the referral, and representatives of Ms. Lang’s office and the commission declined to comment.
Neither the former state officials nor Mr. Balboni had been contacted by the ethics commission as of Sunday, they said in statements or interviews.
A spokesman for Mr. Balboni, Michael McKeon, said Mr. Balboni was asked to volunteer in shaping the app at a time of crisis and did so “without hesitation.” Deloitte later “sought and received verbal permission” to pay Mr. Balboni for services that did not include the project for which he had worked as a volunteer, Mr. McKeon said.
At all times, Mr. Balboni “acted ethically and disclosed all his activities appropriately,” Mr. McKeon said, noting that the inspector general “did not include a specific referral” about him.
In an email, Ms. Beattie said during her time as deputy budget director she not only adhered to all ethical guidelines “but exceeded them.” She also said it was “odd” that she had only learned of the referral to the ethics commission “through a press leak.”
“I have been transparent and have fully cooperated with the IG’s investigation and welcome any governmental inquiry that will bring this issue to an open and transparent conclusion,” she said.
Mr. Rao said on Sunday that he had worked hard for the state — sometimes sleeping in his office during the pandemic — and never had an “ulterior motive” or any intention to violate rules or policies.
“I put in 15, 18 hours a day trying to make the state a better place,” he said. “I loved my job. I did what I had to do to get the state as much benefit as I could.”
Deloitte did not immediately respond to calls and emails requesting comment.
In her letter to the Commission on Ethics and Lobbying in Government, the inspector general focused in part on the unusual invitation — into the inner sanctum of state government — that Ms. Beattie apparently extended to Mr. Balboni during the creation of the mobile app, which would become known as Excelsior Pass.
“Simply put, Beattie provided Balboni with open access to state vendors and the opportunity to court future business for his firm,” Ms. Lang wrote in her referral letter. “No other lobbyists were provided this access or opportunity.”
After Mr. Balboni began joining the conference calls about the app’s development, a high-ranking Deloitte official approached Mr. Balboni and offered to bring him on board as a consultant at $250 an hour, starting in April 2021, the investigators said.
Deloitte received 35 percent of what it billed the state for Mr. Balboni’s consulting work, taking in $145,995 and paying Mr. Balboni $94,313, the investigators said. And it was Ms. Beattie who exercised “approval authority” over the state payments to Deloitte, the investigators said.
A few months into Mr. Balboni’s consulting job, Deloitte hired him as a lobbyist at a rate of $10,000 a month. All told, he made over $304,000 from the consulting giant from the spring of 2021 through May of last year, the investigators found.
While work continued on Excelsior Pass, Mr. Balboni used his position on the New York Power Authority — to which he had been appointed by former Gov. Andrew M. Cuomo — to gain free access to two out-of-state technology industry conferences, the investigators said. An online schedule of fees shows that access might otherwise have cost his lobbying firm as much as $16,000 in annual membership fees.
In his state appointee role, Mr. Balboni was also subject to the Public Officers Law and therefore “prohibited from using that position to obtain a benefit for himself,” the inspector general’s letter said.
At the conferences Mr. Balboni staged events to promote his firm, RedLand Strategies, with Ms. Beattie in attendance in 2022 and Mr. Rao on hand in both 2021 and 2022. Both were billed as “special guests” during the appearances.
Organizers of the conferences later complained to the state that Mr. Balboni was using a government membership to “do business for his private company.” Mr. McKeon, the spokesman, said Mr. Balboni got approval from the power authority to attend using the state’s membership.
Mr. Balboni told investigators that his goal was boosting his lobbying business during cocktail receptions he staged at the conferences in Seattle in 2021 and Maryland in 2022.
Mr. Balboni acknowledged that he and his firm did benefit from the receptions, the inspector general wrote in her letter. She added that Ms. Beattie and Mr. Rao, neither of whom sought agency approval for the speaking roles, were “using their official positions to confer a benefit — the appearance of access — to Balboni and his firms.”
Among those at the 2021 reception was a T-Mobile executive who would soon formalize a state lobbying deal that had begun a few months earlier with Mr. Balboni’s RedLand Strategies.
Weeks before the cocktail reception, Mr. Balboni had presented Mr. Rao’s agency with a pilot proposal to sell up to 5,000 T-Mobile phones to the state — which otherwise had an exclusive contract with Verizon. It was Mr. Rao who “identified the opportunity with T-Mobile” to others in state government and facilitated the ultimate purchase, the investigators said.
In the interview, Mr. Rao did not dispute that he brought the idea to the agency, but said he did so not because of any pressure or outside influence but because it would save the state money and foster competition.
T-Mobile did not immediately respond to emails requesting comment.
The inspector general found that Mr. Rao had failed to disclose his speaking role at a cocktail reception with Mr. Balboni’s current or prospective clients, and that at a time when Mr. Rao was working with the contractor on state projects, his son had gone to work for Deloitte as a cybersecurity analyst in Boston. Mr. Rao said he was not aware he needed to inform anyone at his agency about either.
As the pandemic began to ease, change was afoot for Ms. Beattie, Mr. Rao and their friend in the Albany lobby. In late 2022, the longtime state budget director, Robert Mujica, announced that he was stepping down. And as 2023 began, Ms. Beattie seemed to be on the verge of succeeding him when Mr. Cuomo’s successor, Gov. Kathy Hochul, temporarily elevated her to acting budget director.
But Ms. Hochul’s team soon soured on her and pushed her out of the administration. Alarm bells within the government went off on her last day, when Ms. Beattie turned in her work cellphone, and state employees realized it was not connected to the state’s cellphone management system as required. They also found that its data had been deleted.
The discovery prompted Ms. Hochul to call in Ms. Lang, the inspector general’s letter said.
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