Investigation of the Waterfront Commission of New York Harbor

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on August 5, 2009, Governor Corzine informed the Inspector General that he wasremoving Commissioner Madonna for cause.The Waterfront Commission is funded primarily through an assessment on thesalaries paid to employees on the piers. Currently, stevedoring companies 5 are assessedat a rate of 1.98 percent of the portion of the company’s payroll devoted to waterfrontwork. The assessment rate is determined jointly by the governors of the two states basedon the Commission’s budgetary needs, but may not exceed two percent according to theCompact.The executive director oversees the day-to-day operations of the WaterfrontCommission. The Waterfront Commission’s Employees’ Manual enumerates the dutiesand responsibilities of the executive director, which include being in “administrativecharge of all Commission activities and personnel”; making recommendations to theCommissioners “with respect to hiring, discharge and changes in compensation ofpersonnel”; and “initiat[ing] investigations pursuant to the provisions of the WaterfrontCommission Act.” During the period covered by this investigation, Thomas De Mariawas the executive director. On September 10, 2008, Walter Arsenault assumed theposition of executive director.The executive director supervises the directors of each of the divisions of theWaterfront Commission and the general counsel. At the onset of the Inspector General’sinvestigation, the Waterfront Commission consisted of approximately ninety-sevenemployees who were assigned to seven basic divisions: Executive, Law, Police,Licensing, Audit and Control, Information Technology, and Administration. TheInspector General has made a number of findings against former General Counsel JonDeutsch, who was dismissed on October 14, 2008 as a result of misconduct, and replacedby Michele Meyer-Shipp (effective May 6, 2009). The Inspector General also has madefindings with regard to now-retired Audit and Control Director Frank Nastasi, andComptroller Irving Wolf.Authority and Powers of the Waterfront CommissionAs part of its mission of combating corruption and ensuring fair hiring practices,the Waterfront Commission regulates and licenses stevedoring companies operating inthe harbor and on the piers. Moreover, any individual who comes in contact withwaterborne freight must be registered with and licensed by the Waterfront Commission.All workers on the waterfront must undergo a background check, and stevedoringcompanies must meet licensing requirements and submit to regular audits by theCommission.Many individual workers are hired on a temporary basis by stevedoringcompanies as needed, typically to load or unload ships in harbor. The Waterfront5 Article II of the Waterfront Commission Act defines a “stevedore” as “a contractor (not including anemployee) engaged for compensation pursuant to a contract or arrangement with a carrier of freight bywater, in moving waterborne freight carried or consigned for carriage by such a carrier on vessels of such acarrier berthed at piers, on piers at which such vessels are berthed or at other waterfront terminals.”7
Commission regulates the employment of registrants, who must be hired according toseniority. The Commission also limits the number of registrants, 6 partly to ensure thatfull-time work is available for those registered, but also to limit competition for slotsbecause an excess of workers may give rise to opportunities for hiring officers to extortregistrants seeking work. Until a phone system was implemented on June 5, 1989, hiringfor longshoremen was conducted in person at one of five Commission hiring halls, whereavailable registrants would await a company in need of short-term labor.According to the Waterfront Commission’s Compact, companies operating on thepiers must obtain a license from the Commission, and renew such license every fiveyears. Current compliance and payroll audits must be conducted prior to the issuance ofa permanent license, in addition to background checks of certain company officers.Payroll audits are performed to ensure that the company is assessed properly based on itswaterfront operations. Compliance audits are performed as a means to combatcorruption, focusing on the financial transactions of the registered companies todetermine if there are violations of the Waterfront Commission’s regulations or criminalactivity. Until a recent restructuring, audits were conducted by the Commission’s Auditand Control Division.The Police Division is charged with investigating crimes that occur within theCommission’s jurisdiction. The subjects of an investigation may range from relativelyminor theft of cargo to complex organized crime rings. Members of the Police Divisionserve as police officers in both New York and New Jersey.The Waterfront Commission has the power to subpoena records and individualsand conduct hearings. Hearings are generally conducted when individual registrants andstevedoring companies are charged with violations of Waterfront Commissionregulations.Policies and ProceduresThe Waterfront Commission Act broadly lists the powers and mandate of theWaterfront Commission but does not provide guidance for the day-to-day functioning ofthe Waterfront Commission in carrying out its mission. For example, while the Compactempowers the Waterfront Commission to audit stevedoring companies, it does notprovide guidelines regarding how the audits should be conducted or how often.When the Inspector General commenced its investigation, the WaterfrontCommission had in effect a 25-page Employee’s Manual which does not contain a date ora version number. While the manual does address some items, such as employeebenefits, it falls short of providing adequate policies and procedures with which to governemployees of the Waterfront Commission. For example, the manual fails to address theuse of Waterfront Commission vehicles and other property. And, while the manual doesaddress the basic function of each of the divisions of the Waterfront Commission, it6 The Waterfront Commission Act uses the terminology register or license depending on classification ofthe individual, i.e. longshoremen, hiring agents, or security guards. While the standards for the differentgroups vary, they are all considered registrants of the Waterfront Commission.8
Page 1 and 2: State of New YorkOffice of the Insp
Page 3 and 4: STAFF FOR THIS INVESTIGATION AND RE
Page 5 and 6: Personal Use of Waterfront Commissi
Page 7 and 8: mandated core responsibilities. 2 T
Page 9 and 10: enforcement officer, he was hired a
Page 11: II. BACKGROUNDHistoryIn the early 1
Page 15 and 16: There was virtually no communicatio
Page 17 and 18: and, therefore, the Waterfront Comm
Page 19 and 20: did identify individual instances o
Page 21 and 22: Maria that he “should have been m
Page 23 and 24: Q.: Why did it change?Deutsch: Beca
Page 25 and 26: all the things that has gone on wit
Page 27 and 28: Police Division. That testimony not
Page 29 and 30: had been completed within the curre
Page 31 and 32: epercussions of his felony convicti
Page 33 and 34: Michael DeCotiis testified to the I
Page 35 and 36: offending companies, although Kelly
Page 37 and 38: Web sites were blocked by software
Page 39 and 40: At all of the police academies, the
Page 41 and 42: epresenting the Waterfront Commissi
Page 43 and 44: training facility has been created
Page 45 and 46: Madonna’s other recommended candi
Page 47 and 48: Madonna denied providing the exam t
Page 49 and 50: which car they would drive, they ne
Page 51 and 52: F. ABUSE OF PUBLIC RESOURCESPersona
Page 53 and 54: A Waterfront Commission Vehicle Was
Page 55 and 56: Wolf also attempted to disclaim res
Page 57 and 58: determining the outstanding forfeit
Page 59 and 60: non-federal share of expense, and t
Page 61 and 62: comptroller received this informati
Page 63 and 64:
Commissioner Madonna compelled the
Page 65 and 66:
Fiscal Management• The Commission
Page 67:
JON S. CORZINEState GovernorOFFICE
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Investigation of the Waterfront Commission of New York Harbor

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