Investigation of the Waterfront Commission of New York Harbor

the past ten years because the Audit and Control Division has completed few timelyaudits.The companies licensed by the Waterfront Commission range from small cleaningcompanies operating within the Waterfront Commission’s jurisdiction to largecorporations, such as Maher Terminals, that move large container ships in and out of theport. A license by the Waterfront is issued for a five-year term. The current applicationcycle runs from December 1, 2005 through November 30, 2010.License applications are received by the Commission’s Licensing Division, whichensures applications are complete before forwarding them to the Law Division. The LawDivision is responsible for recommending an issuance or denial of a license or temporarypermit to the Commissioners. Corporate officers and significant shareholders mustsubmit to a criminal history check, and a company is barred from obtaining a license ifany of the officers or shareholders has been convicted of a felony within the past fiveyears. The Waterfront Commission Act also requires that the applicant have “goodcharacter and integrity.” 16Prior to its dissolution January 15, 2009, the Division of Audit and Control wasresponsible for assessing the financial health of all stevedoring companies within theWaterfront Commission’s jurisdiction. 17 A pre-licensing audit, a cursory examination ofthe company’s general ledgers and vouchers, was conducted for every new stevedoringcompany before the Waterfront Commission issued the company’s first temporarypermit. Former Law Division Director Joy Kelly stated that payroll and complianceaudits should be conducted every three years thereafter. The payroll audit determineswhether the company has paid the required assessments to the Commission, and thecompliance audit reviews the company’s finances for evidence of criminal activity.According to the directors of the Law and Licensing Divisions, a license cannot be issuedunless compliance and payroll audits have been completed within the current licensingcycle.Unlike the Law and Licensing Division directors, Audit and Control employeesgave conflicting accounts regarding the frequency with which audits should be completedto be considered current and allow a company to be eligible for a permanent license.Some auditors stated that each company should be audited every two to three years, whileothers believed that an audit simply needed to be completed within the current five-yearstevedore licensing cycle to be considered current. Almost all of the employees of theAudit and Control Division, including former Director Frank Nastasi, stated that theywere unaware that the absence of current audits was often the reason why the LawDivision had not recommended that the Waterfront Commission issue any permanentstevedoring licenses.The Inspector General’s review determined that audits were typically severalyears behind and in fact, several had not been completed in fourteen years. Only a few16 Waterfront Commission Act, Article VI §3(b).17 The Division of Audit and Control was eliminated during the Inspector General’s investigation. Changesalready in effect at the Waterfront Commission are discussed in a subsequent section of this report.23