Investigation of the Waterfront Commission of New York Harbor

had been completed within the current licensing cycle. Almost every file contained acopy of a May 2, 2007 memo from then-Law Division Director Joy Kelly to then-Auditand Control Director Frank Nastasi, asking that Audit and Control provide approximately60 outstanding audits that the Division of Law had requested in March and April of 2006.The memorandum reads, in part:No audits have been received from your Division since approximately2000 with the exception of Global Terminal and Port Securing….Due to the fact that the Law Division has received no audits, I [am]unable to enforce the Waterfront Commission Act and the Rules andRegulations of the Waterfront Commission with respect toStevedores.Neither this memorandum nor its contents were apparently ever shared with thecommissioners.Prior to the Inspector General’s investigation, the Waterfront Commission did notmaintain a central list tracking audits of stevedoring companies. There was no audit plandetailing which audits were outstanding and when the companies were last audited. Alist was created only after the Inspector General requested information regarding thedates of completion of audits concerning current stevedores within the WaterfrontCommission’s jurisdiction. The list reveals that the unit had fallen far behind therequired frequency of audits. As of mid-2007, payroll audits were anywhere from one to14 years outstanding. Since most completed payroll audits result in additional fundsowed to the Waterfront Commission, most members of the audit staff agreed that timelierpayroll audits would result in an increased budget for the Waterfront Commission.When the Inspector General’s Office showed Audit and Control staff membersthe list of outstanding audits, few were surprised that the vast majority of audits were somany years behind schedule. Although then-Executive Director Thomas De Maria wascopied on Joy Kelly’s memorandum listing the 60 outstanding audits, he testified to theInspector General that he was unaware that the lack of timely audits was the reason thatevery waterfront licensee was operating on temporary permits. De Maria attributed theproblem of late audits to the small number of auditors on staff, but most auditors blamedtheir supervisor, former Audit and Control Director Frank Nastasi.Nastasi stated to the Inspector General that it would be “impossible” for the auditstaff to complete audits of each of the stevedoring companies within a five-year periodgiven his limited staff. He claimed that he was unaware that the Waterfront Commissionhad not issued any permanent licenses, nor that the Commission’s reliance on temporarypermits was largely a result of the lack of completed, current audits. In fact, Nastasistated that it “seems a little farfetched,” and claimed permanent licenses were not issuedbecause of the “practices of the agency.”Nastasi also challenged the contention of Joy Kelly’s 2007 memo that there were60 outstanding audits, claiming that his secretary mistakenly filed the reports withoutforwarding them to the other divisions. Although some of the audits on Kelly’s list had24