Last week's bribery bust on 70 current and former employees of the New York City Housing Authority should not come as a surprise after the agency's top chiefs repeatedly rejected proposals to curb corruption, according to a report.
In September 2021, New York City's Department of Investigation sent a letter to then-NYCHA Chair Greg Russ warning him about the potential for corruption in the agency through its no-bid contract process and informed him that it was investigating bribes paid to superintendents. In the letter, the Department of Investigation also told Russ that they had referred the issue for criminal investigation and called on the NYCHA chair to stop allowing superintendents to reward no-bid contracts for small tasks.
"The City employees who chose to call DOI when they saw wrongdoing helped to kick off a broad look at the integrity of micro-contracting at NYCHA housing developments in Brooklyn and spurred DOI's undercover operations where investigators posed as NYCHA managers and were ultimately offered cash, liquor and gift cards to provide the defendant vendors with unfettered access to small contracts at NYCHA," the letter read.
"We have issued policy and procedure recommendations to NYCHA, which we expect NYCHA will implement, to address the vulnerabilities we found during this investigation, including removing NYCHA superintendents and property managers as the point-of-contact to request and approve small procurement contracts," the letter continued.
However, Russ and his lieutenant, then-general manager Vito Mustaciuolo, refused to take the advice, per The City.
Around the time, the DOI commissioner also suggested centralizing the no-bid contract-award process for deals costing less than $10,000 and creating a list of fixed prices to avoid overbilling. Neither suggestions were implemented.
NYCHA Corruption Case
Corruption in NYCHA all came to a head last week when federal prosecutors charged 70 current and former employees of allegedly pocketing more than $2 million in cash payments for no-bid contracts. Federal prosecutors claimed NYCHA employees sought between 10% and 20% of a contract's value via kickbacks from 2013 to 2023. The kickbacks totalled to $2 million on $13 million worth of contracts.
The operation was touted as the "largest single-day bribery takedown" in the Justice Department's history.
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