NYPA cooperating in federal, state probes of agency

Outgoing LIPA Chairman Richard Kessel at a board Outgoing LIPA Chairman Richard Kessel at a board meeting on Jan. 25, 2007. Photo Credit: Newsday / Audrey C. Tiernan

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The New York Power Authority said Thursday it is cooperating with federal and state authorities in a probe of practices at the agency dating back to 2009 under former president and chief executive Richard Kessel.

As part of the investigation, the FBI "has been interviewing [NYPA] staff" in recent weeks on issues related to procurement, according to a state energy source familiar with the inquiry. An FBI spokeswoman declined to comment.

Also, the state authority has hired auditor Ernst & Young to "conduct an independent review of procurement and internal audit practices," according to a source at NYPA.

As part of that review, NYPA is "instituting additional controls to strengthen its processes," the source said.

In a statement in response to Newsday questions, NYPA Thursday confirmed the federal and state probe, but declined to specify the subject.

"NYPA is fully cooperating with state and federal authorities in an ongoing investigation stemming from matters that began in 2009 under the leadership and administration," of Kessel, the statement said.

Kessel declined to comment Thursday night.

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It's unclear which state agency is handling the investigation. A spokeswoman for state Attorney General Eric Schneiderman was not available for comment Thursday night.

Last month, state Inspector General Catherine Leahy Scott announced the results of a nearly three-year investigation that found "ethical misconduct, procurement irregularities and financial mismanagement" in 2009 and 2010 at NYPA under Kessel.

The IG referred its findings to the New York State Joint Commission on Public Ethics. The commission could not be reached Thursday night.

At the time, William Reynolds, an IG spokesman, said the probe did not find violations of criminal law, but rather "ethics violations and financial controls that needed tightening."

Reynolds declined to comment on the state and federal NYPA probes or whether they were related to the inspector general's findings.

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NYPA's statement said the agency was "committed to the highest standards of ethics and integrity and has zero tolerance for any breach of the public trust."

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