Bank deal seen as possible Cuomo conflict

Former Gov. Mario M. Cuomo's involvement with a group of investors who want to buy a small Long Island bank is raising a question about the potential appearance of a conflict of interest because Cuomo's son, Andrew, is governor of the state.

But the investment group that wants to acquire Madison National Bank of Hauppauge and change its name to First National Bank of New York insists there is no potential conflict of interest, that the former governor will play no role in the new bank's operations. The group says the bank does not intend to do any business with the state and will be federally, not state, chartered.

Madison, which has branches in Merrick, Melville and Massapequa, announced in October that it intended to be acquired by FNBNY Bancorp of Manhattan for about $33.7 million in cash, or about $9.09 a share. The deal is awaiting approval by the Federal Reserve Board in Washington. No branch closings are expected, Madison said at the time.

FNBNY is owned by the Manhattan firm of Modern Capital Holdings of which Mario Cuomo, an attorney, is chairman.

The conflict of interest question was raised in an article published in The New York Times Wednesday.

Dick Dadey, the executive director of the watchdog group Citizens Union, said Mario Cuomo's involvement in the deal creates the appearance of a potential conflict of interest by raising suspicions that people seeking to curry favor with Gov. Andrew M. Cuomo's administration might steer their business toward the new bank. "The former governor needs to be extra cautious in ensuring that the perception of conflict is addressed by being extra careful," he said. "Given the connections between the former governor's network and the current administration, they all need to be supervigilant in ensuring that everything is done by the book." He said he had no reason to believe that it wouldn't be. "The former governor is a man of great integrity," said Dadey.

The Times article noted that another investor in the venture is Michael J. Del Giudice, who is an adviser to Gov. Andrew M. Cuomo and was a gubernatorial aide to Mario M. Cuomo in the 1980s. And it noted the bank intended, among other things, to lend money to troubled municipalities in the state and it hadn't ruled out the future acquisition of state-chartered banks. FNBNY says Del Giudice would play no role in the bank's operation.

In a statement, Josh Vlasto, a spokesman for Andrew Cuomo, said, "there would be no institutional relationship between the bank and the state as the proposed acquisition is a federal bank and, as such, it is regulated by the federal government. The state regulators would have virtually no role whatsoever." Further, he said, "the bank would never do any business with the state, and the state would never do any business with the bank."

Ronald Krolick, chief executive of FNBNY, said in a statement Wednesday that First National's mission would be to "enhance the historical functions of the bank we seek to acquire and serve the local communities in Long Island and greater New York by expanding the provision of services and loans to small and middle-market businesses." He said "the bank will not do any underwriting, lending, advisory or any other business with any state agency or state public authority. Neither will the bank do any underwriting or advising on the issuance of any bonds by local municipalities." He said any direct lending to municipalities would be a small percentage of its business.