LIPA, PSEG and the state said they are scouring contracts and payments to a Long Island company implicated for allegedly giving kickbacks to five former National Grid employees, widening an investigation into whether Long Island utility customers were put on the hook for wrongful costs.
The expanded probes are examining possible impacts on electricity ratepayers as well as those for National Grid's gas business. The federal investigation into the alleged scheme itself is continuing.
In more fallout from the allegations, a union representing thousands of utility workers on Long Island is demanding that National Grid return to using unionized employees for facilities management jobs after federal prosecutors said the accused former managers took kickbacks and bribes from outside companies that did facilities management work under contract.
LIPA, PSEG Long Island and the state Department of Public Service said they plan to review whether payments made to the Long Island contractor and subcontractors were billed to LIPA/PSEG ratepayers, because PSEG leases space at facilities owned and operated by National Grid.
"We're looking into the allegations and the vendor and any business we may have done with them or PSEG may have done, any contracts with National Grid where we may have been charged for those services," said LIPA Chief Executive Tom Falcone on Tuesday, saying the review was in its "early stages" after revelations of the charges Friday.
"Obviously we would be looking into allegations like this is ratepayer money and it's theft," he said, adding that the review is focusing on one vendor at this time. PSEG had separate contracts with the contractor in addition to those of National Grid, which leases space to the electric utility. He said LIPA has already made a request that PSEG sever contracts with the business.
The facilities, which a union official said include equipment depots and service centers, have been maintained by an unnamed outside company whose officials have pled guilty to felony bribery-payment charges, according to a federal complaint.
"We are looking into this matter," said PSEG spokeswoman Ashley Chauvin.
The state Department of Public Service on Monday said its separate investigation of the National Grid contracts, announced Friday, will include whether LIPA/PSEG ratepayers, too, were potentially affected by the scheme. Prosecutors said hundreds of thousands of dollars in bribe and kickbacks were paid, and authorities recovered $300,000 in a safe-deposit box held by one of the men.
"Anything found that applies to LIPA/PSEG will be addressed with National Grid as part of the investigation," DPS spokesman James Denn said.
Karen Young, a National Grid spokeswoman, declined to comment further after last week confirming the company has cooperated "fully" with the FBI investigation, adding that National Grid had "zero tolerance for unethical and illegal behavior." Young would not say whether National Grid had severed its contract with the outside companies, whose owners pleaded guilty to bribery charges in connection with the scheme. "We have no further information to add at this time, as the investigation is ongoing," she said.
A union official, Patrick Guidice, business manager with Local 1049 of the International Brotherhood of Electrical Workers, said a contractor who handled building maintenance at National Grid properties around Long Island was "removed" in February.
Last week, the federal prosecutors in Brooklyn announced the criminal complaint against five former National Grid managers in connection with the alleged bribery and kickback scheme that netted the men cash, home renovations, "more than one" recreational vehicle, and even college tuition in exchange for their help in steering and awarding facilities management contracts between 2013 and 2020, according to court papers.
The federal complaint charges the men with conspiring to violate the Travel Act by accepting hundreds of thousands of dollars in bribes and kickbacks to steer contracts to Long Island contractors. Accused were Patrick McCrann, 57, of Selden; Jevan Seepaul, 36, of Rockville Centre; Richard Zavada, 65, of Hicksville; Devraj Balbir, 33, of North Bellmore; and Ricardo Garcia, 48, of Stroudsburg, Pennsylvania. The employees, who were released on bonds ranging from $75,000 to $250,000, worked for National Grid for periods varying from a few years to 37, and one had recently retired.
Facilities management work for National Grid has been performed by a company and subcontractors whose owners cooperated in the FBI investigation by turning over financial records and text messages, and recording conversations with the accused, according to the federal complaint. None of the cooperating witnesses or contractor companies is identified in court papers.
Guidice estimated that two dozen union jobs have been lost as a result of National Grid’s switch to outside contractors to manage its facilities. During the pandemic, that included using the outside workers to install hand sanitizer stations and COVID-19-related signage, he said, tasks that could easily have been done by his members.
Guidice said National Grid informed union members earlier that it would no longer use the outside contractor as of February. "Their equipment is no longer there," Guidice said, adding the work is "not getting done."
He said the union is reaching out this week to National Grid officials to urge the company to bring the work previously done by unionized employees back to them.
"We are shocked and appalled at the alleged behavior of [National Grid's former] managers who were entrusted to give out work fairly," Guidice said. "They were doing away with our jobs so they could further line their pockets. It had nothing to do with the employer providing better service for customers."
He added, "We’ve lost more than two dozen jobs due to allegedly criminal behavior and we will be watching the process very closely. We expect the employer to act responsibly for its employees and ratepayers on Long Island." He said he plans to demand that management return 12 to 20 jobs done by the contractor back to inside workers.
Guidice said most of the work done by the outside company was in operating yards owned by National Grid, where trucks and other equipment are kept and which also includes buildings and customer service centers. At one point, the contract also included paving repair, but no more, he said.
National Grid’s unionized workers are capable of operating plows for snow removal at the facilities, he said, and it's "far more economical to utilize people" employed by the company rather than contractors to do that work, he said.