NEW YORK (CBSNewYork/AP) – Federal prosecutors should examine the relationship between the Long Island Power Authority and Chicago-based Navigant Consulting, a state commission tasked with overseeing how New York utilities responded to Superstorm Sandy said Saturday.
The Moreland Commission, created by Gov. Andrew Cuomo just weeks after the October storm, issued its final report after reviewing more than 175,000 documents, holding 10 hearings, and interviewing more than 90 stakeholders and witnesses.
The report found questionable billing and reimbursement practices that racked up millions of dollars.
The commission also was critical of the utility in a previous report, saying LIPA was unprepared for Sandy, then inept in its response, leaving many of its 1.1 million customers without power for as long as 21 days.
The report found consultants charged hundreds dollar per hour between 2008 and 2011.
In one instance, consultants racked up a nearly $7,000 hotel bill for an 11-day trip.
The report also found possible revolving door conflicts, including a former LIPA acting chief executive officer who now works for Navigant.
The commission deemed the relationship between the utility and the consultants amounted to “breathtaking waste and inefficiency,” and wants the feds to investigate.
The co-chairman of the commission said LIPA’s inefficiency helped jack up rates for Long Island families.
The latest report found that of the $43.4 million LIPA contracted to consultants for general consulting and engineering services between 2008 and 2011, $28 million went to Navigant – where dozens of consultants billed between $300 and $500 per hour, not including expenses. Some Navigant consultants billed more than 2,000 hours per year, including one who billed more than $4.5 million between 2008 and 2011.
“After the Commission discovered the questionable billing and reimbursement practices and was advised by a witness that there was no auditing of the practices, there was a concern that if the practices were connected they may rise to a scheme to defraud,” the report said. “Once that threshold was met, the Commission found that further external investigation was warranted to determine if other Navigant consultants followed similar practices.”
Navigant released a statement Sunday in response to the allegations:
“Navigant and our professionals adhere to the highest industry standards of ethics and integrity. We were not aware of the claims in the Moreland Commission report until it was publicly released. We take the questions raised by the Commission in its report very seriously and are closely reviewing the facts related to each question in detail. We will cooperate fully with authorities seeking any further information.”
A LIPA spokesman said the agency is reviewing the report and will continue to fully cooperate with investigators.
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