Answered Essay: Discuss the type of corruption that was perpetrated and the red flags in the case. How did the scheme come to light?

Read the following articles about a case of bribery in New York City:
Numbers Scribbled Here and There Added Up to $600,000 in Bribes, U.S. Says and City Official Accused of Taking Bribes, Left in Boxes and Cups.

Discuss the type of corruption that was perpetrated and the red flags in the case. How did the scheme come to light?

What steps would you implement to prevent this type of fraud in the future?

In recent years, federal prosecutors say, Wendell B. Walters has spent a fair amount of time scribbling down numbers on little pieces of paper.

He did it in a coffee shop in Manhattan in 2002, when he wrote “250.” He did it at a golf driving range in 2007; then, the number was “70.” And he did it three other times, according to court papers unsealed Thursday in his federal bribery and racketeering conspiracy case.

In each instance, the papers say, Mr. Walters, who was an assistant commissioner at the city’s Department of Housing Preservation and Development, was demanding a bribe.

Each number stood for how many thousands of dollars he wanted. When all was said and done, according to a search warrant affidavit, the numbers added up to something in the neighborhood of $600,000.

Mr. Walters, 49, was suspended from his job after his arrest on Thursday and, with the six developers charged along with him in federal court in Brooklyn, faces up to 20 years in prison if convicted. His lawyer, Howard R. Leader, did not return a call seeking comment. All seven have pleaded not guilty.

As a result of the case, which has raised some questions about the oversight of Mayor Michael R. Bloomberg’s $8.5 billion affordable housing program, the housing agency is reviewing how it awards projects to developers and contractors and how they are vetted. The agency is the largest municipal developer of affordable housing in the United States.

The rules say companies may be invited to bid through a process called requests for qualifications; the agency can choose from a list of approved companies; and it can select “a sponsor for a project by any method which H.P.D. determines will best further the purpose of the program.” That includes, “in the discretion of H.P.D., by a direct designation of an entity judged by H.P.D. to be suitable for the task” — essentially, whomever the agency wants.

Mr. Bederman said that in the Neighborhood Entrepreneurs Program, which was the focus of the indictment, all projects had been awarded through requests for qualifications.

Mr. Walters’s role in the process was still unclear on Friday. The indictment and a search warrant affidavit for Mr. Walters’s home in Harlem and his office at the agency’s headquarters in Lower Manhattan allege that he accepted approximately $600,000 in bribes from contractors and developers in exchange for steering to them $22 million worth of agency projects in Brooklyn, the Bronx and Queens. The affidavit even suggests that the Harlem home, on historic Strivers’ Row, was itself a form of bribe from a developer he had helped and who has since died.

The Mason Tenders District Council of Greater New York and Long Island, which represents demolition and some construction workers, said Friday that it had little doubt that the agency was at fault. “The problem is how H.P.D. conducts its business and awards contracts,” said its spokesman, Richard Weiss, in an e-mail. Some unions have been upset with the agency for awarding jobs to contractors that use nonunionized labor.

Officials have said that the investigation, involving several agencies, including the F.B.I., the city’s Department of Investigation, the Internal Revenue Service, federal prosecutors in Brooklyn and the federal Labor Department, is continuing, and they will be combing through evidence they seized in the searches of Mr. Walters’s home and office.

According to the court papers, Mr. Walters did not always receive what he asked for. Stevenson Dunn, a developer who was among those charged, told a cooperating witness that Mr. Walters had asked him for $75,000 “as a bribe to help secure additional work with H.P.D.,” according to the search warrant affidavit. But Mr. Dunn, a high school friend of Mr. Walters, paid only $25,000 and pronounced Mr. Walters “greedy.”

Expert Answer

  • Answer :

    Discuss the type of corruption that was perpetrated and the red flags in the case. How did the scheme come to light?

    The type of corruption what was perpetrated in the case is “Bribery”. Because bribery constitutes the exchange of goods, services or favours in return for personal gain.

    Red Flags in the Case :

    #1 Mr.Walter’s Book Keeping : The fact that Mr.Walters used pen paper for a system of accounting. Since Emails, texts and phonecalls are traceable and trackable, he used an age old book keeping system for his records and accounting purposes. The fact that he never explained what were the contents of the book even after the accusation, proves that he’s not merely shy, he’s hiding something.

    # 2 Evasion and Ambiguity : The Fact That Mr. Walters & All Six Developers never appealed to the Public through the Media when they reached out to him for a word or his take on the accusations to save face or defend themselves.

    Evasion and Ambiguity Breed Suspicion : Evasive action only breeds more curiosity. Whenever accusations blow up people’s faces, they tend to get defensive and always confront the problem, without evading or deflecting the issue when questioned about it. Transparency Builds trust and this point of time, being transparent about what happened and and trying to reason with the public and institution or an organization could win some sympathy. Because a lack of dialogue eliminates any benefit of doubt and more ambiguity only allows false reports to seep in.

    # 3 The information that one of the developers had given the investigators : Every criminal confession is generally either backed my motive or guilt. However this early into the case, the only reason why one of the developers had informed the investigators about the amount was Mr .Walters demanded and amount that he had received. The motive was to rat out Mr Walters due to his excessive demands and the fact that he had written 70 down in his book suggests that his original demand amount could have been 70 – 75 k $.

    # 4 Mr. Walter’s ownership of his Harlem Home and its timing was another red flag and points out to another form of bribery

    The case came to light when there was an ongoing investigation about the affordable housing program.

    What steps would you implement to prevent this type of fraud in the future?

    i would implement a strong set of internal and external controls, compliances and audits to prevent this type of fraud in the future.

    Have a horizontal and a lateral reporting structure for public project : In this form of an organisational structure. government employees do not report to one particular leader but two or more leaders who over see a project and its integrity and implementation. This way the employee executing a project always has the freedom to approach any manager and the project isn’t under the mercy of one individual.

    Seamless Communication & Exchange between different departments including federal, state , public and third party vendors : Integrate operations, business, engineering, finance, H,R and legal, and prevent leaders and middle management working in individual silos to increase the speed and the chances of success in the project. Silos are old organisational structures that are no longer relevant in today’s public sector.

    Audits that track operations and public institutions progress : Accountability is critical to getting the job done. Although most housing programs had audits for its operations department but no audits or performance tracking was carried out to track the progress, effectiveness on a real time basis on the role that government and the vendors incharge played in the execution of the project.

    Strong Gifting Policy : Public institutions just like MNC’s should have strong gifting policies which their employees are expected to adhere too. The value and the form of gift should be specified and tangible and cannot be intangible in any forms between government employees and third party vendors and contractors.

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