Feds probe sewer system contracts
By MICHAEL P. MAYKO
A federal grand jury investigating possible municipal corruption in Bridgeport has subpoenaed documents linked to the city's turnover of its sewage treatment operations to a private company.
In 1997, the city turned over management of Water Pollution Control Authority operations to Professional Services Group of Houston. The five-year contract, which included overseeing the city's two sewer plants and the sewer system, provided that PSG would pay the city $10.625 million over the five years. In return, sources said, the city was to pay PSG $8 million-plus yearly to run the system.
In 1999, PSG signed an 18-year contract extension in which the company paid $6 million up front to the WPCA, to be used to reduce rates over the years.
The Connecticut Post learned the federal subpoena was served recently on the city seeking documentation involving all bids and proposals leading up to the privatization.
The grand jury also requested agendas, minutes and meeting notes from Jan. 1 to Dec. 31, 1996, of a special committee appointed to review the bids and recommend a company.
City Attorney Mark Anastasia has circulated a request for documents among city officials and departments, sources told the Post. Anastasia failed to return phone calls for comment.
The FBI declined to comment on the subpoena.
The city and PSG are currently involved in an $800,000 dispute. The waste-water treatment firm claims the city owes them that much for handling increased water loads and flows. The matter has been submitted to the American Arbitration Association for resolution.
Attempts to contact PSG officials through their local attorney were unsuccessful Tuesday.
Both Chris Duby, a spokesman for Mayor Joseph P. Ganim, and Andrew Abate, general manager of the Water Pollution Control Authority, said they were unaware of any grand jury subpoena.
The subpoena is the latest twist in a widening federal probe that came to light in December.
At that time, FBI and IRS agents, bolstered by a surveillance helicopter, raided the offices of United Properties in Fairfield, which developed several Bridgeport shopping centers; Kasper Group, a Bridgeport architectural firm that designed the city's baseball stadium and arena; and the law offices of Willinger, Willinger and Bucci, which has represented both firms.
Shortly after that, FBI agents removed a bugging device from the Fairfield Diner and Vegetarian Enclave, not far from a table where officials of United Properties frequently dined.
Since then, the grand jury has subpoenaed documents involving the city's purchase of $2.6 million in insurance policies for Ganim and five top officials, as well as documents involving the brokering of multi-million-dollar police pension contracts.
The insurance and pension deals were linked to Frank W. Sullivan, a Stamford broker and childhood friend of the mayor.
Privatization of the WPCA was called a money-saving effort for the city and its rate-paying residents.
In 1996, a committee was appointed to solicit bids, review proposals and recommend a company. It included Ganim; Lisa Parziale, then-City Council president; and Jerome Baron, the city's finance director.
Of the five proposals received, the committee -- minus Parziale, who refused to vote -- recommended PSG. The company offered the city a five-year contract with a $10.6 million payment. Parziale would not comment on why she declined to vote.
On Dec. 2, 1996, the City Council voted to hire Killam Management & Operational Services of Millburn, N.J., as an independent consultant to review PSG's final proposal.
That didn't fly with Ganim, who vetoed the council's action on Dec. 23, 1996.
And that veto remained in place when council members on Jan. 6, 1997, failed to muster the necessary two-thirds vote to override.
Once the council failed to override the veto, that was it, said Councilman Robert Walsh, D-132. We lost the chance to have an independent set of eyes to review the proposal.
Instead, Walsh said, [the council's failure to override the veto] gave the mayor complete control over the process.
It didn't stop there either, sources told the Post.
On Dec. 30, 1996, the mayor sent a letter to council members pointing out that further delays in approving the PSG contract could cost the city $2 million, which would have to be made up by increasing taxes.
A Feb. 2, 1997, Post story pointed out that Ganim had eight of the 10 council votes he needed for approval. Ganim's own vote was expected to break a 10-to-10 tie.
But the council never got to vote.
In April 1997, the administration determined through its lawyers that since the contract was between the Water Pollution Control Authority, a quasi-private agency, and PSG, it was not a city contract. As a result, the pact supposedly did not require council approval.
Charles J. Willinger Jr. drew up the contract.
Duby, the mayoral spokesman, said the WPCA budget was always separate from the city's budget. As a result, he said, the city attorney's office, as well as private attorneys, determined council approval was not necessary and the unanimous vote of the WPCA was sufficient.
In June 1999, the mayor and Public Facilities Director John Marsilio negotiated the 18-year pact with PSG.
Under the new agreement, in the first two years the city paid PSG about $8.6 million to run the water treatment plants, maintain the sewers and assume administrative duties and pay salaries. In the third through 18th years, the fee increases to $10.4 million. In the previous contract, the city paid PSG about $8.4 million a year.
Michael P. Mayko, who covers legal issues, can be reached at 330-6286.