Monday, February 13, 2012

Forest City's alleged actions in Ridge Hill corruption case, if not illegal, seem to violate corporate Code of Conduct

Somehow the Forest City Enterprises Code of Legal and Ethical Conduct didn't bar the corporate behavior--noncriminal, apparently, but ethically questionable--alleged in the Yonkers corruption case that goes to trial tomorrow in federal court and will surely mention the role of subsidiary Forest City Ratner.

By my reading, if the code bars not merely bribes but also direct or indirect "improper" payments, it should have barred such behavior.

That means either 1) the allegation isn't true or 2) Forest City's Code of Conduct is toothless.

An executive at the center of the allegations, Bruce Bender, kept his job, only to announce his departure last week, in what may be--but can't be confirmed--timed to the upcoming trial.

The allegation

In the part of the case involving Forest City Ratner's Ridge Hill project, Council Member Sandy Annabi, a longtime opponent of the project, is alleged to have changed her vote because of a bribe. That bribe allegedly came from her cousin Zehy Jereis.

At the meeting and while he was helping secure Annabi's support, Jereis asked representatives of FCR for a consulting job. They reached an agreement in principle in which FCR agreed to give Jereis a job after Annabi formally voted in favor of Ridge Hill.

That happened on or about 7/11/06. Around October 2006, Jereis signed a consulting contract with FCR to serve as a "real estate consultant," even though he was not a broker and had little or no relevant experience.

The contract was backdated to 8/1/06 and he began receiving his $5000 monthly payments retroactively starting with August 2006. Only until 3/12/07, after news reports about the federal investigation surfaced, did Jereis submit required monthly reports, dating back to August 2006.

From the Code

Here's the relevant excerpt from the code of conduct:
2. No bribe, kickback or other improper payment or promise of same shall be authorized, approved or made, directly or indirectly, by or on behalf of FCE in connection with any of its business.
That's a pretty blanket statement.

Not merely a bribe, or a kickback, but "improper payment or promise of same."

It seems to cover the actions alleged in the case. We should, in the next few weeks, know more.

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