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New York City Comptroller William C. Thompson, Jr. today released an audit finding the Business Integrity Commission (BIC) is not adequately monitoring the private carting and wholesale market industries.

The audit – available at www.comptroller.nyc.gov - uncovered numerous shortcomings in the BIC’s ability to root out corruption and organized crime in the City’s carting and wholesale market industries. The audit covered July 1, 2005 to June 30, 2007.

”My office detected significant weaknesses in the BIC’s monitoring of the trade waste and market industries,” Thompson said.

The BIC was created in November 2001 to eliminate organized crime and other criminal elements from the private carting, public wholesale market and shipboard gambling industries. BIC investigates applicants, issues licenses and registrations, enforces applicable laws and promulgates rules and regulations that govern the business conduct in the industries it oversees. (No shipboard gambling businesses were in operation during the audit period.)

Auditors found significant flaws, including that the BIC:

• Failed to institute standard operating procedures (SOPs) for the investigation and resolution of complaints, as required by the New York City Administrative Code §16-522, and did not review BIC Inspectors’ decisions regarding the intake, investigation, and resolution of complaints. In the absence of SOPs and supervisory review, BIC cannot ensure that all complaints that warrant investigation are investigated and that BIC Inspectors conduct investigations appropriately and uniformly.

In addition, auditors determined that one person was in charge of receiving complaints, deciding which complaints warrant action, and assigning of investigators – a system that fails to segregate duties and opens the door to potential misuse of authority and fraud.

• Lacks an effective system for tracking the investigation of trade waste complaints because it does not adequately document complaints received; it therefore cannot verify that all complaints received are entered into its database and ultimately resolved.

Auditors repeatedly requested SOP’s but were told they were being written. When auditors were handed the SOP’s in May, the document was incomplete and dated May 2006.

“Standard Operating Procedures are essential for performing a job properly,” Thompson said. “Without them, the BIC cannot ensure that inspectors are thoroughly investigating complaints.”

• Did not regulate all markets or implement a timetable for their regulation, as authorized by the New York City Administrative Code. Of the six designated markets operating in the City, the BIC was only monitoring the Hunts Point Produce Market, the Hunts Point Meat Market, the New Fulton Fish Market and the Brooklyn Wholesale Meat Market.  Both the Brooklyn Terminal Market and the Gansevoort Meat Market were operating without any oversight.

• Did not ensure that Market Agents actively patrolled markets and failed to ensure that there was adequate coverage of the markets. Market Agents, assigned to patrol the markets and enforce applicable laws, were not being monitored by the BIC.  Auditors were unable to verify that agents were patrolling markets because the BIC could not provide all the agents’ memo books for review.  Books that were received were missing entries for numerous shifts.

• Did not consistently adhere to the New York City Administrative Code and its Policies and Procedures for Processing Trade Waste and Markets Renewal Applications when renewing licenses and registrations. Before a license is renewed, the BIC performs background and criminal checks on all principals and managerial employees to ensure there is no organized crime connection.   In addition, NYPD officers search relevant databases when requested to do so in order to identify any other possible criminal links.

Auditors, however, discovered that the BIC: did not request NYPD searches for principals and managerial employees of all 11 businesses that applied for their third renewal; did not perform criminal background checks on all principals or managerial employees of three businesses; renewed three registrations and one license without the mandatory signature of BIC Assistant Commissioner for Licensing; and allowed businesses to operate in trade waste and market industries without a valid license or registration due to inability to process renewal papers in a timely manner.

To address the problems, Thompson made 20 recommendations, asking the BIC to:

• Develop and implement standard operating procedures for the investigation and resolution of complaints, as required by New York City Administrative Code §16-522.

• Keep a record of all complaints received and retain original copies of all complaints received by mail, e-mail, and fax.

• Record essential complaint data in its database, including but not limited to—complaint source, action taken to date, status, number of days open, date resolved, and how complaint was resolved.

• Develop a timetable for the sequenced implementation of regulation of the Brooklyn Terminal Market and the Gansevoort Meat Market if it cannot commence regulation of these markets at this time.

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