Earlier this month, Gov. Cuomo paid a visit to the centerpiece of his upstate economic development strategy: a massive, still unfinished “gigafactory” taxpayers spent $750 million to build and equip for SolarCity, a money-losing company with a foggy future.
“Cuomo’s approach has featured a uniquely close intertwining of government and corporate interests — complete with state ownership of the means of production.”
“This is the economy of tomorrow,” the governor gushed, according to a Buffalo News account. “It’s such a metaphor — a symbol of everything we’re doing.”
Indeed. But rather than symbolizing a shiny high-tech future, the solar-panel could become a monument to what US Attorney Preet Bharara described as “pervasive corruption and fraud” allegedly infecting Cuomo’s signature economic development programs.
Federal prosecutors Thursday leveled public-corruption charges against eight individuals including Cuomo’s former right-hand man, Joe Percoco, stemming from what was described as “two overlapping criminal schemes.”
The most prominent public official named in the case was Alain Kaloyeros, the former president and guiding visionary behind the SUNY Polytechnic Institute, who was entrusted with an extraordinary degree of control over Cuomo’s biggest state-subsidized tech projects.
Federal prosecutors charged that Kaloyeros joined with another former close Cuomo associate, lobbyist Todd Howe, in steering lucrative construction contracts to favored developers in Buffalo and Syracuse. In a separate case unveiled by Attorney General Eric Schneiderman, Kaloyeros and an Albany developer face bid-rigging charges in connection with a SUNY Poly project.
The governor himself hasn’t been accused of any wrongdoing, and he responded to the charges by reasserting “zero tolerance for abuse of the public trust from anyone.” But make no mistake: the cloud of corruption now surrounding billions of dollars in state economic development investments is an outgrowth of Cuomo’s highly secretive and centralized management style.
Compared to previous Albany-directed corporate-welfare binges, Cuomo’s approach has featured a uniquely close intertwining of government and corporate interests — complete with state ownership of the means of production.
To an outside observer, it may have seemed curious that development of a solar-panel factory in Buffalo was being guided by a state college administrator in Albany.
But Kaloyeros has a swashbuckling, get-it-done style that clearly appealed to Cuomo.
Over the past quarter-century — with the support of every governor since Mario Cuomo — Kaloyeros has built a public-private tech empire, now based at a gleaming, 1.3 million-square-foot “NanoTech Megaplex” adjacent to the SUNY Albany campus. The SUNY Poly complex hosts 3,500 scientists, researchers, engineers, students, faculty and staff, plus a tech-oriented public high school.
Kaloyeros has parlayed hundreds of millions of dollars in state government grants and capital investments into R&D partnerships with leading tech companies, including IBM, Intel and Samsung.
Along the way, he pioneered the technique of creating a college-controlled nonprofit real estate subsidiary to build and manage state-subsidized research, manufacturing and office facilities shared with private corporate tenants. Such closely held subsidiaries figure prominently in the federal and state corruption cases.
Under Cuomo, Kaloyeros’s institutional footprint has been extended to include a virtually empty and unused film production “hub” in Syracuse, a cancer drug manufacturer in Dunkirk and a computer chip commercialization center in Utica. In each case, private corporations were enticed by the offer of production plants owned, built and at least partially equipped by taxpayers.
Until he was suspended without pay after yesterday’s revelations, Kaloyeros oversaw $43 billion in tech investments, including private money leveraged by state funds. He also did quite well for himself, collecting more than $10.4 million in pay over the past seven years, supplementing his $549,947 salary in 2015 with $877,078 from the SUNY Research Foundation.
Meanwhile, regardless of what happens in the corruption cases, New York taxpayers are locked into what amounts to a business partnership with SpaceX and Tesla tycoon Elon Musk, who’s proposing a takeover of heavily indebted SolarCity.
If it doesn’t work out, Musk can always fall back on SpaceX, which has announced a partnership with NASA to launch an unmanned mission to Mars — where Musk has suggested he’d like to retire. And if not the Red Planet, there’s always Buffalo.
This piece originally appeared in the New York Post
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E.J. McMahon is a senior fellow at the Manhattan Institute and president of the Empire Center for Public Policy. Follow him on Twitter here.
This piece originally appeared in New York Post