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New York dwarfs Zuidoost subsidy affair

11 July 2008 - The Zuidoost District Council is still struggling with a subsidy affair revealed last year. The affair is child's play compared to the New York City Council's slush fund scandal, with at least 4.6 million dollar allocated to organisations associated with conflicts of interest.

A year ago, the Amsterdam Accounting Office published a report accusing seven Zuidoost District Council members of having been involved in conflicts of interest. Three would have personally benefited from subsidies, involving amounts of 3,000 to 7,000 euro.

In New York, twenty out of fifty-one council members have reported a conflict of interest involving nonprofits. For example, Diana Reyna funded a senior citizen's centre run by her mother-in-law and the Striking Viking Story Pirates, a group providing after-school activities of which her sister-in-law is a founding member.

Erik Martin Dilan has directed 187,500 dollar to the North Brooklyn Community Council, which is run by his wife. Maria del Carmen Arroyo directed 82,000 dollar to the South Bronx Community Corporation, which employed her sister and nephew, although she has said that they were no longer employed by the organisation when it received the funds.

According to the New York Times, council member Hiram Monserrate has directed over 2.7 million dollar to the Latino Initiative for Better Resources and Empowerment. Authorities would be investigating whether this organisation has collected signatures for one of Monserrate's political campaigns.

Council Speaker Christine Quinn directed funds to an institute providing services to lesbian and gay youth. Her partner, Kim Catulla, is an unpaid board member of this institute, which received nearly 330,000 euro in council funding last year. It has been suggested that the scandal may affect Quinn's chances of becoming mayor next year.

New York city council members have considerable control over the allocation of so-called discretionary funds, amounting to over 300 million dollar (by comparison, the Zuidoost District awards some 25 million euro in subsidies to organisations). The funds are sometimes used to offset budget cuts by the mayor.

As in Zuidoost, some council members have argued that having ties with organisations that receive funding is part of the job. "A good councilman has been involved in the community, has worked for non-for-profit institutions. That's how they become a councilman", council member Lewis Fidler told the Gotham Gazette.

Regulations are remarkably permissive with respect to conflicts of interest. Funds allocated by council members may not go directly to the salary of a relative, but beyond that, anything goes.

This year, council members were for the first time required to disclose their conflicts of interest. In April, local media obtained the forms through a Freedom of Information request. The slush fund scandal is being investigated by federal prosecutors and the city's Department of Investigation.

Sources: Daily News, Gotham Gazette, New York Times. Image: Christine Quinn (photo azipaybarah / Flickr)


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