Menendez: Waterfront Project Reflects 2 Images of a Senator

Waterfront Project Reflects 2 Images of a Senator
October 29, 2006 NYTimes

BAYONNE, N.J. — Senator Robert Menendez is not directly involved in building the new waterfront development that will soon rise here in the shadow of the Statue of Liberty. But his influence can be seen throughout it.

The project, which occupies the 437-acre site of the abandoned Military Ocean Terminal, is being built with the help of nearly $30 million in federal funds that Mr. Menendez secured using his trademark policy expertise and aggressive politicking. His work provided the seed money for a plan to produce movie studios and shops, marinas and waterfront parks, and 6,600 homes.

The project has also produced considerable work for some of his chief political supporters.

The first major contract to develop the site went to a company that hired a Menendez friend and political confidant, Donald Scarinci, to lobby for it. That developer later took on Mr. Menendez’s former campaign treasurer, Carl Goldberg, as a partner. Bonds for a portion of the project were underwritten by Dennis Enright, a top campaign contributor, while Kay LiCausi, a former Menendez Congressional aide and major fund-raiser, received lucrative work lobbying for the project.

Mr. Menendez said he had no role in securing the contracts for any of his friends. But the project, known as the Peninsula at Bayonne Harbor, nonetheless displays the two contrasting images of Mr. Menendez — one a fiery advocate who brings home federal aid for his constituents, the other a political empire builder who detractors say pushes too much largess toward his friends.

Whether the considerable clout wielded by Mr. Menendez in Congress is matched by cronyism, or worse, at home, has become one of the central issues in the Senate race he is waging against State Senator Thomas H. Kean Jr., his Republican challenger.

Republicans have portrayed Mr. Menendez as a modern-day political boss, presiding over an apparatus not of union stewards, ward heelers and precinct captains, but of lawyers, developers and lobbyists who fill his campaign coffers.

In a year when Republican candidates are on the defensive, Mr. Kean’s steady attacks on Mr. Menendez’s ethics have made the New Jersey race one of nation’s closest and nastiest. A defeat here, where Democrats have not lost a Senate race since 1972, would endanger the party’s hopes of winning control of the upper chamber.

Mr. Menendez brushes aside the questions about his ethics as “guilt by geography,” a reference to his rise in politics in Hudson County, where the reputation for machine politics and official mischief is notable even by New Jersey standards. Mr. Menendez asserts that in 32 years in political office he has never once used his power to steer a contract to an ally.

Mr. Menendez’s supporters say the attacks are simply a way for Republicans to avoid talking about issues he has campaigned on, including Iraq, terrorism and stem cell research. “Those are the things that matter to people, which Senator Menendez is far superior on, both in his knowledge and in his ability to articulate,” said State Senator Bernard Kenny, chairman of the Hudson County Democratic Organization.

Even Mr. Menendez’s critics concede his success in bringing federal transportation and environmental funds to the state while serving in the House for 13 years. That money helped revitalize blighted communities in his district, particularly a stretch along the Hudson that has come to be known as New Jersey’s Gold Coast.

It should not be odd then, Mr. Menendez says, that developers and business leaders have expressed their approval by contributing to his campaigns.

“If someone agrees with your policy goals, is it surprising that they would support you?” he said in a recent interview. “What are they supposed to do? Give to someone who opposes their vision?”

A Land of Scandal

In many ways Mr. Kean has tried to turn the election into a referendum on Hudson County and its checkered political history.

The densely packed county was once a destination for generations of Irish, Italian and Cuban immigrants, including Mr. Menendez’s parents, drawn by low rents and the promise of work in the factories and shipyards that stared across the harbor at the New York City skyline.

Today, the county functions almost like New York’s sixth borough, as young professionals, families and banking firms flee to cities like Hoboken and Jersey City in search of rents that are lower than in Manhattan.

But while the county’s demographics have shifted, and many of its communities have gained new vibrancy, its reputation for corruption has endured. It was here that Frank “Boss” Hague, Jersey City mayor from 1917 to 1947, famously declared “I am the law,” while ruling over a machine that controlled governors, judges and United States senators. When he died, he had a net worth of $10 million though his salary never eclipsed $8,000 a year.

In the 1980s, after an onslaught of corruption cases hit the county, The Jersey Journal declared in a headline, “No Hudson officials indicted today.”

These days, the political power structure is less influential and more decentralized than in the past. The taint of scandal continues, however. Since 2002, about 20 public officials, including former County Executive Robert Janiszewski, have been indicted or convicted of corruption charges.

But Mr. Menendez, who grew up in Union City, says he is proud of his roots and of the way that he fought his way up, unlike his opponent, the scion of a famous New Jersey political family who was appointed to his first posts in the State Assembly and Senate.

In fact, Mr. Menendez’s reputation as a tenacious infighter was born challenging the political establishment. In 1981, as a young lawyer serving as school board secretary, he became a government witness after discovering that the mayor, William V. Musto, who had been both mentor and father figure to him after his own father committed suicide, was diverting school funds to organized crime.

To many, the act was seen as a shameful betrayal, stirring so much resentment that Mr. Menendez said he took to wearing a bulletproof vest during the trial. When he made a bid to run against Mr. Musto for mayor, fliers filled the streets depicting him as a plump bird in a cage, with the caption, “Once a canary, always a canary.”

Mr. Menendez lost the election, but four years later he ran again and won, becoming the state’s first Hispanic to be elected mayor.

He went on to become the first Hispanic elected to the State Assembly, the State Senate and, in 1993, the first to represent New Jersey in the House of Representatives, where he rose to be the third-ranking Democrat. Jon S. Corzine appointed him to finish out the final year of his Senate term after Mr. Corzine was elected governor in 2005.

In Washington, he has become a respected voice on issues like immigration and transportation, and a staunch defender of liberal causes like stem cell research and abortion rights. He has also broken with his party to support deregulation of the financial services industry, a growing force in the New Jersey economy, and his devout opposition to Fidel Castro has won him near folk-hero status, and generous campaign contributions, in South Florida.

But critics from both parties say that some of Mr. Menendez’s most ardent battles have been fought to preserve his own power, and protect government contracts of his patrons.

“If you’re going to cross him or his people, you’re in for the fight of your life,” said William O’Dea, a Democratic freeholder from Hudson County who has clashed with Mr. Menendez over the apportionment of county contracts.

A Friend’s Good Fortune

Perhaps no one has done more to foster Mr. Menendez’s political success than Mr. Scarinci, a childhood friend who has stood by him from the days when he was battling Mr. Musto, and before. And few have benefited more from that success: among Mr. Menendez’s first acts as Union City mayor was to name Mr. Scarinci city attorney.

Mr. Scarinci has since contributed more than $250,000 to state Democrats and helped raise millions more; he and his wife and members of his law firm have contributed more than $40,000 to Mr. Menendez’s Congressional campaigns since 1997. As his chief campaign fund-raiser, Mr. Scarinci was so closely associated with Mr. Menendez that many elected officials came to view him as the congressman’s emissary.

As he raised money for Mr. Menendez and helped him navigate the treacherous currents of Hudson County politics, Mr. Scarinci also won millions of dollars in state and local contracts for his law firm, many of them with government entities over which Mr. Menendez and his allies hold immense influence.

For example, after Mr. Menendez was named to head Gov. James E. McGreevey’s transition team, he lobbied vigorously to help Mr. Scarinci win a legal contract with the Casino Reinvestment Development Authority, according to three officials familiar with the appointment. Mr. Scarinci’s firm has made $2.8 million from that contract since 2002.

Mr. Scarinci does not deny that his firm has benefited from his political activity.

“It’s not the political connections as much as you’re involved,” he said in an interview earlier this year. “So when they win, you’re not going to hire some stranger, you’re going to hire someone you’re comfortable with, someone you trust.”

Mr. Menendez insists that he has never helped Mr. Scarinci get or keep a contract, except when he was mayor and it was his duty to appoint legal counsel.

But in 1999, Mr. Menendez led a fierce recall effort against his former protégé, Mayor Rudy Garcia of Union City, because, Mr. Garcia says, he had fired Mr. Scarinci as city attorney. Mr. Menendez says it was because Mr. Garcia wanted his job in Congress. Whatever the cause, there was no mistaking who won: Mr. Garcia resigned as mayor in 2000, and his successor promptly rehired Mr. Scarinci.

Mr. Scarinci was forced to sever his ties with the campaign last month, after the release of audio tapes recorded in 1999 in which he is heard advising a client who held a lucrative psychiatric contract with Hudson County to hire another physician as a “favor” to Mr. Menendez.

The psychiatrist with the contract, Oscar Sandoval, who is being sued by the county for allegedly bribing Mr. Janiszewski, the former county executive, to win contracts in the first place, said in an interview that Mr. Scarinci’s message was clear: hire Mr. Menendez’s friend or risk losing the contracts.

After the tapes were released, Mr. Scarinci issued written statements denying Dr. Sandoval’s allegations and insisting that his dealings with him were never directed or requested by Mr. Menendez.

True or not, the tapes have provided fodder to Mr. Kean, who in ads has promised to free New Jersey from “the clutch of corruption.”

In September, United States Attorney Christopher J. Christie also subpoenaed the records of a Hudson County social services agency that leased a building, for $300,000 over nearly 10 years, from Mr. Menendez while, as a House member, he helped it win millions in federal financing. Mr. Kean has used the subpoenas to assert that Mr. Menendez is under criminal investigation, which Mr. Christie’s office has never confirmed. Mr. Menendez denies that he is under investigation and says that the House Ethics Committee’s legal counsel cleared the deal.

Questions About Contracts

Mr. Menendez’s involvement in the Bayonne project began in the mid-1990s, as he fought to save the base, which provided 2,500 jobs and was Bayonne’s largest employer. Once that fight was lost, he began a new battle for federal financing necessary to transform the site into a thriving addition to the local economy — including $11.6 million from the Army for environmental cleanup, $7 million in Defense Department funds to stabilize the shoreline, and $3.2 million for road improvements to make the area more accessible to the New Jersey Turnpike.

Project officials say that Mr. Menendez had no role in awarding contracts and that without his support the development would never have gotten off the ground.

But the board created to oversee the project, the Bayonne Local Redevelopment Authority, was appointed by one of his allies, Mayor Joseph V. Doria Jr. The selection process for a developer — which was based not on price but on the subjective assessment of the redevelopment authority — was also led by people who are Menendez allies.

And the redevelopment authority’s first executive director was Nicholas A. Chiaravalloti, a lawyer who had once worked in Mr. Scarinci’s office. After assembling the contract specifications for the project, Mr. Chiaravalloti left in late 2002 to accept a job on Mr. Menendez’s Congressional staff.

Dozens of companies expressed interest in the development, and two submitted detailed written proposals. The new executive director, Nancy Kist, who had worked as Mr. Doria’s legal counsel before being appointed to the authority, said she forwarded both proposals to the board.

But at least one board member remembers seeing only the plan submitted by Fidelco Bayonne Realty — Mr. Scarinci’s client. Two principals of the second group, George Figliolia, president of BG Builders, and Angelo Cali, a co-owner in Cali Futures, said they were never asked to give a presentation.

Maria Karczewski, who served on the seven-member board from 2002 until this January, said the Fidelco offer was the only one presented, though she said she did not believe Mr. Menendez had an influence on that decision. Three other board members said they recalled a presentation by Fidelco but could not recall whether they had seen the second one.

In public hearings, Ms. Kist urged the board to accept Fidelco’s proposal because it included movie and television production facilities as well as housing, and also gave local officials a voice in shaping the project.

But some city officials said that once Fidelco hired Mr. Scarinci, it was clear who would get the contract.

“People knew that Menendez was running the show because he brought all the federal money,” said City Councilman Anthony Chiappone, a rival of Mr. Doria who said he is frustrated that he and others have been excluded from the decision-making process. “And everyone in Hudson County politics know that Scarinci is his No. 1 guy, so any contractor who hires him gets treated like they have Menendez’s seal of approval.”

Steve Kalafer, a principal in Fidelco, said he hired Mr. Scarinci’s firm because it had a long track record of getting waterfront development projects through Hudson County’s maze of legal and governmental regulations.

“In every community there’s one firm that has the experience and credibility with the local governing agencies to get projects done,” he said. “I didn’t bother to interview any other firm because I didn’t want to try and reinvent the wheel.”

Mr. Kalafer said that Fidelco’s decision to bring Mr. Menendez’s former campaign treasurer, Carl Goldberg, into the project as a partner in 2005 was based on his track record as a developer rather than any political connections. He said that Mr. Menendez played no role in Fidelco’s decision to hire Mr. Scarinci or team up with Mr. Goldberg.

“Other than a smile and an occasional passing comment like, ‘how’s the project going?’ I’ve never had any discussions with the senator about it,” Mr. Kalafer said.

Royal Caribbean Cruises, one of the development’s first tenants, hired a former Menendez staffer and fund-raiser, Kay LiCausi, who was vice chairwoman of the Hudson County Democratic Organization, to lobby for state and federal support.

Ms. LiCausi left her job on Mr. Menendez’s staff in 2002, but she has maintained a close relationship with the congressman, who has acknowledged helping her get more than $200,000 in lobbying work for campaign committees over which he controlled or had strong influence. He has also recommended her for other lobbying work, which he compared to writing a reference letter for any deserving former employee.

In August 2004, just months after Royal Caribbean hired her, paying her more than $180,000 over the next two years, Mr. Menendez announced the first of two appropriations totaling $9.5 million to repair shoreline and extend a berth for the company’s huge cruise ships.

Mr. Menendez said in an interview last week that Ms. LiCausi’s role with the firm did not affect his actions, and that he did not consider it a conflict of interest to be obtaining tax dollars for companies who hire his own fund-raisers as lobbyists.

“If these people, these companies have success, that’s their own initiative,” he said, adding that several of the contractors involved in the project have never contributed to him or hired any of his supporters.

Royal Caribbean also hired Dennis Enright, a top contributor to Mr. Menendez, to underwrite a $16.5 million bond issue to help pay for terminal repairs.

A Royal Caribbean spokesman said the company never discussed the hires with Mr. Menendez, and that Ms. LiCausi and Mr. Enright were chosen because they were the best people for the job. Ms. LiCausi and Mr. Enright did not return repeated phone calls seeking comment for this article.

Mr. Menendez says that he is being held to a different standard because of where he comes from, saying that Mr. Kean has accepted campaign contributions from government contractors, and asserting that his opponent would never have received his first Assembly and State Senate appointments without his family’s considerable “political muscle.”

“You do that when you come from Hudson County, it’s called bossism,” Mr. Menendez said. “But I guess when you come from my opponent’s background, it’s just leadership.”

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