The New York State Budget Division said yesterday it will examine a bond syndicate selection recently made by the state's Power Authority.
The inquiry into the power authority's syndicate, led by budget director Patrick J. Bulgaro and Elizabeth Moore, counsel to Gov. Mario M. Cuomo, was sparked by the naming of a securities firm that employs a former power authority official, a budget division spokeswoman said.
The examination of the authority is part of a larger review by the state, launched in May in the wake of the New Jersey Turnpike bond scandal, of the way state authorities select their bond syndicates.
Officials at the budget division said Bulgaro and Moore will now examine the facts surrounding the Power Authority's recent selection of PaineWebber Inc. as a lead manager for a $1 billion refunding of authority revenue bonds.
A 15-firm underwriting group is scheduled to sell the refunding issue the week of Aug. 23. The authority said recently that the bond syndicate was chosen under a new formal selection process.
The budget division's interest in the syndicate selection emerged earlier this week.
Claudia Hutton, a spokeswoman at the budget division, said officials there found "disturbing" the authority's selection of PaineWebber as the transaction's senior manager and bookrunner after they discovered that the firm's lead banker, managing director Walter T. Kicinski, once worked at the agency.
Kicinski worked at the authority from October 1979 to June 1985. criminal activities.
The Cuomo administration in May began examining several management issues concerning state authorities, including the selection of bond underwriters, and what legal power, if any, the governor's office has over the management of these agencies, budget division officials say.
Although leaders of state authorities are appointed by the governor, these agencies operate on a semi-independent basis.
On July 29, Cuomo issued an executive order requiring the public authorities to provide the budget division with details of their administrative policies and to "file with the state their guidelines on awarding contracts for financial services."
The New York review was triggered by concerns about syndicate selections raised by the New Jersey Turnpike Authority bond scandal and other allegations of impropriety in the municipal bond market, according to state budget officials.