This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
STATE COMPTROLLER -- Powers and Duties (public corporations -- scope of audit authority); (OTB's -- scope of audit authority)
OFF-TRACK BETTING CORPORATIONS -- Officers and Employees (authority of State Comptroller to request information for the purpose of determining conflicts of interest)
CONFLICTS OF INTEREST -- Disclosure of Interest (authority of State Comptroller to request information for the purpose of determining conflicts of interest)
NEW YORK CONSTITUTION, ARTICLE X, §5; GENERAL MUNICIPAL LAW, §§800(3), 801; RACING, PARI-MUTUEL WAGERING AND BREEDING LAW, §516: In connection with the State Comptroller's authority to oversee the accounts of public corporations, the Comptroller may request officials of an OTB corporation to fill out a form listing certain outside employment and business interests in order for the Comptroller to determine the possible existence of conflicts of interest.
This is in response to your letter in which you question the authority of the State Comptroller, in connection with performing an examination of an off-track betting corporation (OTB), to obtain information relative to potential conflicts of interest by requesting that OTB officials fill out a confirmation form listing certain outside employment and business interests. You also express concern as to whether the information listed in the confirmation form will be confidential.
Each regional OTB is a public corporation (Racing, Pari-Mutuel Wagering and Breeding Law [hereinafter "Racing Law"], §502; General Construction Law, §65[b]). Article X, §5 of the State Constitution vests in the Comptroller the power to supervise the accounts of most public corporations, including OTB's. In addition, subdivision 1 of section 516 of the Racing Law provides that "[t]he monetary transactions of the [OTB] and the keeping of its books and accounts shall be under the supervision of the board of directors who shall be subject ... to audit by the comptroller." Subdivision 3 of the same section provides for the Comptroller to "examine the accounts and books of the [OTB] corporation, including its receipts, disbursements, contracts, leases, sinking funds, investments and any other records and papers relating to its financial standings."
The Court of Appeals has stated that "the Constitution does not grant to the Legislature the power to define the Comptroller's powers and duties with respect to public corporations" (Patterson v Carey, 41 NY2d 714, at 724, 395 NYS2d 411, at 418; see also New York Public Interest Research Group, Inc. v New York State Thruway Authority, Court of Appeals, decided 12/20/90; cf. NY Const, art V, §1, relative to Comptroller's audit responsibilities with respect to political subdivisions). The Court further declared that:
Under the plain language of article X, the State Comptroller is granted the discretionary authority to supervise the accounts of public corporations. In exercising his discretion, the Comptroller is guided by 'his personal responsibility and commitment to his oath of office'. (Cf. Sgaglione v. Levitt, 37 N.Y.2d 507, 512, 375 N.Y.S.2d 79, 83, 337 N.E.2d 592, 595). The Legislature is powerless to mandate how the Comptroller, an independently elected official, is to exercise his constitutional discretion. (Sgaglione v. Levitt, supra.). [Id.]
In addition, in Ronan v Levitt, 73 Misc 2d 35, 341 NYS2d 176, affd 42 AD2d 10, 344 NYS2d 624, mot for lv to app den, 33 NY2d 514, 347 NYS2d 1026, the lower court interpreted Public Authorities Law, §2503 (of article 9, title 1) which provides, in part, that "the state comptroller shall ... examine the books and accounts of every authority or commission ... continued or created by this chapter, including its receipts, disbursements, contracts, leases, sinking funds, investments and any other matter relating to its financial standing". In rejecting the contention that the statute limited the Comptroller's authority to the conduct of "financial audits", the trial court held that section 2503 "does not attempt to tell the Comptroller how to conduct such audit; nor does it draw such semantic distinction between 'management operational audits' and 'financial audits' ...." (73 Misc 2d at 38, 341 NYS2d at 178). The court, in Ronan also stated, with respect to the Comptroller's power to subpoena certain records of a public authority, that "[a]ll that need be demonstrated ... is that the records sought bear a reasonable relation to the subject under inquiry and they will not be quashed unless utterly irrelevant and the futility to uncover anything legitimate obvious" (id.).
The lower court's decision in Ronan was affirmed by the Appellate Division. That Court stated that "[t]he Comptroller's approach in this matter is also consistent with the scope of governmental audits in general (Comptroller General of the U.S., Standards for Audit of Governmental Organization Programs, Activities and Functions )" (42 AD2d at 12, 344 NYS2d at 626; see also Comptroller General of the U.S., Standards for Audit of Governmental Organization Programs, Activities and Functions, as last revised in 1988).
The language in subdivision 3 of section 516 of the Racing Law is virtually identical to that contained in Public Authorities Law, §2503. Therefore, reading Patterson, supra, and Ronan, supra, together, we believe the Comptroller's power with respect to the conduct of an audit of OTB is very broad.
Article 18 of the General Municipal Law prohibits certain interests in contracts of a "municipality" by certain municipal officers and employees. Racing Law, §502(11) provides that, "[f]or purposes of article eighteen, the [OTB] Corporation shall be a municipality and a director shall be a municipal officer". Given the broad scope of the Comptroller's constitutional and statutory powers to supervise the accounts of public corporations, there can be no question but that the Comptroller, in conjunction with an audit of an OTB, can determine the existence of conflicts of interest as defined in article 18 of the General Municipal Law.
Information as to private employment and business interests is essential in determining whether OTB officials have prohibited conflicts of interests in contracts of the OTB (see General Municipal Law, §§800, 801, 802). Therefore, we believe that the information being requested is reasonably related to the subject matter of the examination and that requesting such information from OTB officials is a proper and reasonable exercise of the discretion vested in the Comptroller by law. Further, under the broad authority granted to the Comptroller by State Finance Law, §9, this type of information could be made the subject of a subpoena (see Ronan, supra). Pursuant to that section, the Comptroller "may issue a subpoena ... requiring a person or persons to attend before the comptroller, ... and be examined in reference to any matter within the scope of the inquiry or investigation being conducted by the comptroller, and, in a proper case, to bring with him, a book or paper". We believe this authority necessarily implies the lesser right to request the reporting of such information on a confirmation form.
With respect to the confidentiality of the information provided in these confirmation forms, please be assured that any request for public access under the Freedom of Information Law (Public Officers Law, article 6) will be carefully evaluated by this Office in light of the standards prescribed by that Law, including our right to deny access to records which, if disclosed, would constitute an "unwarranted invasion of personal privacy" (Public Officers Law, §87[b]). Any such determination, however, ultimately could be reviewed by a court and this Office, of course, would be bound by its determination.
February 5, 1991
Timothy A. McCarthy, Esq., Counsel
Western Regional Off-Track Betting Corporation