Prosecutors target builders on minority-hiring mandates
About 100 CEOs from New York's construction industry gathered at a Times Square hotel last fall for a conference on hiring subcontractors owned by minorities or women. But the event was not about networking: Speakers included Manhattan District Attorney Cyrus Vance, U.S. Attorney Loretta Lynch and city Department of Investigation Commissioner Rose Gill Hearn. "The message was basically 'We're coming after you,' " recalled one attendee. That wasn't news to many attendees. Prosecutors have brought a slew of high-profile cases against major city contractors in recent years alleging fraudulent hiring of women and minority-owned subcontractors to meet mandates on city, state and federal projects. Many of those cases have come out of Ms. Lynch's office, but Mr. Vance got into the act in mid-January, securing a $10 million settlement from Siemens Electrical (the successor to Schlesinger-Siemens Electrical), which was controlled by German conglomerate Siemens AG. In a deferred prosecution agreement, Siemens Electrical admitted to filing false documents stating it had hired a minority contracting firm to help build the $3.2 billion Croton water-treatment plant in the Bronx. In fact, Schlesinger-Siemens Electrical provided much of the labor and equipment. The government is not asserting that minority-owned firms are not being paid, but that they are being denied the chance to mature and gain expertise by doing their own work. "Up until these types of investigations, there was no clear definition of what assistance a primary contractor could or could not provide [to subcontractors]," said Louis Coletti, president of the Building Trades Employers' Association. General contractors say there is a counternarrative to accusations that their industry is boxing out women and minority contractors, even as they land lucrative public projects requiring minority hiring. One overlooked fact, they note, is that in the government prosecutions, the minority contractor alleged to be a front group was on a city, state or federal government-approved list of minority or women contractors.