CHICAGO, July 9, 2013 – The law firm of Pugh, Jones & Johnson, P.C., and its partner, Preston L. Pugh, were appointed recently by the Waterfront Commission of New York Harbor to monitor an entity licensed by the commission.
The groundbreaking effort aims to clean up a white collar crime problem New York has faced for nearly 70 years. The licensed entity that Pugh and his law firm will monitor has not abided by a mandatory code of ethics and has thereby placed its license to operate on the waterfront in jeopardy. To address problems like these, the Waterfront Commission recently started an Independent Private Sector Inspector General program. Preston Pugh was the first IPSIG appointed under that program, making PJJ one of the few minority law firms in the country that have been appointed as a monitor.
IPSIG programs were devised in 1989 to fight racketeering and corruption in New York’s construction industry. The idea has since spread to other industries and to locations such as New Jersey, Boston, Miami and New Orleans. IPSIGs often police the affairs of companies, unions and industries. Though in some ways this monitoring resembles consent decree enforcement, it differs since IPSIGs oversee the borderline conduct of entities that governments license and contract with.
IPSIGs may catch on soon in Illinois and Chicago, where news organizations, inspectors general, and the attorney general frequently uncover examples of unethical conduct involving government contractors. IPSIG monitors can oversee operations for an extended period of time when conduct falls within a gray area. Agreeing to such monitoring is often a better alternative for a company than risking that the governmental body will enter an adverse finding. Such determinations can cost companies their government contracts and the ability to do future business with governmental bodies.
Firms engaged in IPSIG work have a mix of legal, auditing, investigative, and loss-prevention skills to ensure compliance with laws and regulations. IPSIGs have the power to uncover and report unethical or illegal conduct. Some businesses hire them voluntarily to protect a company’s image and to promote an ethical and efficient workplace. More often, though, a court or legal authority vests an IPSIG with such broad powers as:
• Access to records, accounts and correspondence
• Subpoena power and the ability to take testimony
• Holding hearings and disciplining or removing individuals
• Withholding salaries and benefits from anyone who misappropriates funds
• Reviewing and vetoing operations, including major contracts
• Ability to receive law enforcement assistance
Most often, when one company agrees to engage IPSIG monitoring in a proceeding, it pays the bill. When a whole industry requires monitoring because of a history of noncompliance, fees can be levied as a surcharge. Monitoring becomes an added cost of entering the government contracting process, much as companies pay for the costs of drafting and submitting proposals. Fees can be used, for example, to verify that minority-owned or women-owned enterprises are what they claim to be. At a time when tax revenues are scarce, IPSIG monitoring may prove an attractive alternative to governmental enforcement.
For more information about IPSIGs, read the referenced article written by Ronald Goldstock, the New York State Commissioner of the Waterfront Commission of New York Harbor.