Crain's New York Business - December 17, 2012 - (Page 4)

IN THE Tennis expansion in Queens MARKETS nets locals a royal headache by Aaron Elstein Fat-salaried group won’t replace parkland BY ANNIE KARNI A sliver of parkland the U.S. Tennis Association plans to build on as part of a $500 million expansion of its 42-acre Flushing complex has become a flash point in a fight between the middle-class neighborhood and the cash-rich nonprofit. Community leaders say the USTA should have to replace the 0.68-acre strip that will become part of the complex, which hosts the U.S. Open every summer. Instead, the city plans to ask for a stillundetermined financial commitment from the tennis organization to refurbish parkland nearby. Money is one thing the USTA seems to have in abundance: Its CEO received total compensation of $1.4 million in 2010, and 12 employees were paid more than $400,000, according to a Crain’s review of its latest available financial filings. The nonprofit USTA, which has annual operating expenses of about $188 million, reported a $17 million surplus in 2010, up from $8 million the previous year.That would be considered a profit in the business world. In 2010, it awarded $61 million in grants to community tennis organizations and spent more than $38 million on staff compensation. The majority of its income comes from the U.S. Open. But the Bloomberg administration has decided the USTA will not have to replace the parkland because the Billie Jean King National Tennis Center is open to the public 11 months a year and serves the community. “In the case of USTA, we decided improvements in the park will provide a greater benefit than scrounging for a small parcel someplace else,” said Joshua Laird, the Parks Department’s assistant commissioner for planning and parklands. “We like the USTA; we like having the tennis center in Queens. The Open itself is important to the city.” With Major League Soccer eyeing the same Queens park for a 25,000-seat stadium,the community is fiercely defending every inch of remaining recreational space. “The general sentiment of the families we work with that live near the park is that the USTA is not at all accessible,” said Joseph McKellar, executive director of the Queens Congregations United for Action. The courts, for which the USTA charges $40 to $66 an hour, are too expensive for many in the neighborhood, he said. “The sentiment is, ‘Wow, they already don’t do much for folks in the community, and now they want to take even more of the public space.’ ” U.S. Open’s 0.68-acre gain irks neighbors Soccer plan differs Local leaders said the city’s deal with the USTA sets a bad precedent by not requiring park space taken for a private project to be replaced. In contrast, the $300 million soccer stadium planned for Flushing Meadows Corona Park will be required to replace parkland it takes. In return, MLS would get a 35-year, $1-a-year lease. The USTA pays the city $2.5 million a year in rent. “The tennis center is open to public use,” Mr. Laird explained. “The soccer stadium will not be open to the public between games. In that instance, they will have to replace the parkland.” Demapping parkland is a long process wrapped in red tape: A bill must be passed by the state Legislature and signed by the governor. But first the city must assess what mitiSee TENNIS on Page 24 Why Justice Dept. held fire on HSBC T wo obvious questions arise from the Justice Department’s $1.9 billion settlement last week with banking giant HSBC. Given the scale of HSBC’s monetary misdeeds from Mexico to Libya to Iran, why only $1.9 billion in penalties? And how did prosecutors decide the bank shouldn’t be indicted? First, let’s examine the financial penalty. Assistant U.S. Attorney General Lanny Breuer (above) last week called it “by far the largest forfeiture ever in a case involving a bank.” Maybe so, but it’s tiny compared with HSBC’s nearly $18 billion in profits last year. I asked a Justice Department spokesman how the number was arrived at but got no response. I also asked a half-dozen Enron and in 2002 was indicted for obstructing justice. Almost immediately after it was charged, the firm collapsed as clients fled and 28,000 U.S. employees—and another 60,000 globally—were left looking for work. Andersen was convicted at trial, but in 2005 the Supreme Court overturned the decision in a unanimous vote. The justices ruled that jurors were given improper instructions before deliberating, setting too low a bar for a guilty verdict. Of course,sacrificing an accounting firm—or a major bank—might be viewed as worthwhile if it made for a better financial system. Did the death of Andersen achieve that? Well, the Public Company Accounting Oversight Board, a regulator created in the Enron aftermath, last week issued a report saying accountants aren’t gathering enough evidence to ensure that companies are telling the truth when they say their books are legit—and that could lead to an increase in serious financial errors going undetected. Yes, sir: The accounting problems of a decade ago may be starting to creep back. Indicting HSBC,which has a total of 271,000 employees around the world, could please a lot of angry people and certainly send a message that would resonate throughout the industry for a while. Would it cause lasting changes in the behavior of bankers? Want to bet on that? former top federal prosecutors in Manhattan, including several who specialized in financial fraud, to ask how the feds figure these things out. Most said they couldn’t talk, citing conflicts with other cases they’re involved in. One former fed who did respond first sought assurances he wouldn’t be quoted, then explained that the goal is to reach a “principled number” based on the amount of illegal activity cited in the case. Let’s see how principled the numbers look. According to the statement of facts in the HSBC matter, the bank transferred from its Mexican unit a whopping $9.4 billion in “bulk cash” that lawenforcement officials say represented drug-sale proceeds. According to the Senate Permanent Subcommittee on Investigations, in 2010 the Office of the Comptroller of the Currency cited HSBC for failing to monitor $60 trillion in annual wire-transfer activity. Amid all that, the Justice Department decided that HSBC had to forfeit about $1.3 billion,with the remaining $600 million paid out as fines to banking regulators. As to why HSBC wasn’t charged criminally, the answer may lie in how things played out in the Justice Department’s signature financial fraud case of the past decade—the Arthur Andersen case. Andersen was the accounting firm for the energy fraud known as 4 | Crain’s New York Business | December 17, 2012 newscom http://www.empirecitycasino.com/giftcards http://www.empirecitycasino.com http://www.empirecitycasino.com

Table of Contents for the Digital Edition of Crain's New York Business - December 17, 2012

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
OPINION
GREG DAVID
ALAIR TOWNSEND
REPORT: SMALL BUSINESS
FOR THE RECORD
CLASSIFIEDS
REAL ESTATE DEALS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crain's New York Business - December 17, 2012

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