At WTC, Conflict Of Interest Concerns

A major engineering firm retained for numerous jobs at the World Trade Center site is in talks to acquire a

A major engineering firm retained for numerous jobs at the World Trade Center site is in talks to acquire a company run by the Port Authority commissioner most closely involved with the site’s redevelopment.

The commissioner, Anthony Sartor, chairs the Port Authority’s World Trade Center subcommittee and is president of KeySpan Services, which controls Paulus, Sokolowski & Sartor, an engineering firm that is a subsidiary of National Grid. Engineering and architectural giant STV Incorporated, which has contracts with the Port Authority for the Freedom Tower and the multibillion-dollar PATH hub, is exploring a potential acquisition of Mr. Sartor’s company, known as PS&S.

Such talks have raised eyebrows over a potential conflict of interest—or at least the appearance of it—according to numerous people involved with the redevelopment effort. The Federal Transit Administration, which has over $2 billion promised to the redevelopment, contacted the Port Authority to get information about the potential conflict, according to an official with knowledge of the situation.

Mr. Sartor is known to be intensely involved in decisions made as part of the World Trade Center redevelopment, decisions that can lead to increased payments to STV—the company that may acquire Mr. Sartor’s PS&S—given a need for more work from the company.

STV, a Pennsylvania-based company with offices in New York, acknowledged that it is considering acquiring PS&S.

“STV is exploring the possibility of several acquisitions right now, one of them being PS&S,” said Linda Rosenberg, a spokesperson for STV. “If there’s any conflict of our interest with our clients, including the Port Authority, we’re not going to proceed.”

The F.T.A. contacted the Port Authority last week about the matter, according to an official familiar with the situation, and the F.T.A. requested information to review the potential conflict. After learning of the talks between National Grid and STV, the Port Authority adopted new provisions for Mr. Sartor, according to the official, including one that Mr. Sartor not vote on contracts involving STV.

Timothy White, a spokesman for Mr. Sartor, said Mr. Sartor disclosed the situation with STV to the Port Authority when he learned of STV’s interest in PS&S.

“Commissioner Sartor has historically acted prudently and with transparency to eliminate and avoid both the appearance and any potential for a conflict of interest, consistent with his own sense of ethics and his legal obligation to do so,” Mr. White said via e-mail. “This is specifically the case with respect to this overture by STV to acquire from National Grid its subsidiary PS&S.”

Stephen Sigmund, a spokesman for the Port Authority, said Mr. Sartor was not himself negotiating with STV over a sale. “Commissioner Sartor disclosed this potential transaction to the Port Authority, and our general counsel put safeguards in place during the negotiation period,” he said in a statement. “If the transaction is completed we will revisit the issue.”

However, while the safeguards do not allow Mr. Sartor to vote on contracts, his position as chair of the World Trade Center subcommittee still seems to give him broad control over many of the decisions made at the site, including those that affect STV. Compared with other Port Authority commissioners, he is known as a micromanager, according to people involved in the redevelopment. Any design change he pushes for on certain projects, particularly the PATH hub, could lead to additional public dollars going to STV, which is on the design team for the project.

For instance, in a memo sent May 7—after the safeguards were adopted—from Mr. Sartor to Port Authority Chairman Anthony Coscia, Mr. Sartor discussed numerous efforts he undertook with the agency’s staff to reduce cost overruns at the PATH hub, including a series of redesigns, writing that “we have successfully made substantial changes to the original design.”

The Port Authority has authorized $244.5 million in payments to a venture between STV and engineering firm DMJM + Harris for design work at the PATH hub. Just in the past three months, the agency approved an additional $56 million in design work for the two firms, intended to reduce the overall cost of the troubled project.

Mr. Sartor’s control at the redevelopment could increase. Last month, the Port Authority board announced it would tighten control by holding additional monthly meetings devoted to the World Trade Center, an apparent response to the aggressive approach brought to the project by the Paterson administration, which has tossed out the public timetable previously approved by the board and Mr. Sartor.

It is unclear what role Mr. Sartor would take if STV were to acquire PS&S. He first sold his company to KeySpan in 2000 and became president of KeySpan Services. KeySpan was acquired last year by National Grid, and company executives say PS&S does not fit as well with the mission of the now-larger utility company.

Ms. Rosenberg, of STV, said details have not been worked out about Mr. Sartor’s position at STV if the company acquired PS&S.

STV has a long relationship with the Port Authority and indeed is in the same building as the agency, where it has been for years. Numerous employees from the Port Authority have taken senior jobs at STV in recent years.

Questions were raised about Mr. Sartor in 2001, after it was disclosed he made a $150,000 loan to then-acting New Jersey Governor Donald DiFrancesco after the politician hit financial troubles. Mr. Sartor’s company later won state engineering contracts worth millions of dollars. Mr. DiFrancesco denied any wrongdoing, but ultimately stepped down as acting governor two months after news of the loan surfaced as scrutiny piled on. At WTC, Conflict Of Interest Concerns