After Ethics Warning, MTA Chairman Gets OK for Outside Jobs in an Email

NEW YORK — The unusual arrangement that allows the leader of New York City’s transit system to hold other lucrative jobs was initially deemed inappropriate by a state ethics commission, but it was later permitted in a brief email rather than through a formal decision, according to new documents released Thursday.

The leader, Joseph J. Lhota, who oversees the Metropolitan Transportation Authority, pushed back against the commission last year, arguing that he was not an employee of the agency and thus not subject to certain ethics laws governing state officials. The commission’s executive director, Seth H. Agata, had earlier warned Lhota about restrictions for state employees on lobbying and outside income.

Their correspondence was revealed for the first time Thursday by Common Cause New York, a government accountability group that has criticized Lhota’s possible conflicts of interest.

In a letter in August, Agata told Lhota that any violations of ethics rules governing state employees could lead to a $40,000 fine or misdemeanor charges. But after Lhota’s objections, Agata ultimately provided lukewarm approval for the arrangement in an email.

The four-sentence email from Agata essentially said the situation was fine “assuming the facts” in Lhota’s letter “are true.”

Susan Lerner, executive director of Common Cause New York, said the ethics commission had ceded its authority to Lhota in the email. She called on the transportation authority to hire an independent auditor to investigate Lhota’s web of conflicts.

“The situation has evolved so that Joe Lhota himself decides if Joe Lhota has a conflict of interest,” Lerner said.

Lhota, who joined the authority as chairman last year to help fix the faltering subway, has faced questions over possible conflicts of interest as he juggles the demands of running the authority with his other well-paying jobs. He had previously declined to release the email from the state’s Joint Commission on Public Ethics, arguing that it was “personal.”

Lhota has kept his job as chief of staff at NYU Langone Health, one of the state’s biggest hospital networks. In December, he was hired by Madison Square Garden as a paid board member. He earned a total of more than $2.5 million in 2017 for his work at NYU Langone and on eight boards — nearly $1 million more than the previous year, before he took the MTA job, according to an investigation by The New York Times.

Jon Weinstein, a spokesman for the authority, defended Lhota in a statement.

“As we’ve said all along, Joe Lhota sought guidance from JCOPE and is treated as a per-diem member of the MTA board, as all other board members are,” Weinstein said, referring to the ethics commission. “The law clearly allows the chairman to delegate the day-to-day operations of the authority, which is exactly what happened in this case.”

Last June, as the subway was hurtling toward crisis, Gov. Andrew M. Cuomo nominated Lhota to serve as chairman and chief executive of the transportation authority, which runs the city’s subways, buses and commuter railroads. Lhota had previously led the authority and received accolades for helping the subway recover after Hurricane Sandy.

In August, Agata sent Lhota a letter outlining the rules Lhota was subject to as an MTA employee. Agata also warned that the commission would have to approve any outside job that generated more than $5,000 in annual compensation.

Lhota responded in September, arguing that he was not an MTA employee because he was serving as chairman and had assigned his chief executive duties to other staffers. He said he would recuse himself from any issues before the MTA involving NYU.

Walter McClure, a spokesman for the ethics commission, said the email from the commission had sought to clarify which laws applied to Lhota as a board member, rather than as an employee.

“The communications speak for themselves,” McClure said in a statement.

Lerner said Lhota had provided the documents to her after her group complained about his outside jobs and she decided to release them to the public. She stopped short of calling on Lhota to step down as chairman of the transportation authority, but she said he should choose between that role and his work in the private sector.

“It’s up to Joe Lhota to decide which he wants — does he want to be MTA chair, or keep his high-paying jobs, in which case he should step away,” Lerner said.

Lhota has said he is focused on improving the transit network and would recuse himself from any thorny issues.

“I’m not going anywhere,” Lhota told reporters in May. “I’m staying here.”