Pa. auditor: Lottery consultant fees will reach $4.6M - abc27 WHTM

Pa. auditor: Lottery consultant fees will reach $4.6M

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Pennsylvania's auditor general says Governor Tom Corbett should either resubmit a contract for lottery privatization by the end of the year or drop the idea altogether.

Auditor General Eugene DePasquale said his review shows payments to privatization consultants will cost taxpayers an estimated $4.6 million, or more than 11 percent of the Lottery's annual operating budget.

He said the money could have been better spent on programs for Pennsylvania's seniors.

DePasquale's review followed Corbett's decision in late October to provide an eighth extension on the contract the governor wants to award U.K.-based Camelot Global Services.

State Attorney General Kathleen Kane rejected the initial contract in February 2013.

DePasquale said to date, Pennsylvania has paid $2.36 million to DLA Piper, an international law firm headquartered in Chicago; $1 million to Greenhill and Co., a financial advisory firm with offices in New York and Chicago; and $123,000 to Blank Rome, a law firm in Philadelphia, to provide services connected to lottery privatization.

An additional $1.1 million is authorized through Dec. 31 under various addendums to the original contracts, he said.

The original contracts called for payments of $375,000 to DLA Piper; $200,000 to Blank Rome; and $150,000 to Greenhill for a total of $725,000, according to DePasquale.

"The Lottery funds paid to DLA Piper are of concern since the firm claims to have experience in lottery privatization but was unable to develop a contract that could gain legal approval of the Pennsylvania attorney general," DePasquale said. "So far, all we know of DLA Piper's work is that they failed to do what the administration is paying them more than $2 million to do."

DePasquale said his department's review of invoices and receipts for the consulting firms revealed that the majority of the total expenses paid to date were for hourly labor costs at $2.4 million.

He said the balance of the payments were reimbursements for professional services of $1 million to Greenhill and Co. and approximately $50,000 for lodging, food, airfare, parking and mileage costs for DLA Piper.


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