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Controversy Brews over Rhode Island GTECH Contract

1 October 2003

RHODE ISLAND – As reported by the Providence Journal: "A week before state lawmakers voted to give GTECH an exclusive, 20-year lottery contract, the Providence law firm with which House Majority Leader Gordon D. Fox is associated was discussing its own proposed contract with GTECH.

"A Providence Democrat, Fox ascended to the second-most powerful political position in the House this year.

"On April 22, GTECH's top in-house lawyer had the first of several conversations with the principals in Ferrucci Russo PC -- where Fox works -- about a potential role for the small Pine Street law firm in the international lottery giant's $65-million move from West Greenwich to Providence.

"Nothing had been finalized at the point the multimillion-dollar GTECH deal whizzed through the House and Senate a week later. The legislation cleared both chambers on April 30.

"GTECH hired Ferrucci Russo three weeks later.

"In a series of interviews this week in which he confirmed this sequence of events, GTECH spokesman Robert Vincent said Ferrucci Russo was hired to help GTECH win Providence City Council approval for a second major piece in its relocation package: an agreement that would provide the company with an estimated $8.3 million in property-tax breaks.

"…Most of Fox's time was spent in what Vincent described as `strategy discussions and meetings.'

"…While he acknowledged a role in formulating GTECH's sales pitch to the Providence City Council, Fox said, he had no business relationship with the company when he voted, on April 30, in favor of the GTECH deal.

"…Of the GTECH contract his law firm landed a short time later, Fox said: `I wouldn't vote on any piece of legislation contingent upon me obtaining a contract and that's it. Nor would I vote on a piece of legislation contingent upon somebody coming to me saying we'll give you this contract if you vote this way.'

"…While some of the facts remain in dispute, the incident illustrates, once again, the thin line that elected officials who are also lawyers walk when they represent clients who have business before the legislature or other arms of government over which they have power.

"…This spring, GTECH was on the verge of moving its 920 employees from West Greenwich to Norton, Mass.

"To keep the company, Governor Carcieri, Senate President William V. Irons and House Speaker William J. Murphy rallied behind legislation that would give GTECH an exclusive 20-year contract to run the state's traditional and video-lottery system -- if the company agreed to build its new corporate headquarters in Providence. Estimates were the higher fee the state agreed to pay GTECH would cost the state $87.2 million over the span of the extended contract.

"As part of that April deal, GTECH was also promised a series of property-tax breaks on its new $65-million corporate headquarters. GTECH would get $8.3 million in city tax breaks over the next 20 years. The deal also gave GTECH a lower tax rate than other commercial taxpayers in the city, and exempted the company from regular property-tax increases.

"…Asked whether GTECH had any qualms about negotiating to hire the House majority leader's law firm while GTECH had major legislation pending before the General Assembly, Vincent said, the company dealt almost exclusively in the House with the Speaker Murphy…"

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