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State economic chief's casino holdings raising questions

Gregory Bialecki, secretary of housing and economic development, said he sold his stock in the Las Vegas Sands Corp. and Wynn Resorts Ltd. last week after conflict of interest inquiries by The Globe.

Jon Hurdle/Reuters

Gregory Bialecki, secretary of housing and economic development, said he sold his stock in the Las Vegas Sands Corp. and Wynn Resorts Ltd. last week after conflict of interest inquiries by The Globe.

The state’s top economic development official, who has pushed lawmakers to legalize gaming and touted the economic benefits of resort casinos, bought stock in two Las Vegas gaming companies last year, according to financial disclosure records filed with the State Ethics Commission.

Gregory Bialecki, secretary of housing and economic development, said he held more than $17,000 in stock in Las Vegas Sands Corp. and Wynn Resorts Ltd., both of which have expressed interest in building casinos in Massachusetts and together spent more than $1 million lobbying the issue. Bialecki said he sold the stock last week after The Globe raised questions about the appearance of a conflict of interest.

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In an interview, Bialecki said his financial adviser bought the shares on his behalf, without his knowledge, and he only learned of the purchases when he filled out his annual financial disclosure form May 1.

At the time, Bialecki said, he did not believe the investments created the appearance of a conflict because he had not selected the stocks; his role in setting gaming policies was limited; and the shares represented only a tiny portion of his financial holdings, worth more than $1 million.

“I made a decision myself,’’ said Bialecki, a commercial real estate lawyer before joining the administration in another post in 2007. “The better thing for me to have done would have been to talk to other people in the administration.’’

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Kimberly Haberlin, spokeswoman for Governor Deval Patrick, said the governor expects officials to adhere to state ethics laws. Bialecki, she said, acted with “an abundance of caution’’ by selling the stock well before the administration would have to implement a gaming law. The House and Senate recently passed different casino bills, and must still negotiate and pass compromise legislation to send to Patrick for final approval.

Massachusetts law prohibits public employees from acting in a manner which would cause a reasonable person to conclude they were unduly influenced by outside ties. They can avoid that problem by filing a separate disclosure form explaining the situation to dispel the appearance of a conflict. Bialecki did not file such a form.

“He absolutely needed to file,’’ said Pam Wilmot, executive director of Common Cause Massachusetts, an advocacy group that supports strong ethics rules.

David Giannotti, a spokesman for the Ethics Commission, declined to comment on whether Bialecki’s actions violated the law.

Regardless, said ethics specialists, government officials should avoid any appearance of conflicts - or risk undermining public confidence by raising suspicions about their motives. Frank Anechiarico, a professor of government and law at Hamilton College in Clinton, N.Y., said many government officials go beyond legal requirements to ensure they avoid even the hint of impropriety, such as putting investments in blind trusts.

Even though Bialecki eventually sold the gaming company stock, “his credibility is going to be seriously undercut,’’ Anechiarico said.

Bialecki, named economic development secretary in 2009, has championed the economic benefits of casino gambling and its potential to create thousands of jobs.

Three days after Bialecki said he learned of his stock in Wynn and Las Vegas Sands, he testified before a legislative hearing on legalizing casino gambling.

Wynn Resorts and Las Vegas Sands are considered among the contenders to build casinos in the state. Wynn spokesman Michael Weaver said the company has explored opportunities to build an “unparalleled gaming and entertainment complex’’ in Massachusetts. Through a subsidiary, Wynn has spent nearly $700,000 lobbying here since 2009, according to state records.

Las Vegas Sands Corp. spokesman Ron Reese confirmed last week that his company remains interested in building a casino in Massachusetts. The firm has spent nearly $400,000 lobbying here since 2009.

Gaming is an entertainment option that is being safely enjoyed by over a million Massachusetts residents every year in Connecticut and other New England states,’’ Bialecki told the Joint Committee on Economic Development and Emerging Technologies May 4. “Any well-crafted proposal would make those entertainment options available here in Massachusetts.’’

Bialecki downplayed his role in shaping the casino debate. He said the legislation is similar to the governor’s original proposal in 2007, when he had no part in gambling policies. In addition, he said, the legislation would likely create an independent gaming commission and he does not anticipate any role deciding which companies receive licenses. “The primary role I was playing was to be the person who articulated the administration’s positions,’’ Bialecki said. “I had little or no role in policy-making on the bill.’’

Bialecki, 51, said he originally set up an investment account in March 2010 for a financial adviser to manage without his involvement. He said the adviser bought the casino shares in August 2010 and sold the stock last week for $17,100, when Bialecki liquidated the account. The value of the casino shares increased by more than $5,000, but not enough to offset losses from other components of the portfolio, Bialecki said.

Bialecki said he plans to discuss with his adviser how to handle his investments to avoid similar issues in the future.

Several observers said Bialecki’s decision to hold gaming stocks as the state considered legalizing casinos could be potentially embarrassing to the administration, giving ammunition to gambling critics and potentially affecting the legislation.

“It’s not appropriate politically in that it’s going to create a problem for the governor,’’ said Marty Linsky, a longtime instructor at Harvard’s Kennedy School of Government and chief secretary under former Governor William Weld.

“You don’t want to put your boss in a position where, because of your actions he has to hold a press conference and explain something that is a diversion from his agenda. It doesn’t make good political sense.’’

Todd Wallack can be reached at twallack@globe.com. Follow him on Twitter @twallack.
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