After probe, Donaghy firm to pay $10M

By Harry Keaney

Structure Tone, one of the largest construction companies in the U.S., headed by County Tyrone man Patrick Donaghy, has agreed to pay $10 million in a plea agreement with the office of Manhattan District Attorney Robert Morgenthau. The agreement, struck in State Supreme Court in Manhattan recently, was among a number of plea agreements between the district attorney’s office and New York construction companies as a result of a five-year investigation into allegations of kickbacks and bid-rigging.

Structure Tone’s 1997 revenues exceeded $1.1 billion. Structure was given a conditional discharge on agreeing to pay the $10 million in lieu of fines and forfeiture of assets.

A spokesman for Structure Tone, Howard Rubenstein, issued a statement saying the contractor had merely paid “legitimate sales commissions,” not bribes, to obtain a $500 million contract at the Sony Building, at 550 Madison Ave., at 56th Street. Structure Tone claimed that the company itself was a victim of the bid-rigging scheme.

Structure Tone also said it had not forced subcontractors and suppliers to pay bribes, as other contractors or construction managers had done.

“The company felt it was victimized,” a Structure Tone statement said. “It made a corporate decision to settle this matter and plead guilty and get on with its business. Unlike the others who are charged, Structure Tone never took any money from anyone associated with any project.”

However, Daniel Castleman, chief of investigations for the district attorney, said Structure Tone’s statement was contradicted by the guilty plea it entered in court.

“In pleading guilty, Structure Tone admitted that it paid a bribe to Bennis & Reissman, albeit through a middleman, to get the Sony contract. The fact that Structure Tone pleaded guilty to commercial bribery and has agreed to pay $10 million speaks for itself,” Castleman said.

But Rubenstein said that Structure Tone’s statement did not contradict its plea. He said that the contractor had originally believed that the payments were legal commissions but later learned that some of the money had gone to Bennis & Reissman.

Structure Tone was not the only construction company to enter plea agreements, some of which involved executives going to prison. Other individuals and corporate defendants pleaded guilty to Superior Court information and thereby waived formal indictment.