The state’s Joint Commission on Public Ethics had determined Lhota’s various outside activities were “legally incompatible with [his] obligations under the state’s Public Officers Law." | AP Photo Potential conflicts of interest the real reason Lhota left the MTA

When Joe Lhota, the embattled chairman and CEO of the Metropolitan Transportation Authority, resigned last fall in the midst of the subway crisis — and two days after his patron, Gov. Andrew Cuomo, won reelection — he and the governor omitted the real reason for the departure.

While Cuomo and Lhota painted the resignation as a natural development in what was always intended to be a limited engagement, Lhota actually resigned because the New York state ethics board had deemed him too burdened by potential conflicts of interest to continue serving as the head of the country’s biggest transit network.


The cause of Lhota’s departure emerged in his Nov. 8, 2018 resignation letter — one the governor’s office initially declined to provide to POLITICO under the state’s public information law, only to relent after POLITICO appealed.

The state’s Joint Commission on Public Ethics had determined Lhota’s various outside activities were “legally incompatible with [his] obligations under the state’s Public Officers Law, and ... that recusal could not adequately cure or mitigate any potential conflicts in a way that would satisfy the standard set forth in the law,” Lhota said in his letter.

Lhota’s correspondence with Cuomo was more candid than his or the governor’s public admissions.

In his public statement about his departure, Lhota said he had originally accepted the leadership position with “the sole purpose of halting the decline of [subway] service and stabilizing the system for my fellow New Yorkers.” Now that he had accomplished that mission, he was leaving, he said.

The governor, who appointed Lhota to the job, said something similar.

“The original understanding was he would just help out for a period. ... He fulfilled that commitment to me,“ said Cuomo, according to an official transcript of a Nov. 11, 2018 radio interview.

At the time, Lhota’s service atop the MTA had become ever-more untenable. The prior February, POLITICO reported that he had quietly taken a well-paid seat on the board of the Madison Square Garden Company, which controls Madison Square Garden. The Garden sits atop Penn Station, which houses both the MTA’s Long Island Rail Road and two subway stations.

The Garden was also co-developing an arena for the New York Islanders at Belmont Park that was predicated on better LIRR service.

The appearance of a conflict of interest was too much for some good-government groups and transit advocates, particularly in light of the ongoing bribery trial of former longtime Cuomo aide Joe Percoco. While Amtrak owns Penn Station, the hub plays a crucial role in MTA operations. Some 500 LIRR trains start or end there every day, and it’s home to stations for the A/C/E and 1/2/3 subway lines.

The Garden has also long served as the bête noire for urbanists who believe the only way to resurrect the much-reviled Penn Station is to move the arena. Efforts to more incrementally improve Penn Station can also require involvement of the Madison Square Garden Company.

Other transit advocates worried Lhota was overburdened. He was already simultaneously serving as the MTA’s leader and chief of staff at NYU Langone Health.

Though he had said he was not acting as an NYU Langone lobbyist while working at the MTA, The New York Times subsequently reported that Lhota had, in fact, lobbied the city on behalf of the hospital network.

State law requires the MTA chairman and CEO to be one job. But Lhota declined a salary and delegated his CEO responsibilities to other MTA executives. Those actions, he said, freed him from the conflict of interest rules that constrain regular MTA employees. He also promised to recuse himself from any Madison Square Garden-related matters.

JCOPE accepted Lhota’s argument that he was not a true employee of the MTA. But, it said, he was still subject to the ethics rules that apply to public authority board members.

“There was no way the commissioners could figure out how he could operate and set up an effective set of recusals while leading the MTA and serving in that capacity at MSG,” a source familiar with JCOPE’s deliberations told POLITICO.

Neither Lhota nor the governor’s office responded to requests for comment.

A friend of Lhota’s, who sought anonymity so he could speak freely, defended Lhota’s tenure and described the conflicts of interest concerns as little more than a sideshow.

“He brought beloved Andy [Byford] and started the turnaround of the subway,” the friend said, referring to the president of New York City Transit. “He also never will get the credit, but he’s the one who told the governor to really embrace congestion pricing.”

Transit and good-government advocates see it differently.

The resignation letter “shows that JCOPE finally put their foot down and said, this is too outrageous even for us to accept,” said John Kaehny, the executive director of Reinvent Albany.

Susan Lerner, executive director of Common Cause New York, agreed.

"New Yorkers are simply tired of politicians who are playing games with the MTA, and not recognizing the need to put the interests of all New Yorkers first and foremost," she said.

During the height of the uproar, Kaehny and Lerner, among others, also urged the MTA to ban outside income for MTA chairmen and CEOs. That didn't happen.

“Chairman Lhota stepped in to take the helm of the MTA in a time of crisis, and was instrumental in bringing the system back from the brink,” said MTA spokesperson Max Young in a statement. “During his time at the MTA, Chairman Lhota recused himself from every issue related to Madison Square Garden. The MTA has and will continue to consult JCOPE on recusals, conflicts and related issues."