The Paterson administration is examining whether the state can scuttle contracts it

holds with Carl Paladino now that racist and pornographic e-mails that the Buffalo businessman

reportedly forwarded to friends have surfaced.

"We're looking at the contracts to see if there is anything in there, like a morality

clause," an administration official told The Buffalo News. The official spoke on condition of

anonymity.

The government source said the Paladino contracts "were awarded properly."

"He was the lowest bidder. That's not what we're looking at," the official said. "This is

being taken very seriously. Those e-mails were reprehensible."

This afternoon, the head of the state's Office of General Services, called on Paladino to

"voluntarily" withdraw from a pending lease the businessman has to rent space to the Workers

Compensation Board at 295 Main St. Details about the size of the contract were not immediately

available.

"I am very disturbed about recent reports of e-mails sent or forwarded by you that contain

racist and sexist depictions and remarks," said John Egan, commissioner of the office. "As a

landlord doing business with the state of New York, I expect you to conduct yourself in a

professional manner," Egan said in the letter sent to Paladino this afternoon and obtained by

The Buffalo News.

"The lack of respect these e-mails show for the rights of minorities and women is of great

concern to me both as commissioner and as a citizen of this state," he added.

It is unclear why Egan chose to ask Paladino to voluntarily withdraw from what he called a

"pending" lease with the workers compensation agency.

The Buffalo News recently reported that Paladino has more than two dozen contracts —

about $85 million in value — with various state agencies that lease space in buildings

owned by him or partnerships in which he is a member. The current contracts, dating back to

1999, extend as far off as 2021, and include the State University of New York; the departments

of Education andMotor Vehicles; and the Office of Children and Family Services.

The largest single contract is four years old, signed with the former Pataki

administration, for the state Transportation Department's regional office in Buffalo.

The Paladino camp countered this morning, saying the Paterson administration for more than

a year — long before Paladino became a gubernatorial candidate — has been trying

to kill his contracts with the state.

"They have been looking for any reason to pull the leases from landlords to give them to

their political cronies," said Michael Caputo, Paladino's campaign manager. "Carl has been in

disagreement with the Paterson administration for quite some time. This is actually just the

next step in the process," Caputo said of the administration's move since the e-mails surfaced

this week.

Paladino wrote to the U.S. attorney's office in Albany on March 2, seeking an investigation

of several Paterson administration officials who work at the Office of General Services, which

handles leasing for state agencies. Among the charges he made was an effort by the officials

to impose prevailing wage standards — which provide higher salaries — on private

landlords as "payback" to private trade and service workers unions. He also asked the state

Inspector General's Office to investigate his claims.

Paladino said the state — "using the state's budget crisis as an excuse" —

pushed various changes in lease terms, including rent concessions. He called it an "arbitrary,

irresponsible policy."

At the same time, the Paterson administration sought to dictate the prevailing wage levels,

Paladino said in the March letter, that would boost construction costs by 40 percent and

operating costs on the buildings by 25 percent.

The administration had no immediate comment on the Paladino charges.