Pension Plunder -- The Power of Corruption

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    NEWSLETTERS

    Former New York Comptroller Alan Hevesi .

    State government employees and retirees should be mad as hell. The money tucked away for their pensions apparently has been plundered by people entrusted with protecting it.

    Alan Hevesi, the former state comptroller, is accused of corruption involving the state pension fund.

    The charges, reported by the Daily News and The New York Times,  are serious. The practices alleged threaten the core of what state employees rely on for their retirement. But, ironically,  Hevesi’s predicament may finally bring reforms in how the state invests its pension money.

    Basically, Hevesi’s office is accused of rewarding pension investment business to companies that offered financial benefits to Hevesi and his aides.  It’s alleged that Hevesi’s friends, families and associates sold access to the state’s 125 billion dollar pension fund. The purpose: to pay back political favors---and, incidentally, get millions for themselves.

    Among the charges Attorney General Andrew Cuomo is making is that a California businessman paid for Hevesi and his relatives to take five first-class trips to Israel. The businessman, Elliott Broidy, reportedly gave gifts totaling nearly $1 million in exchange for a $250 million investment from the pension fund.

    In the confused web that spun out of this investigation, Raymond Harding, the former head of the Liberal Party, pleaded guilty to accepting more than $800, 000 in exchange for doing favors for Alan Hevesi. One favor was to enable Hevesi’s son to get an Assembly seat.

    Harding was a political pal of former Mayor Rudolph Giuliani, who put two of Harding’s sons on the city payroll.

    You can’t make this stuff up. It’s not legend. It’s political reality.

    The case against Hevesi seems to revolve around Hank Morris, the former comptroller’s key political adviser. Morris was indicted last year on 123 counts. He has strongly denied all charges.

    Dick Dadey of the reform group, Citizens Union, told me he’s hopeful that out of this investigation will come basic change.

    He points out that, under current law, the State Comptroller is the sole trustee of the pension fund.  That means the comptroller ultimately decides what investments the fund will make.

     Dadey points out that proposals to put the investment strategy in the hands of a board of trustees [instead of a single trustee] would “diffuse” responsibility and thereby guard against possible corruption..

     “I hope,” says Dadey, “that this development will re-ignite debate about whether we need to change the system for investing pension money. It cries out for change.”

     It’s said that there’s nothing new under the sun. Certainly corruption in government goes way back in history.  Great philosophers have weighed in on the subject. Jean-Jacques Rousseau thought that man was born innately good but that society corrupted him.

    Lord Acton, an English historian, famously said: “Power tends to corrupt and absolute power corrupts absolutely.”

    So how do we eradicate corruption?  That’s hard to say but maybe we have to agree that we can take only one small step at a time.