New York's Culture of Corruption

Corruption 101: required reading
The Albany Times Union - EDITORIAL - March 12, 2010

David Loglisci's account of how he allowed kickbacks to go on in the state's pension system while he was its chief investment officer should be required reading for every politician and state employee. Beyond shedding fresh light on how the pension fund was corrupted at the highest levels, the two-page statement Mr. Loglisci read in court Wednesday is a primer in political patronage, and how it can become so institutionalized that it passes for business as usual. And it's a warning that whether it's called a kickback, pay-to-play or patronage, it is not good government, and, as Mr. Loglisci now knows all too well, it could be criminal. For his role in a scheme that got him a promotion, he now faces prison. Mr. Loglisci detailed how a senior official in the Comptroller's Office told him that firms looking to handle certain investments for the $129 billion pension fund had to be cleared by Hank Morris, then-Comptroller Alan Hevesi's political adviser and campaign manager. To get the business, Mr. Loglisci said, firms had to contribute to Mr. Hevesi's campaign, or pay a "placement fee" to Mr. Morris or his associates. The use of placement fees or campaign contributions as bribes prompted an investigation by Attorney General Andrew Cuomo's office that has netted more than $120 million in payments from people and firms that played along. Six individuals have pleaded guilty for paying or receiving kickbacks. Mr. Morris has been indicted. Mr. Hevesi, who resigned in 2006 after his conviction in connection with personal uses of state resources, hasn't been charged so far in the pension schemes. How much damage, if any, was done to the pension fund by this corrupted investment system may never be known. Comptroller Thomas DiNapoli has since banned, by executive order, the use of placement agents and fees, and the awarding of investment business to donors to a comptroller or candidate for comptroller for two years following a contribution. That, and more, should, of course, be law. While the hundreds of millions of dollars at stake in this scheme make it so remarkable, the case should put politicians on notice that the spoils they may have come to view as perks of public office -- jobs for family and pals, a personal favor on the side, the award of a discretionary contract -- may end up being Exhibit A at their corruption trial. And state employees who go along with this because the boss said so should know they do so at their own peril, and that if they allow this play, they, too, may have to pay.

The issue:A former top state pension fund official admits his role in a pay-to-play scheme.
The Stakes: A culture in which political patronage is the norm encourages such abuses.

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