Hevesi, Round II

When Alan Hevesi ran into trouble for misuse of a state chauffeur, these columns expressed a certain frustration. The big scandal we were concerned about was not whether a state driver ought to be devoted to the comptroller's ailing wife but about what favors Hevesi was handing out to those who contributed to his campaign. Our own reporting had focused on how hugely lucrative legal assignments went to a law firm whose members had helped Hevesi raise funds. Now the news is that authorities are looking into whether Hevesi steered pension business to firms that, as the New York Times put it on Sunday, "provided favors to those close to him in exchange for pension business."

This puts things on a more important plane than where it had been left with Hevesi. The focus of attention of the authorities — the new comptroller, Thomas DiNapoli, the attorney general, Andrew Cuomo, and the district attorney in Albany County, David Soares — is on fees paid to companies that manage parts of the state pension funds. The New York Post reported on Monday that more than 100 pages of records relating to investment decisions and management fees had, as the Post put it, "vanished" from the office of Deputy Comptroller David Loglisci, a Hevesi holdover who resigned in May. Mr. DiNapoli has since said it is apparent that Hevesi and others on his staff "engaged in unethical, irresponsible and possibly criminal activity."

The best thing for Messrs. Cuomo and DiNapoli to do is widen this probe as far as possible. One of the issues we tried to flag involved legal assignments paid to tort firms whose members had been involved in raising campaign cash for Hevesi. In a September 27, 2005, editorial called "Hevesi's Presumption," one of a number of editorials we ran on this topic, we pointed out that two of the firms that represented the state retirement fund in the WorldCom case donated $121,800 to Hevesi's campaign for comptroller. One of the firms, our editorial said, "actually held a fundraiser for Hevesi in its Philadelphia office." We noted that an aide to Hevesi signed a retainer agreement with the firms setting a fee for their work in the WorldCom case and stipulating that the fee "is presumptively fair, adequate and reasonable."

Lo and behold, those legal fees — approved by a federal judge, Denise Cote of the Southern District of New York, as part of the WorldCom settlement — added up to an enormous $340.5 million, which, we noted at the time, was "a huge payday for a few lawyers who are supposed to be working for the state of New York." We voiced this opinion: "When state government lawyers are paid a $340 million legal fee after donating $120,800 to the campaign of the state official who sets the fee, it's the sort of thing that you'd expect the state comptroller to be investigating, rather than perpetrating." It's not for a newspaper column to say whether it's illegal — and we're not alleging it to be. But it certainly is the kind of thing into which it would be logical for Messrs. Cuomo and DiNapoli to look.

We are at an important juncture in New York State, with a new governor who has promised that on day one, everything changes, with a new attorney general, and with a new comptroller. So far we've been unimpressed with the governor's campaign finance reforms. We favor making it as easy as possible for as many New Yorkers as possible to participate in funding campaigns to the maximum extent their wealth will allow. That is speech. But once politicians have taken money from individuals, they then fall under a particularly strong burden to stand back and act only on the merits. Under the New York State system, the comptroller is the sole trustee of enormous sums of pension money, and his office is a good place to start a wide-ranging probe into possible abuses of the kind these columns originally flagged.