Cuomo Proposes State Pension Board After Harding’s Guilty Plea

ANDREW CUOMO: Need board to avert abuses. State Attorney General Andrew Cuomo Oct. 8 proposed that a state pension board be created, ending the State Comptroller’s status as sole trustee for the state retirement system.

His plan was unveiled two days after the abuses perpetrated under the current setup were highlighted with the guilty plea of former Liberal Party Chairman Ray Harding to accepting more than $800,000 in unearned fees tied to state pension investments.

Payment for Favors Rendered

Mr. Harding was designated a placement agent by aides to then- State Comptroller Alan G. Hevesi in return for favors he did for him over the years, among them clearing the way for a vacant State Assembly seat to go to his son, Andrew Hevesi.

While the senior Hevesi has not yet been charged in the scheme, among those indicted six months ago by Federal prosecutors were a top aide to the Comptroller and Hank Morris, his close friend and key political adviser. In entering his guilty plea, Mr. Harding said that it was Mr. Morris who made him the placement agent for $130 million worth of state pension investments with two firms, garnering him fees of $805,000 although he did no real work on either account.

RAY HARDING: Admits illegal transactions. An attorney for Mr. Hevesi told the New York Times following Mr. Harding’s plea that his client “had no involvement in, or knowledge of, any wrongdoing, or any quid pro quo, related to the New York State Common Retirement Fund.”

City Funds Barred Agents

Each of the city’s five pension funds has a Board of Trustees, but questions arose earlier this year about their use of outside placement agents as go-betweens on fund investments as well, and such arrangements were subsequently banned. Prior to being elected State Comptroller in November 2002, Mr. Hevesi served as City Comptroller from 1994 to 2001.

ALAN G. HEVESI: Despite denials, cloud darkens. Mr. Harding several years ago had approached a high-ranking official in the State Comptroller’s Office—identified by an aide to Mr. Cuomo as then-Deputy Comptroller Jack Chartier— and stated that he was having financial trouble stemming largely from his son Russell’s legal fees. The younger Harding, who had been appointed Housing Development Commissioner in 1998 by Mayor Rudy Giuliani in what was viewed as a reward for Ray Harding’s help in providing the margin of victory on the Liberal line in the 1993 mayoral election, later went to prison for embezzling $400,000 in agency funds and possession of child pornography.

Helped Create Assembly Vacancy

According to published reports, Mr. Chartier relayed the conversation to Mr. Hevesi, and ultimately Mr. Harding was referred to Mr. Morris. After he began receiving business from one investment firm, in late 2004 Mr. Harding began using his influence to secure a position with the Health Insurance Plan of Greater New York for a Queens Assemblyman, whose resignation created a vacancy that was ultimately filled by Andrew Hevesi after a special election. Mr. Cuomo previously said that the younger Hevesi was unaware of the machinations on his behalf.

Mr. Harding is said to be cooperating in the ongoing criminal probe, which could result in his being spared jail time for his guilty plea to financial securities violations.

State Comptroller Thomas P. Di- Napoli, who succeeded Mr. Hevesi following his resignation to settle unrelated charges nearly three years ago, called Mr. Cuomo’s proposal to create a pension fund board “another good step forward to reform.” He said the measure would also “codify many of the reforms I’ve already implemented along with setting in law a code of conduct.”

Puts Check on Donors

Among the provisions of the bill is a continuation of a ban on “pay-toplay” contributions by firms seeking state pension business to candidates for Governor and Attorney General and the leaders of both houses of the State Legislature.

“After the Hevesi administration violated the public trust, New Yorkers are rightly asking questions about the best way to ensure ethical, honest management of the Fund,” Mr. Di- Napoli said in a statement. “The viability of a board [of trustees] should be put on the table.”