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Eye on the News

William J. Stern
Questionable Authorities
State Comptroller Hevesi needs to clean up New York’s corrupt public authorities
22 July 2004

Recently, I received a phone call from David Neustadt, director of communications for State Comptroller Alan Hevesi. He wanted to know if I was aware of all the audits of New York’s bond–issuing public authorities that the comptroller had been conducting. Hevesi’s office was doubtless reacting to a City Journal piece I had written a few months back on the need to clean up the notoriously corrupt state authorities, created decades ago by Governor Nelson Rockefeller to get around the state constitutional requirement that voters approve all state borrowing (see “Spitzer’s Double Standard,” Winter 2004). These quasi–independent bodies have over the years buried New Yorkers under a mountain of debt by issuing bonds for innumerable projects, many of them utterly dubious. I reminded Neustadt that my criticism in the piece targeted not Hevesi, primarily, but state attorney general Eliot Spitzer, whose speak-loudly-but-carry-a-small-stick approach to cleaning up the largely unaccountable authorities wasn’t—and still isn’t—getting the job done.

Spitzer rightly compares the authorities to Enron: they share shady accounting practices that have resulted in the public getting ripped off. But while government prosecutors have indicted every major Enron official—even the C.F.O’s wife sits in the cooler—Spitzer hasn’t even brought a civil suit against any top executive of any major state authority. If many people are misbehaving at these government entities, as Spitzer acknowledges, why hasn’t he gone after any of them? He certainly has shown no hesitation in punishing institutions and individuals on Wall Street. His double standard is glaring: private sector corruption is fair game, but not the public sector’s dirty deeds.

As for Hevesi, the state comptroller’s audits of the authorities are impressive—far exceeding anything done by his two predecessors in office, Democrat Carl McCall and Republican Ned Regan. The audits take us back to the days of fearless and methodical comptroller Arthur Levitt. Hevesi has exposed, for example, the Long Island Power Authority’s payment to an interim CFO of $580,000 over 14 months under a contract never submitted for approval to the comptroller’s office, as required by law. He has uncovered as well the misstatement by NYC Transit, which runs Gotham’s buses and subways, of more than $850 million in operating expenses.

But such audits aren’t supposed to be ends in themselves. Instead, they’re supposed to lead to action—by top executives and directors of the authorities, by the governor, by the state legislature, and, ultimately, by prosecutors. And on that score, they’ve failed dismally. No state official, Spitzer included, seems to have taken the audits seriously. After Hevesi issues one of them, sometimes a couple of small stories appear in local newspapers, but that’s it—everything then goes on just as before. The “before,” in the case of the authorities, has been a quarter century of corruption.

What could Hevesi do to spur action on his audits? He should call a high-profile press conference and name those elected and appointed state officials who are not enacting reforms based on his reports. Hevesi should become the state’s chief whistleblower—which would give him a place in the history books. New York’s political elite has long benefited handsomely by using the state authorities as personal cash cows. Members of this corrupt class have rarely faced punishment for their actions, but instead get treated as if they’re respectable prominent citizens. If the state comptroller starts naming names, he might begin to change the sleazy culture at the authorities. Better yet, he might successfully push for the abolition of many of them, which would cause New Yorkers to owe him a deep debt of respect and gratitude—the only kind of debt New York pols have rarely imposed upon the state’s taxpayers.

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