NY looks to abandon sole fiduciary

Bill is the latest push by Cuomo and other New York officials to crack down on the corruption scandal

The New York State Common Retirement Fund, which is at the center of an alleged kickback scandal, should be run by a board instead of being overseen solely by the state comptroller, Attorney General Andrew Cuomo said last week.

The Democrat, who is heading an nvestigation of kickbacks paid by investment firms seeking to manage some of the state pension fund, said he had agreed with Democratic state senators on a bill creating a 13-member board and tougher penalties for violations.

New York is one of just two states that does not have some sort of board structure. The other, in Connecticut, also experienced a pay-to-play scandal related to private equity investments.

Cuomo compared the current system of putting all oversight of the $116 billion New York Common fund in the hands of one individual as about “as sensible as having a single lock on Fort Knox.”

The bill marks the latest push by Cuomo and other New York officials to crack down on the so-called “pay-to-play” corruption in which private firms make campaign donations in hopes of winning public contracts.

“Today’s legislation will ensure that the fate of our public retirement fund isn’t decided by one individual, and that the entire system is rid of the kind of pay-to-play that infected and derailed it in the first place,” Cuomo said in a statement.

The bill will go to the New York State Assembly, which has drafted a competing measure, and the Senate. Both houses are led by Democrats though the party has a razor-thin majority in the senate.

Cuomo charges that the former state comptroller’s top political adviser, Henry Morris, corrupted the system and reaped millions of dollars of fees from investment firms that sought business from the fund through the pay-to-play scheme.

Under the porposed bill, a new board would be chaired by the comptroller. Six members would be appointed by the governor and otehr elected officials while the other six members would be chosen by the members of the pension fund, including active members and local representatives.

Thomas DiNapoli, the current Democratic comptroller, said in a statement that the bill was another good step toward reform. Later, the former Assemblyman added that many issues would have to be resolved, including how much new oversight might cost and whether it was constitutional.

“We can’t afford the chaos and confusion of protracted legal battles and constitutional challenges,” DiNapoli said.

A spokeswoman for Democratic Gov. David Paterson had no immediate comment.

A spokesman for Assembly Democratic Speaker Sheldon Silver said by telephone that both models—a pension oversight board or having the comptroller serve as the sole trustee—had advantages and disadvantages.