NEW YORK CIVIC

New York Civic’s spring party and fundraiser is just eight days away. We will gather April 30 on the 55th floor of the Corinthian, an apartment tower. We could not send out the elegant Evite invitation earlier because of computer glitches. They have now been overcome, and you can see the invitation by visiting our website, www.nycivic.org, or by simply clicking here.

We hope to see you there. The view is extraordinary, and comes at no extra charge.

All the best,

StarQuest





Murders Down by 77%,
Pension Fund Influence
Comes at a Heavy Price,
Recall Prince Bernhard?



By Henry J. Stern
April 21, 2009

Years ago, the number of violent crimes committed in New York was much greater than it is today. One could count on four to six murders each 24 hours in the city. The record high was 2245 in 1990, the first year of the Dinkins administration. Many of these were the result of territorial disputes between different bands of drug dealers, but the law-abiding public was put at risk by poorly aimed or stray bullets that killed neighborhood people, often children playing in the street.

The number of homicides in New York City in 2008 was 516, which is a reduction of 77 per cent over the past eighteen years. The decline began under Mayor Dinkins with the hiring of thousands more police, continued dramatically under Mayor Giuliani, Commissioner Bratton, and the late Deputy Commissioner Jack Maple. The murder rate has continued to fall under Mayor Bloomberg and Commissioner Kelly, even as police manpower has slowly been reduced and the police have assumed additional duties such as counter-terrorism.

Homicide is a crime more likely to be recorded accurately than other crimes, in part because it is harder to cover up.

There is a body that must be disposed of, and there are relatives and friends of the victim who are likely to make inquiries. Some murders happen in the sight of others, and a gunshot may be within the range of their hearing. A decomposing body will assail one’s nostrils after a period of time. Bloodstains and severed organs are obvious signs that a violent crime may have occurred. There is also a concentration of police resources on gruesome or widely publicized crimes, especially if the victim is young and attractive.

In years past, the newspapers, particularly the tabloids, would occasionally string together a number of murders and announce that a crime wave had overtaken the city. Each new offense would be publicized more widely than usual, and similarities drawn between different crimes that had taken place. The crime stories were sometimes accompanied by editorials demanding action by the mayor and the police commissioner. This sentiment reached its peak in a 1990 New York Post headline on page one, “DAVE – DO SOMETHING.” (The Dave the paper was referring to was Mayor David Dinkins.)

In recent weeks, we seem to have been undergoing a different sort of crimewave – in this case, a political one. The most alarming news involves the New York State Pension Fund, administered by the State Comptroller as sole trustee, where Hank Morris, an aide to former Comptroller Alan Hevesi is accused, and possibly the sum is exaggerated, of enriching himself by thirty million dollars by acting as a “placement agent” for companies seeking investments by the New York State Pension Fund, or desiring to become money managers for the fund for part of its former $158 billion corpus (now said to be reduced by over 20 per cent because of market conditions.).

When people of sufficient importance become involved with a financial transaction, it is somehow airbrushed so that a transaction becomes an exercise of business judgment, rather than an inappropriate payment. Steve Rattner, an influential and successful businessman (I remember his by-line when he was a New York Times reporter) is now assisting President Obama, pro bono, in an effort to resuscitate what remains of the American automobile industry.

Rattner also heads a firm named the Quadrangle Group, money managers who wanted the State Pension Fund to hire them. In order to make this eventuality more likely, they paid over a million dollars to a business controlled by Morris, a former campaign manager who was close to Comptroller Hevesi for many years.

The question arises as to what services, if any, Morris performed to earn the million dollar fee. One would think that a firm with the stature of Quadrangle would have competent personnel with sufficient expertise to do the work required to qualify for the $150 million assignment to manage pension funds, so as to get the highest and safest return.

In this case, Quadrangle was said by Fred Dicker and Brendan Scott of the Post to have “put big bucks into a dud movie” produced by a brother of the pension fund manager, David Loglisci, a Hevesi appointee who has also been indicted. No rational businessman would invest in the movie “Chooch” except for a purpose unrelated to its value as entertainment.

Cash or a check would have been a more plausible and less laughable method of transferring funds in order to secure goodwill. It is a measure of the arrogance of the recipients of the payoff that they chose to receive it in a manner which so brazenly, almost comically, demonstrates the unsavory nature of the transaction.

It’s difficult to draw the line that separates a fee for service from a bribe. In some cases, the facts are evident. If the payee did considerable work, which can be documented, the payment received is most likely a fee. If the payee did nothing except to make a telephone call, the payment may be a bribe, but that is difficult to prove beyond a reasonable doubt. If the payee paid part of the proceeds back to the person he influenced by the telephone call, that is a crime. It is called bribery.

But what if the two were old friends, or buddies who did occasional favors for each other, and no money was passed between them? Is it a crime to ask for a favor? No. Is it a crime to take money (possibly millions of dollars) to use one’s influence to seek a favor? Perhaps it should be, but it is not at all clear that it is.

Is it sound public policy to allow intermediaries like ‘placement agents’ to receive substantial fees to assist companies trying to do business with the New York State Pension Fund? No, it is not. For every applicant they may legitimately assist with advice or information, there can be another who is simply purchasing the agent’s influence with the Comptroller.

How, then, can small businesses who want to participate in the Fund’s programs be assisted to do so? Perhaps by a division of the Comptroller’s office devoted to that purpose. A company that needs legitimate help should be able to receive it from a public agency. The cottage industry of private placement agents, unless strictly regulated, would resemble a Petri dish, where organisms grow which can be an unhealthy influence on an impartial merit-based State Pension Fund.

People and businesses have a right to lobby their government; the big guys do it all the time. But where millions of dollars of retirees’ savings are involved, as they are here, one must be careful to watch the flies circling the honey pot, and keep them from getting too close.

Can Quadrangle, or anyone else, be blamed for retaining Morris, if that turned out to be a prerequisite to dealing with the New York State Pension Fund? The case reminds me of the $1.1 million dollars paid in 1976 by Lockheed Aircraft to Prince Bernhard of the Netherlands (1911-2004), for fighter aircraft to be used by the Dutch Air Force, presumably to defend the small nation from aerial assault. The outcome of the scandal was that the Prince resigned as inspector general of the Dutch Armed Forces, as well as from his high-profile positions in businesses and charities, including the World Wildlife Fund. The prince, who was born as a minor member of the German nobility, was now damaged goods.

The States General voted against criminal prosecution of Bernhard, and he remained a member of the Royal Family. His wife, Queen Juliana, (1909-2004) was the daughter of the renowned Queen Wilhelmina (1880-1962), who reigned for fifty-eight years (Her father, King William III, died when she was ten years old.) During World War II, when the Netherlands was occupied by the Nazis, Wilhelmina broadcast to the Dutch people from her exile in England.

Queen Wilhelmina abdicated in 1948 in favor of her daughter, Juliana, who reigned for thirty-two years until she yielded the throne to her own daughter, Queen Beatrix, who is in the 29th year of her own reign. Queen Beatrix has three sons, so when she passes away or abdicates, the Netherlands will have a King for the first time since 1890.

StarQuest

#553 04.21.2009 1383 wds