Last week, Governor George Pataki did his best to put his stamp on the state’s burgeoning reform movement.
“New Yorkers want a more open, accountable and responsive government,” he told the audience of dignitaries assembled for his hour-long State of the State speech in Albany on Jan. 5. “This year, let’s give it to them.” Mr. Pataki then laid out seven proposals to advance his agenda, the first two aimed at shedding light on the relationships between lobbyists and state officials.
But before Mr. Pataki casts himself as the man to reform the state he’s governed for a decade, he might want to turn his attention to his own household and to the income he shares with his wife, Elizabeth, known as Libby. While the Governor’s salary is set by statute at $179,000, Mrs. Pataki’s income grew in 2003 to $339,293, most of it in the earnings from her career as a vaguely defined consultant to businesses and charities. Most of her clients are linked to friends and political supporters of Mr. Pataki, and some of those friends also have interests before the state.
Like much about the way New York State is run, Mrs. Pataki’s arrangement is taken for granted in Albany, despite being far from the norm among American first ladies and, as they’re called, first gentlemen. Laura Bush, for example, has never reported performing private consulting work or taking payment for charity work. A survey of the spouses of governors of other large states-all those who release tax returns, including the governors of Pennsylvania, Indiana, Illinois and Texas, and even scandal-tarnished New Jersey and Connecticut-turns up no arrangements like those enjoyed by the Patakis.
This isn’t just a matter of first ladies who, like Mrs. Bush, adopt the traditional role of homemaker. For example, the husband of Michigan Governor Jennifer Granholm, Daniel Mulhern, recently divested himself of his own business consulting company, in part “out of concern for conflicts,” his spokeswoman, Mary Dettloff, said.
And Maria Shriver, the wife of California Governor Arnold Schwarzenegger, refers to herself as the state’s “lead volunteer,” said her spokeswoman, Terri Carbaugh.
“She hasn’t created a firm, and she’s not consulting with people who are running legislation or anything like that,” Ms. Carbaugh said.
A spokeswoman for Governor Pataki, Mollie Fullington, denied that there is any conflict of interest in Mrs. Pataki’s work, calling the implication “absurd.”
“Libby Pataki is a highly qualified and effective strategist and communicator. We’re confident any number of companies would benefit from her expertise on a host of issues,” Ms. Fullington said.
Mrs. Pataki’s patron whose interests cut closest to the business of governing is the Cendant Corporation. The Patakis’ 2003 tax returns, released last year, included a $55,000 payment from a trust established by a subsidiary of Cendant. Lobbying reports show that the company, the same year, paid $118,750 to lobbyists to influence state government on a range of issues. The reports indicate that Mr. Pataki’s executive branch was among the targets of the lobbying.
Cendant is a service conglomerate valued at $23 billion. It owns everything from Avis Rent-a-Car to Century 21 Real Estate to the online travel booker Orbitz. Its car-rental, mortgage and tax-preparation businesses put it under a variety of state regulations, and the company and its car-rental subsidiaries have two of the state’s most powerful lobbyists on retainer. One is Pat Lynch, a former aide to Assembly Speaker Sheldon Silver, who has earned $120,000 from Cendant since 2003. Another is a firm run by Mr. Pataki’s mentor, former Senator Alfonse D’Amato, which was payed $15,000 in 2004.
Mrs. Pataki received the $55,000 payment for her services as trustee to a trust called FFD II, established when Cendant took over Fairfield Resorts at the beginning of 2003. Cendant’s spokesman, Elliot Bloom, said in an e-mail the trust “was established by Fairfield Resorts”-which sells time-share condominiums-“to benefit the owners of timeshare units developed or sold by Fairfield. The Trust was established by Fairfield but was never owned or controlled by Fairfield or Cendant.”
An aide to the Governor said that Mrs. Pataki’s work for the trust involved attending monthly meetings about property the trust owns.
Mr. Bloom made a point of distinguishing the money from a trust established by the Cendant subsidiary from a payment from Cendant itself. “Mrs. Pataki has never been employed by the Cendant Corporation,” he said.
The paid trusteeship, however, was actually the second time Mrs. Pataki has been paid by an entity associated with Cendant. In 2000, she was paid $30,000 to serve as a trustee of a charity affiliated with another company created by Cendant, the Netmarket Group, according to news reports in 2001.
Cendant’s reports to the Temporary State Commission on Lobbying contain a litany of legislation that the company is seeking to influence. The targets of Cendant’s lobbying range from legislation to stiffen disclosure requirements for refund-anticipation loans-Cendant owns the Jackson Hewitt Tax Service-to a bill barring car-rental companies from penalizing clients based on information from global-positioning devices.
Cendant, which settled a lawsuit by the state’s pension fund after a 1998 accounting scandal, has also done more than $800,000 in business with the state over the last five years, according to a partial tally from the New York State Comptroller’s office. Most of that money came in $474,387 worth of state business with Avis.
“It’s on its face problematic,” said Doug Muzzo, a professor of public affairs at Baruch College, of Mrs. Pataki’s relationship with Cendant. “Those people who are being lobbied on behalf of these firms know that Mrs. Pataki works for them, so it appears that the Governor’s wife is being used to influence either access or action on the part of state agencies.”
There is not, in fact, any evidence that Mr. Pataki helped Cendant. However, he appointed its chairman, Henry Silverman, to the board of the Port Authority after Mr. Silverman contributed $48,000 to Mr. Pataki’s campaign treasury and after the first Cendant contract for Mrs. Pataki.
Cendant’s Mr. Bloom said that Mrs. Pataki’s recent trusteeship was “absolutely not” aimed at influencing state government.
Cendant is the only heavily regulated corporation that has been good to the Patakis, but it is not their only source of income. Other earnings in 2003 included $127,500 from a pair of charities and $80,000 from Ronald Lauder. Mr. Lauder is a staunch political supporter whose Estée Lauder cosmetics company also lobbies the state. An aide to Mr. Lauder did not return a call seeking an explanation of the payments. One of the charities paying Mrs. Pataki, the Breast Cancer Research Foundation, is headed by Mr. Lauder’s sister-in-law,Evelyn Lauder.
A spokes woman for the foundation, Anna DeLuca, said Mrs. Pataki had been paid to serve as a spokeswoman for the foundation during its 10th-anniversary year.
The other charity, the California-based Wheelchair Foundation, paid Mrs. Pataki $77,500-more than its executive director’s salary, according to the foundation’s public tax returns.
The Wheelchair Foundation’s officials did not return calls seeking an explanation of Mrs. Pataki’s work. But an aide to the Governor, who spoke on the condition of anonymity, said that Mrs. Pataki has traveled widely on behalf of the foundation. The aide said Mrs. Pataki was currently in the Dominican Republic distributing wheelchairs to people who had never had them before.
The Village Voice and The New York Times have also reported extensively on the Patakis’ main source of wealth, the good will of an old college friend, Richard Hayden, who apparently has no major interests before the state. Mr. Hayden arranged a consulting job for Mrs. Pataki with a family medical-devices business and has involved her as a partner in lucrative land deals.
The Time s reported that their financial relationship started after Mr. Hayden mused that the Patakis weren’t making much money, to which Mrs. Hayden responded, “They need help.”
Mr. Pataki was asked about his wife’s earnings after he released his family’s tax returns last year, and he pointed out that, in the late 1970’s, she had a promising career in corporate public affairs, including jobs at Time Warner and Paine Webber.
“I’m just very proud of her and what she does,” he told reporters at the time. “She could have had a very lucrative and successful career, but took time off to help us raise the kids and help me run for public office. The kids are older now, so Libby is working a lot more than she was back when the kids were younger, and I respect that.”
The head of Common Cause’s New York Chapter, Rachel Leon, however, criticized the Governor’s attitude. “Obviously women are entitled to have careers and to have their own lives,” she said. “But these conflicts have come up again and again and again in [Mr. Pataki's] tenure, and his response is ‘There’s nothing wrong here’ and staying with the status quo.”