In Pension-Probe Announcement, Cuomo Makes the Hevesi Argument

Andrew Cuomo told reporters this morning that a private equity firm has agreed to pay $30 million and adopt a new code of conduct as part of the attorney general’s two-year-old probe of the state pension fund.

Cuomo announced the deal with Riverstone Holding LLC, and said that new code of conduct – which bars the use of placement agents to land business with the pension fund – would help clean up the industry.

“The code is important. It is the systematic reform of the problem,” Cuomo said.

This payout is on top of the $20 million agreement Cuomo struck with the Carlyle Group last month.

Cuomo said the problem with people paying money to win business with the state pension fund lies in the fact that the fund is controlled solely by the state comptroller, rather than a board, as it is in New York City and other states. (Often to suboptimal effect, it should be noted.)

The “structure of the New York State Pension Fund makes it more susceptible to fraud,” said Cuomo.

To bolster his case, Cuomo pointed to Alan Hevesi, who served as comptroller in New York City and New York State, and whose associates are alleged to have received kickbacks from people doing business with the pension fund only when they got to Albany.

“Isn’t it interesting that Mr. Hevesi was the comptroller of New York City and New York State. Mr. Hevesi operated in the city system with a board, and in the state system as the sole trustee. We haven’t found any evidence of Mr. Hevesi, or his team, his associates, Mr. Morris, committing the same type of activities on the city side that they did once they once they got to the state side. Why weren’t Mr. Hevesi’s cronies doing the same thing when he was city comptroller? Why only when he became state comptroller? Maybe they were totally schizophrenic and it never occurred to them to do it as city comptroller.”

Cuomo later reminded reporters that Hevesi has not been charged with any wrongdoing. When asked why, after two years, Hevesi has neither charged, nor cleared, in the pension investigation, Cuomo said the probe is “ongoing.”