Pension discrepancies, ethics issues and corruption

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Pension discrepancies, ethics issues and corruption are overseen by state ethics laws.

Ethics

Some states specifically outline the relationships that lobbyists, public officials and pension fund officials can have.

Corruption

Illinois

According to a press release by the office of U.S. Attorney Patrick J. Fitzgerald, former Governor Rod Blagojevich "used his office in numerous matters involving state appointments, business, legislation and pension fund investments to seek or obtain such financial benefits as money, campaign contributions, and employment for himself and others, in exchange for official actions, including trying to leverage his authority to appoint a United States Senator," but he was far from the only one.[1]

According to the indictment, beginning in 2002 and going until after he was elected governor, Blagojevich and five associates made a pact to use the Offices of Governor and Chief of Staff to reap financial benefits, which would be divided among them and distributed once leaving office.[1]

This plan was implemented in 2003 when the four men, along with others, worked to direct state business dealing with refinancing billions in State of Illinois Pension Obligation Bonds to a company whose lobbyist agreed to give Rezko hundreds of thousands of dollars, which he would then distribute among the others.

New York

Fraud

In New York, it was revealed that in 14 cases the city continued to pay pensions to deceased public employees, which totaled more than $450,000 in pension fraud.[2]

Pay-to-play

Raymond Harding, the former chairman of the New York Liberal Party, was indicted April 15 on charges of taking over $800,000 in exchange for doing political favors, along with other allegations of corruption.[3] According to the complaint filed by New York Attorney General Andrew Cuomo, Harding, 74, provided "30 years worth" of favors to former State Comptroller Alan G. Hevesi, who resigned in late 2006 after being convicted on an unrelated felony.[4]

The charges against Harding came as a result of a two-year investigation into a pay-to-play scheme in which aides to Hevesi, led by Democratic consultant Hank Morris, arranged access to state pension funds in exchange for some $30 million in campaign contributions, fees and gifts.[4] Cuomo's complaint said Harding became involved with the scheme in June 2003, and sought out help from an unnamed official in the Comptroller's Office to receive kickbacks. "They were using the fund as a piggy bank to pay people who did them political favors, like clearing an Assembly seat for the comptroller's son," Cuomo stated.[4]

From 2004-06, Harding was alleged to have received a portion of the finder's fee from two investment firms related to deals for managing $100 million of New York's $122 billion pension fund.[3] Morris and former pension fund manager David Loglisci were indicted on 123 counts last month for their part in the scheme.

Retire/rehire

A "loophole" in the pension system is that in many of the systems, employees can retire one day, be retired for a one day, and return to work at full pay and a year later start collecting retirement benefits and salary. This "double dipping" was becoming a drain on pension funds in Louisiana and the governor signed a law in July 2010 to close the door and end the overused "retire-rehire" provision in state law.[5]


References