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Editorial: Appalling corruption at pension fund demands better oversight by the state

Perhaps it is not surprising, given the vast amounts of money, but the New York State Comptroller’s Office seems to be especially ripe for corruption.

First it was the office’s previous leader, sent packing to prison for enriching himself by abusing his position. Now a former top official at the New York State Common Retirement Fund, which is run by the comptroller, has been indicted in an alleged bribery scheme that prosecutors say lined his pockets and slaked other desires outside the traditional bounds of public service.

U.S. Attorney Preet Bharara Wednesday announced the indictment of Navnoor Kang and of two private brokers who are accused of bribing the former state official with money, expensive trips, fancy watches, hookers and cocaine. In exchange, according to the indictment, Kang directed $2 billion worth of state investments to the brokers, Deborah Kelley and Gregg Schonhorn, who made millions of dollars in commissions.

It was a fraction of what Kang could have sent to those, or other, brokers. He controlled $53 billion of an investment portfolio that totals about $184 billion.

The six-count indictment, which alleges securities fraud, theft of honest services and wire fraud, claims the scheme lasted two years, ending in February. That, in itself, raises questions of structure and oversight that both the Legislature and Comptroller Thomas P. DiNapoli must immediately confront.

The level of greed reported in the indictment is unnerving. Kang, whose salary was $166,464, received another $100,000 in bribes, according to the document, including a $17,420 Panerai wristwatch that Schonhorn bought when Kang had a hankering for a new timepiece. The $8,000 Rolex, previously purchased for him by Schonhorn, was no longer enough.

Given the history and prevalence of corruption in New York State government, the indictment can hardly be described as surprising. Indeed, it’s getting to be unusual if many months go by without new allegations of fraud against the state’s overburdened taxpayers.

Anyone can be greedy, of course, but New York’s centuries-old culture of corruption surely helps to attract job candidates – elected or not – who are more interested in fleecing the people than in serving them. That was the story of former Comptroller Alan G. Hevesi.

In 2011, he pleaded guilty to a pay-to-play scheme also involving misuse of the state pension fund. He served 20 months of a four-year prison sentence. And five years earlier, he pleaded guilty to state charges of assigning a state employee to chauffeur his wife.

It was – and evidently remains – the way of things in New York State government. The sense of entitlement is so deeply entrenched that exploiting public office must seem like normal conduct. It’s viral avarice.

Fortunately for taxpayers, Bharara has taken an interest in rooting out corruption. He has sent many state leaders to prison. Former Assembly Speaker Sheldon Silver and former Senate Majority Leader Dean Skelos face long prison terms after being separately convicted of federal felonies. Both men are appealing their convictions.

Given the temptation that tens of billions of dollars obviously presents, it is essential for the state to reconsider the comptroller’s oversight of the pension fund. While most state retirement funds are managed by a board, the comptroller is the sole trustee of New York’s fund.

DiNapoli says Kang managed to circumvent “our rigorous ethical standards and policies.” Those policies obviously weren’t strong enough, and it’s plain that the structure of the office needs to be reviewed.

It’s also plain that taxpayers can be well pleased that Bharara will remain on the job.

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