Call to Close LLC Loophole: It is legal Bribery

 

Reinvent Albany joined civic groups, Brooklyn Democrat Senator Dan Squadron and Manhattan Democrat Brian Kavanagh and dozens of other state legislators in calling for the closure of the infamous “LLC Loophole.” This bizarre legal loophole allows essentially unlimited contributions to state political campaigns by allowing people to make contributions via an unlimited number of Limited Liability Corporations, or shell companies. The LLC Loophole is the main way that real estate companies like Glenwood Management, a major player in both the Skelos and Silver scandals, have given millions of dollars to political campaigns despite contribution limits on individuals and corporations.

“The LLC loophole is legal corruption. LLCs are used by very rich people to legally bribe elected officials. It is very simple, Albany will remain mired in corruption until this loophole is closed,” said John Kaehny, Executive Director of Reinvent Albany.

Blair Horner: Will Albany Open Up In 2016?

Originally published by WAMC Northeast Public Radio.

2015 was a bad year for openness at the state Capitol. It ended with Governor Cuomo vetoing two bills which had been supported by the Committee on Open Government. The Committee is a widely-respected state agency created in the 1970s to offer an independent judgment on New York’s Freedom of Information and Open Meetings Laws.

The bills the governor vetoed were designed to make state agencies accountable for violating the state’s Freedom of Information Law. One bill would have required that state agencies not drag their feet on disclosing information to the public; another raised the likelihood of penalties if the agencies wrongfully denied the public access to public information.

Both proposals were advanced by the Committee on Open Government. Both proposals were part of the agency’s annual analysis examining what should be done to improve governmental accountability.

The Committee issues an annual report every year in December offering its views on the state’s “sunshine” laws and making recommendations on how to make government more transparent. Unfortunately, too often the governors and legislative leaders who receive these recommendations, ignore them. As a result, each year government openness advocates outside of government review the Committees’ recommendations and see if there is any appetite for legislative action.

In December 2014, the Committee on Open Government made a number of recommendations, including the two bills vetoed by the governor. In his State of the State 2015 address, the governor said nothing about the Committee’s recommendations. Thus, reformers focused on the two bills to strengthen the Freedom of Information Law.

Both bills passed with overwhelming bipartisan support, yet were vetoed by the governor. Why? Largely technical reasons – the type of reasons that are usually worked out. In addition, the governor had a more specific concern that was not easily remedied. In his veto message the governor wrote, “the bills are limited to one branch of government further advancing a fractured system.”

In short, the governor has chosen to oppose piecemeal changes – no matter how necessary – unless he gets everything he wants. The governor’s argument means that he will never approve improvements to the FOIL unless it is also extended to the Legislature.

This is, of course, exactly the opposite of how the governor operates in all other circumstances.

For example, the governor supports closing the so-called “LLC loophole” and is willing to do so without complete overhaul of the campaign finance law.

While the governor is correct that the Legislature should be covered in a manner similar to the executive, to hold all reforms hostage to the one he wants means nothing will get done.

Of course, the governor’s argument would be more compelling if he had been a champion of FOIL reforms. But he has not. As mentioned earlier, the governor said nothing about FOIL improvements in the beginning of the 2015 session.

In fact, in 2015 the governor did something that stunned the government openness community. The governor issued an executive order requiring that state agencies eliminate all emails after 90 days.

Emails are considered records under the Freedom of Information Law. If they are eliminated, those records which would have been accessible to the public, vanish. How can the public be knowledgeable about its government, if certain records are eliminated? They can’t.

The governor’s rationale for the order kept changing when confronted with the facts: At first, the governor’s office argued that the policy was simply due to technological limitations. When faced with the fact that the federal government – which has far more emails than New York – now has a seven year retention policy, the justification changed.

Then the governor said that the policy was something that it inherited. But that turned out to be a flimsy explanation when an internal Administration document surfaced that stated that the “90-day email retention policy was adopted by the State in June 2013.”

A true champion for government openness would not have made that decision. Coupled with the governor’s vetoes of bills advanced by the Administration’s openness watchdog weakens the claims that the governor will champion reforms in 2016.

The governor promises that things will change. We’ll see.