Money in Politics in New York, April 12 Edition

The New York Leadership for Accountable Government (NY LEAD), a group of business, civic and philanthropic leaders organized to push for a citizen-funded elections in New York State, has added several prominent new members to its ranks. Delroy Warmington, managing partner of Delwar Capital Management, and Cynthia DiBarolo, CEO of Tigress Financial Partners and chairwoman of the Greater New York Chamber of Commerce, are two of the recent additions with impeccable business credentials. Dennis Mehiel, chairman and CEO of U.S. Corrugated and Battery Park City and former candidate for Lieutenant Governor in 2002, stated that “We must end the wasteful political arms race that forces so many businesses and business owners to siphon more and more money into election campaigns. A system of small-donor matching funds is a good answer. It will encourage business growth, help constituents hold candidates and officeholders accountable, and ensure fair legislation in Albany.” The complete list of new members is available here.

In an Albany Times-Union op-ed, Jonathan Soros, CEO of investment firm JS Capital Management and co-founder of Friends of Democracy, discusses how the State Legislature can respond to the recent corruption scandal which has tarnished its reputation. Since 2000, twenty-six sitting New York State Legislators have been indicted, arrested, or implicated for corruption. Although enforcement of the law and prosecution of corruption can catch criminal offenses, altering systematic incentives in favor of transparency and responsiveness can take us one step further. Governor Cuomo’s proposal for comprehensive campaign finance reform is one such systematic change that can induce greater transparency and accountability from our elected officials. The proposal matches small political contributions from local residents with a limited amount of public funds in an effort to decrease Legislators’ dependence on big contributions and special interests. Consequently regular constitutions are empowered. Along with the disclosure of campaign funds and effective enforcement of the law by state agencies, matching small donations can increase constituent participation, and create disincentives for reliance on special interests, which breeds corruption.

This week, the Riverdale Press embraced campaign finance reform in a Wednesday editorial. Pointing to the recent scandals involving Assemblyman Eric Stevenson (D-Bronx), Malcolm Smith (D-Hollis) and Bronx Republican Party Chair Jay Savino, the editorial stated that this culture of corruption is generated in part by our elections system. “The pay for play culture that periodically crosses over into crime is far from surprising.” The concern is not only about illegal bribery but also about high contribution limits and big donations from a few special interests. The public would certainly be equally as appalled at campaign activities that are perfectly legal under current state laws as they were by corruption of their elected officials.

New York State Comptroller, Thomas DiNapoli, has reached an agreement with five Fortune 500 companies to disclose their political spending. The companies, including Southwest Airlines, Dr Pepper Snapple Group, Plum Creek Timber Company, Harley-Davidson and Noble Energy, have committed to publicly disclose all their direct and indirect monetary and non-monetary political contributions to campaigns and politically active trade associations. As the trustee of the New York State Common Retirement Fund, which holds millions of dollars of shares in numerous corporations, DiNapoli argues that such information is important for investors. “Shareholders have a right to know how companies are using corporate money for political purposes. These companies deserve credit for embracing transparency and reducing potential risk to shareholder value by disclosing direct and indirect contributions made with corporate funds,” DiNapoli said in response to the agreement. DiNapoli has filed 26 shareholder resolutions in 2013 on the issue of political spending disclosure, reaching agreement with eight companies, including Qualcomm, KeyCorp and PepsiCo.

Governor Cuomo has unveiled a series of reforms seeking to reduce corruption in Albany. The proposal, known as the Public Trust Act, would change the state’s definition of bribery to conform to federal standards to allow greater leeway for prosecutors and increase penalties for official misconduct and misuse of taxpayer dollars. Under the proposed law, elected officials as well as other state and local government workers could be charged with misdemeanors if they are aware of bribery schemes but fail to report them. The plan would also bar anyone convicted of public corruption felonies from holding public office, serving as a lobbyist or doing business with the state. Attorney General Eric Schneiderman and State District Attorneys have welcomed the proposal but request greater resources and authority to probe the executive and legislative branches. Good-government groups have similarly praised the plan but insist that the entrenched culture of corruption cannot change unless campaign finance reform is also instituted. Karen Scharff, executive director of Citizen Action, said she hopes the Governor will take the next step and reform the way campaigns are financed. Currently candidates have to rely on large donors and special interests for campaign contributions, which breeds a “show me the money” culture. “From day one, you’re stuck in this pay to play system,” Scharff stated.