The current pension fund scandal is exposing the pay-to-play culture that has stifled responsible state politics in Albany for years.

Reporting on the scandal, the New York Times published this detailed account, tracking both the original allegations leveled against former state comptroller Alan Hevesi and his aides, and Attorney General Andrew Cuomo’s ongoing investigation.

Since the NYT article, the allegations have continued to be tossed about, most notably against Hevesi’s predecessor, H. Carl McCall.

As both articles document, a primary concern for Attorney General Cuomo is the questionable influence of “placement agents” for state’s pension fund. Placement agents are unlicensed – and sometimes politically involved- brokers who act as middle men between the pension fund and potential investors. They receive large sum payments for referring a particular investor to the pension fund, or vice versa.

The problem comes when those people who control the pension fund (i.e., Hevesi’s top advisors) are employed by the same firms acting as placement agents – thus receiving enormous amounts of money (in the case of Hevesi’s staffers, some $30+ million) essentially as a referral fee.

As for McCall, it is alleged that his  firm, Covenant Capital, received $50,000 from private equity firm, Steinberg Asset Management, simply for playing matchmaker between Steinberg and the state pension fund.  McCall denies the tag of placement agent and insists he provided both sides with useful advice about the other.

Sadly, for New Yorkers, this is merely more evidence of a pay-to-play culture in Albany that rewards the interests of wealthy stakeholders and lobbyists over state’s citizens.

This culture is the undeniable link between the pension scandal and the state’s current election system.

A publicly financed system of elections would be a crippling blow to the pay-to-play culture and all who abuse it for personal or political gain.

Continue to check back with this blog for more pension scandal news as it occurs.

By Jeff Juron on May 11th, 2009