Scandal Could Derail New York Comptroller

Political Parade

By E.J. Kessler

Published November 03, 2006, issue of November 03, 2006.
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Few New Yorkers expected Alan Hevesi — the state comptroller and one of the most influential Jewish elected officials in the country — to face an uphill battle for re-election this year, when Democrats like him are winning big in the Empire State.

But scandal may take him down.

A former all-city basketball player, 6-foot-3 and strapping, with silver hair and ice-blue eyes, Hevesi looked and acted the big-town pol, glad-handing his way through the grips-and-grins New York political world with aplomb. For months he appeared to be cruising toward an easy re-election.

Last week, however, with Election Day looming, Hevesi, a Queens native and the great-grandson of the prewar chief rabbi of Budapest, was fighting for his job after admitting that for three years he had used a state employee as a driver for his ailing wife and had failed to pay for the service. The controversy threatens to end the career of a politician who made a name for himself as a champion of issues of Jewish interest, including Holocaust restitution and investment in Israel.

Hevesi cited the Holocaust restitution battle in defending the need for a driver for his wife.

“I get threats regularly,” he said during a telephone interview with the Forward on Tuesday. “It began when I led the fight for Holocaust restitution.”

As the New York City comptroller in the 1990s, Hevesi led a nationwide coalition of finance officials that levered government pension funds to press Swiss and German banks to restitute funds to Holocaust survivors for Nazi-seized assets. In 1998, the Swiss banks settled for $1.25 billion. A year later, Hevesi pressured former Nazi financier Deutsche Bank, which was seeking to buy New York-based Bankers Trust Corp., to kick in to a slave-labor reparations fund.

More recently, Hevesi, who as state comptroller since 2003 has served as the sole trustee of New York’s $145 billion pension fund, made sure that the Empire State invested in Israel and divested from companies that violated sanctions against doing business with Iran.

The state announced recently that it would invest $100 million in venture capital in Israeli biotech,Internet, telecom and military-technology companies, bringing the pension fund’s investments in the country to more than $1 billion. “We are long-term investors,” Hevesi told The Jerusalem Post. “We see a very positive future for Israel.”

Many states maintain similar portfolios, but Israel constitutes a cause for Hevesi. For many years, Hevesi served as the president of B’nai Zion, a fraternal organization, and several times ran to be a delegate to the World Zionist Congress. As head of B’nai Zion, he served as a member of the Conference of Presidents of Major American Jewish Organizations — and some years ago even briefly considered serving as the group’s chairman, a post colloquially called “King of the Jews.”

Hevesi depended heavily on Jewish support in all his winning races, and in a failed 2001 mayoral bid. In addition to supervising the state pension fund, Hevesi is the auditor of New York’s state and local governments and its alphabet soup of public authorities.

Although he apologized for his use of a government employee and reimbursed the state almost $83,000, the State Ethics Commission found that it had “reasonable cause to believe” that Hevesi “knowingly and intentionally used his position… to secure unwarranted privileges for himself and his wife,” and accused him of violating the Public Officers Law.

Within a few days, Republicans were calling on Hevesi to resign immediately or be impeached, and State Attorney General Eliot Spitzer — the Democrat who most observers assume will be elected governor of New York next week — unendorsed him. The scandal prompted a vertiginous dive in Hevesi’s poll numbers: His 40-point lead over an unknown GOP challenger, J. Christopher Callaghan, dropped by 28 points in a week. But Democrats, hoping to keep his seat, tread gingerly around the collapsing candidate: Their plan was to have him eke out a win so that Governor Spitzer or the Democrat-controlled assembly could name a successor.

Hevesi launched a series of attack ads against his GOP opponent and, in his interview with the Forward, said that Callaghan “doesn’t believe in investing in Israel — he calls that foreign aid.”

By early this week, Hevesi’s situation appeared to stabilize somewhat. Even so, it was a sad state of affairs for a politician who most observers said had been doing a good job as comptroller.

In addition to his lead role in the restitution fight, Hevesi said that stances he took as city or state comptroller had angered diverse interests, including Protestant paramilitaries in Northern Ireland and mob-linked companies debarred from doing business with the state. He said his wife had seen and heard threats that had arrived at his home via mail or telephone, and that during the administration of New York Mayor Rudolph Giuliani, the city had provided him and his wife with security.

When he moved to the state office, however, authorities determined that the threat to Mrs. Hevesi was “low.” Still, Hevesi retained the same driver for his wife — this time, however, without express permission.

Some attributed that judgment on Hevesi’s part to an arrogance of power they see in the comptroller.

“Part of it’s arrogance and hubris, and part of it’s, if not a pattern of questionable behavior, instances of it,” a professor of public administration at Baruch College, Douglas Muzzio, said of Hevesi’s lapse.

Hevesi pleaded for mercy: “I’m human. I made a terrible mistake. I’ve paid politically. I’ve paid with my reputation.”

He appealed to the voters. “I want them to see [the mistake] in the context of a 35-year career in public service,” he said. “I wrote the nursing home reform law. I wrote the law saying there will be no medical experiments on human beings — based on the Nuremberg [jurisprudence]….”

“I think,” he said, “there’s been a rush to judgment.”

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