Pay for Play in in the New York Pension Scandal

The Pension scandal, a separate from the muni-bond scandal but has many similarities. You have elected officials who steer employee money to favored firms for investing. The politicians usually has friends, family, or aides who work as consultants and receive cash and favors from the company in question. Additionally campaign donations often swell the coffers of those very same politicians. Its classic pay to pay and is clearly the case with Democrat Alan Hevesi of the state of New York:

July 18 (Bloomberg) -- EnTrust Capital Inc., a hedge-fund firm whose founders contributed to the campaign of New York Comptroller Alan Hevesi, received millions of dollars of pension money to invest while he was running the state retirement fund, public records show.

Hevesi’s staff suggested the state use EnTrust to invest its money, according to Consulting Services Group LLC, a company hired to vet and choose firms. EnTrust was one of 50 firms recommended by the fund in 2006 and 2007 to CSG and one of 15 firms chosen, said a person familiar with the matter. EnTrust’s vetting was a priority, a person familiar with the process said.

Hevesi, comptroller from 2003 to 2006, and CSG are being investigated by U.S. regulators and New York’s attorney general over corruption at the fund, valued at $140 billion in 2006. To show criminality or liability, it must be established that the parties involved had the intent to trade a kickback or a campaign contribution for state business, lawyers said.

“Pay-to-play is absolutely at the core of all this,” said John Coffee, Columbia University securities law professor. “Underlying is an unwritten norm of reciprocity. If you want money, you have to contribute and, if you do contribute, you can expect that money will be given to you for investment.”

This pensions scandal which reached the highest echelons of the Obama admin and has led to the resignation of Steve Rattner is just getting started, In this case it was Hank Morris who was the ally of Hevesi who is being investigated for taking the kickbacks:

Hank Morris Charged

Morris, Hevesi’s former chief political consultant, was indicted in March by Cuomo and accused of taking kickbacks and pressuring fund managers for campaign contributions. CSG is among the firms that hired Morris. It denies wrongdoing.

“The CSG matter is ongoing, and we therefore cannot comment on it,” Detrick said in an e-mailed statement. “There has been no change with respect to the status of EnTrust.” CSG is in preliminary talks with Cuomo’s office to resolve his probe of the firm, according to a person briefed on the investigation

Of course these are all top Democrats