A New York politician got caught messing with the state pension fund. Here is how it affects you. No matter where you live and work. And even if you are on Social Security.
Alan Hevesi was the New York Comptroller. He was in charge of the pension fund for state employees. He took big money and gifts from money managers. And from their agents. Bribes. If he asked them to give, it is called extortion.
The managers wanted to manage some of the pension fund’s investments. He took their money and gifts. Then he directed at least $5 billion to them. (That we know of.) They got to manage those billions. They took their normal fees for the management, oh boy.
Now, why do you suppose only one guy was in charge of this pension fund? The fund is worth over $125 billion. Gee whilikers, that seems like a lot of money to let just one guy control.
Politicians set it up that way. So they could use those billions to lure gifts. Like this crook did. They have used the fund in the past to reward cronies. A few years ago they funneled many millions into “economic projects” around the state. They let their cronies select the projects. You don’t suppose the cronies were rewarding supporters. By selecting their projects for the money. Perish the thought.
Here is how the world of pension investing works. Pension funds attract billions of dollars. The piles of money draw politicians like manure draws horseflies. Simple as that. The politicians then use the money to help their careers. Or their bank accounts.
Let’s say your firm manages investments. If it wants to manage state pension funds it pays to play. The politicians find ways to make you pay. When you pay, they select you to manage the investments.
If your firm wants to manage union pension funds, same deal. You may have to pay bribes to union guys. You may have to give jobs to union members. I knew one such guy. He worked as a consultant for a money management firm. He could not even spell those words. He knew as much about the subject as I do about brain surgery. I suspect he funneled some of his salary back to his union bosses. That is the way life works...