By Matthew Monks
An avalanche of recent corporate scandals and questionable practices by several state public authorities underlie a need for government oversight in a free market, Hevesi said at the Citicorp building April 20 during a talk sponsored by the Long Island City Business Development Corp.”Freewheeling competition needs regulation,” Hevesi said. The Enron and WorldCom debacles were two of the most notable cases in a series of corporate scandals that cost New York $3 billion and 160,000 jobs, Hevesi said. The Houston-based energy giant Enron went bankrupt in 2001 after hiding more than $1 billion in debts through offshore subsidiaries to make its profits appear higher, driving up its stock prices. WorldCom, a Virginia telecommunications firm, also went bankrupt in 2002 after overstating its cash flow by booking $3.8 billion in operating expenses as capital expenses. Hevesi, the lead plaintiff in each case, is in the midst of settling multibillion-dollar class action lawsuits with executives from both firms. “We're going after the corrupt corporate leaders on behalf of the 99 percent who are honest,” Hevesi said. “We will pursue these cases.”Reform is also needed in the public sector, he said. A state audit revealed that three officials with the Roslyn school system allegedly stole at least $11 million from the district, Hevesi said. During testimony in March before the state Senate Committee on Corporations, Authorities and Commissions Committee, Hevesi said audits have shown that several of the state's public authorities have mismanaged public monies. The New York Racing Association spent $1 million on inappropriate expenses, including country club memberships and golf trips for executive's wives, he said, while the MTA has misled the public about its finances by hiding $512 million.”It's all over the state,” Hevesi said. The comptroller outlined a public authority reform plan at the Senate hearing that eliminates unnecessary authorities and increases state oversight. Reach reporter Matthew Monks by e-mail at news@timesledger.com or by phone at 718-229-0300, Ext. 156.
