Broidy and Hevesi

The Securities and Exchange Commission is turning up the heat on California-based money manager Elliott Broidy in connection with the "pay-to-play" public pension fund scandal, the Wall Street Journal reports today. The Journal article refers to Mr. Broidy, who denies any wrongdoing and has not been accused of any crime, as a "major Republican fundraiser" who is "the former finance-committee chairman for the Republican National Committee and major donor to GOP candidates." But as this New York Sun editorial from May 11, 2006 reported, Mr. Broidy and his wife donated $83,400 to the campaigns of Alan Hevesi between 2002 and 2006. Hevesi, a Democrat, was New York state comptroller before pleading guilty to a felony and resigning from office. Mr. Broidy's wife also donated $179,000 to the campaign of the then-California state comptroller, Steve Westly, who is also a Democrat. The New York Sun editorial raised questions about the propriety of the New York and California public employee pension funds investing in funds managed by Mr. Broidy after the politicians in charge of the funds received campaign contributions from him and his wife, and it made the point, "If ever there were an argument for shifting public employees to defined-contribution pensions instead of the defined-benefit systems of California and New York, this is it." I made a similar argument in a piece for Forbes.com as the pay-to-play scandal started to attract more attention. The point is not that Democratic politicians are more corrupt than Republicans. Mr. Broidy's motivations are unknown. But in some cases these campaign contributions are not motivated by ideological or political party loyalty but by commercial interest. The Journal article plays up Mr. Broidy's Republican connections but does not mention his ties to the Democrats. It doesn't even mention that Hevesi or Mr. Westly are Democrats. The broader point is that as government officials get involved in allocating funds, it is an invitation to corruption.