Watchdogs tell corruption panel 'systemic reforms' needed

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New York's campaign laws are so flimsy that perfectly legal deeds are often just as scandalous as any illegal activities, government watchdogs told a state corruption panel Tuesday.

It's easy to funnel money to preferred candidates through corporate subsidiaries, use shadow groups to attack opponents and even spend campaign money on cars, golf and trips to Florida -- and it's all lawful, good-government groups said at the second in a series of hearings on corruption after a spate of indictments of state legislators.

"That's the shame of all this," Dick Dadey of Common Cause told the Commission to Investigate Public Corruption, "that so much of what is unbelievable in New York is perfectly legal."

Because of this, watchdogs contended, New York will remain ripe for influence peddling until state election laws are overhauled. They urged lawmakers not to focus just on the scandals.

"Only systemic reforms can restore our democratic process and restore New Yorkers' faith in our government," said Karen Scharff of Citizen Action. "That's why it is so crucial that you focus on systemic reforms, not just on the 'bad apples.' "

The commission was launched by Gov. Andrew M. Cuomo after legislators rejected his plan to change state elections laws -- including giving him to the power to appoint someone to investigate violations.

Co-chaired by Nassau County District Attorney Kathleen Rice, the panel is charged with reviewing state election laws and coming up with recommendations to prevent corruption. Last month, it subpoenaed large New York City real estate developers. And just recently, it asked state legislators for details about their outside employment and clients -- which they declined, citing the "constitutional doctrine of separation of powers."

Good-government groups dominated Tuesday's hearing.

Brian Paul of Common Cause called for closing a loophole that currently allows limited liability companies to skirt laws on corporate giving. He noted that New York -- unlike the federal government -- treats these LLCs as a person, meaning they can contribute up to $150,000 a year instead of the $5,000 corporate limit. And because there's no limit on how many LLCs a parent company can form, there's effectively no limit on contributions.

"The evidence is clear -- the LLC loophole completely undercuts New York State's campaign contribution limits and allows special interests free reign to use their financial power to influence our government," Paul told the commission.

Bill Mahoney of the New York Public Interest Research Group said the lack of limits on donations to political parties' "housekeeping accounts" further undermines contribution laws. Further, he said candidates can use campaign money almost any way they want.

"Everything is legal," Mahoney said. "Cars. Trips to Palm Beach. A night out. Even a golf outing."

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