'Boondoggle of a Case'
Eliot Spitzer owes me--and New York's taxpayers--an apology.
BY KEN LANGONE
Friday, September 30, 2005
opinionjournal.com
A little more than a year ago I was obliged to defend myself publicly against a legal smear. Eliot Spitzer, the full-time New York state attorney general and part-time fund-raiser for his political ambitions, called me "unsavory," "deceptive" and "tainted." When many in the media were uncritically swayed by his posturing, Mr. Spitzer then pledged to "put a stake through" my heart.
This metaphorical threat to my cardiovascular system aside, the occasion for all this brash talk was the attorney general's assertion that I was a lawbreaker. I tricked some of Wall Street's keenest minds, so the accusation goes, into approving a portion of Dick Grasso's compensation when he headed the New York Stock Exchange.
As the case wends toward trial in a New York court, I've been considering two questions: First, what has actually been learned about the facts in the case? And second, how have people reacted to Mr. Spitzer's invective-laden charges?
In recent weeks, those NYSE directors who Mr. Spitzer claims were hoodwinked are speaking in their own words about the attorney general's notion--in depositions that are laying bare the unembellished facts.
Are they thanking the attorney general for coming to their rescue? Hardly.
Their testimony is clear and consistent. Of the six directors deposed thus far who served on both the compensation committee and the full board, each has said they were not deceived in any way. They all confirm that, as head of the NYSE compensation committee, I provided them and the board with complete and accurate information about Mr. Grasso's proposed compensation--and that they approved it.
Pressed for examples, they cited one-on-one meetings with compensation experts, committee meetings, conference calls, comprehensive written documentation, full board meetings, as well as annual presentations I gave both to the committee and the board that included detailed handouts and unfettered opportunity for discussion and debate.
I have pushed for full openness in court as well, though strangely the attorney general tried to prevent disclosure of the centerpiece of his case, the so-called Webb Report. Ultimately, we had to ask the judge to compel the unveiling of those documents.
To understand why Mr. Spitzer wanted the information obscured, take a look at what it showed:
• The directors of the exchange, one and all, had full access to all the details about Mr. Grasso's pay.
• There was a unanimous view that Mr. Grasso was doing a praiseworthy job. Asked to grade his performance, most directors replied "A-plus."
• One section of the Webb interviews is teasingly headlined, "Cronyism and Friendships," in which directors are asked point-blank if they detected any unfair dealings on my part. One after another, without exception, the board members say there was no indication--not even the appearance--of impropriety.
And confronted with these hard facts in full view, Mr. Spitzer's public response was flat, total silence.
Thus far, the attorney general has presented a grand total of one person who, as part of a negotiated settlement, signed an affidavit saying that some of the compensation material was "misleading."
As if holding a smoking gun, Mr. Spitzer's lawyer held up that affidavit, from NYSE employee Frank Ashen, who headed Human Resources. He asked one director, the CEO of a leading media company, whether he felt deceived. "No," was the firm reply. "I find this totally offensive for several reasons. First, there was a lot of work done that was used with due diligence by several parties inside and outside the Stock Exchange that provided the basis for our committee's consideration. Secondly, being somewhat familiar with the politicized nature of the prosecutorial activity, most particularly in this case with an attorney general who is actually running for governor, I don't place much stock in this. And finally . . . I don't know what took place that encouraged Mr. Ashen to sign this piece of paper. So it has no validity from my point of view at all. As a matter of fact, I find it offensive that you are raising it."
Since the attorney general seems to be lying low of late--no more press releases every time he goes to the water cooler--allow me to summarize.
Here's a case alleging deception, in which nearly everyone involved says that the full details were provided repeatedly. The public official who brought the case has indulged garish profiles of himself to publications like Vanity Fair, People and New York magazine, while at the same time resisting scrutiny of key facts in the case. And while his office recently said it is low on funds to pursue Medicaid fraud, he is devoting multiple lawyers to this case--which will benefit the state not one nickel. Medicaid spending by the way costs this state more than a quarter of its budget, in excess of $40 billion.
That's why the citizens of New York have a right to demand some answers of their own. How much taxpayer money, for example, has been spent so far to finance the attorney general's boondoggle of a case? And why? Even if he were to somehow prevail, the damages would be handed not to the state but back to the owners of the Stock Exchange, millionaires one and all--myself included.
New Yorkers know when their tax dollars are being squandered. They also know what a bully looks like and how to treat one. Mr. Spitzer may be a little lightheaded from all the puff-and-fluff coverage the media give him, but voters could soon deliver a reality check at the ballot box.
The reliability of Mr. Spitzer's judgment, especially in light of the facts in this case, should be an issue of prime concern when those votes are cast. But he also has a troubling method of making loud legal threats, strong-arming witnesses, and intimidating boards and companies into destructive concessions. Of course, my confidence rests mainly in an impartial court where a fair judge will let the facts stand on their own. Coercing settlements through fear, as anyone can see, is far different from delivering justice.
He owes me an apology, though I somehow doubt, even when we prevail in court, that he'll have the good grace to offer it. But just as I've tried to build a reputation through my own words and deeds, so too will I pursue the truth to my last breath to preserve it.
Mr. Langone is chairman of Invemed Associates and a former member of the board of the New York Stock Exchange. |
