Is John Liu Really Ready for All the Attention?
After previous befuddling behavior, Liu took to the podium at the recent state Democratic convention to put state Comptroller Tom DiNapoli's name in nomination, an odd speaker selection that merely highlighted the paradox of their opposing positions on a key reform promulgated by fellow Democrat Andrew Cuomo, the gubernatorial nominee.
Liu has already had some shaky moments, like when he picked the city's leading anti-gay pol to be one of his deputy comptrollers and then named the head of the city's top pro-gay organization to be another.
And now comes Liu's bizarre behavior at the convention:
Cuomo's sweeping probe of the state pension funds had forced both DiNapoli and Liu's predecessor, Bill Thompson, to ban the use of placement agents, the backroom intermediaries at the center of the scandal.
Nonetheless, Liu issued a press release in February, shortly after taking office, that announced he favored rescinding Thompson's 2009 ban and would ask the boards of the five city funds "to allow legitimate placement agents who provide value-added services."
The ban, however, was so important to DiNapoli that he cited it in his acceptance speech, which followed Liu's. "The most severe problem I faced," DiNapoli noted, was the "violation of trust" involving the pension funds under his predecessor, listing the ban on "lobbyists and placement agents from participating in fund investments" as one of the changes he made "to stop these abuses."
Indeed, when a Times editorial blasted Liu's announced plan to separate good placement agents from bad ones as "not practical" and "not necessary," it quoted DiNapoli as saying that his ban was "working well in Albany" and "helped new and small firms compete" for asset-management contracts.
That statement turned Liu's rationale on its head, since Liu claimed he was allowing agents because smaller firms, particularly minority-owned firms, needed agents to compete for management contracts.
After nominating DiNapoli, Liu returned to his front-row seat in the Rye Hilton auditorium while DiNapoli delivered his acceptance. I noticed that Liu never looked at DiNapoli during the speech and appeared to be focused on something in his lap (he told me he wasn't BlackBerry-ing). When he walked past the press area, I asked him about his efforts to lift the ban that DiNapoli had praised in his speech.
Liu launched into a bizarre series of denials. He contended that he "never said I was lifting the ban." He insisted he has "no disagreement with DiNapoli on placement agents."
"We actually extended the ban," Liu claimed, adding that he was "not for placement agents for any type" of investment.
I certainly didn't have Liu's February press release in my hand, or any of the news stories, so I just kept insisting that I recalled reading his announcement, and the smiling comptroller kept insisting I had it wrong. The exchange took place right in front of Eleanor Randolph, who is a member of the Times editorial board, which had condemned Liu's placement-agent policy. We were all dumbfounded after Liu left the hall.
Twenty minutes later, I was standing in a corridor outside the convention hall when a Liu aide approached me and said that the comptroller made a misstatement in our interview and that he'd like to talk to me again.
This time, Liu began by repeating the exact language of his own press release, saying that he did in fact favor using agents in "value added" circumstances and contending that "they are not all bad." He repeated his February notion that agents "have a role in helping smaller management firms get into the door" and acknowledged that Cuomo and DiNapoli do favor "a complete ban." He added, however, a new wrinkle.
He said "we are not implementing" the placement agent policy he announced because the Securities & Exchange Commission has indicated that it is weighing new regulations about placement agents. "We'll consider what's allowed and what's not" when the SEC finishes its review, Liu added. An SEC spokesman tells us that its review is "still pending" with "no set timeline," though it's "usually a few months."
The only problem with Liu's current position that he's awaiting an SEC determination is that its review was publicly reported two weeks before Liu declared his new policies. Indeed the review began in December. So why did Liu move in February to lift the ban? And why is Liu, whose problems with the truth about his own biography nearly crippled his 2009 campaign, such a dissembler even when discussing his own publicly released policies?
Research credits: Gavin Aronsen, Michael Cohen, Jenny Tai