Spitzer:
Surrendering to the Temptations of Power
In
the name of fighting crime, government prosecutors have tremendous
power to investigate, charge, and sue those suspected of wrongdoing.
But that power can lead to abuse.
Easy
access to favorable publicity lures ambitious prosecutors into pursuing
politically popular cases, even if those cases arent always
legally sound. And prosecutors can be tempted to use their posts
to further their own political or ideological agendas.
New
York Attorney General Eliot Spitzer increasingly appears to have
succumbed to both temptations.
After
attracting sensational attention for pursuing tobacco companies
and Wall Street, Spitzer is continuing his prosecutorial crusade
against "big business."
Labeling
himself the "peoples lawyer," Spitzer has turned
to new targets in an effort to make an even bigger splash before
formally beginning his campaign for Governor of New York. But as
Spitzer has widened his net, his cases have gotten thinner and his
motives have grown increasingly suspicious.
Last
month, in a classic example of regulation by prosecution and after
declaring drug manufacturers would be his next corporate targets,
Spitzer filed a lawsuit against drug-maker GlaxoSmithKline, charging
that the company withheld negative information about one of its
drugs from doctors and consumers.
His
lawsuit attracted world-wide attention, and once again landed Spitzer
on newspaper front pages, this time attacking politically unpopular
drug manufacturers. Unfortunately, Spitzers case threatens
to undermine the carefully woven fabric of regulation that ensures
the quality and safety of drugs across all 50 states.
By
mandating through his suit what information drug makers must provide
doctors, Spitzer substitutes his regulatory judgment for that of
the Food and Drug Administration the only governmental agency
tasked with drug regulation which has existing rules addressing
precisely the kind of communications that Spitzers suit attacks.
Spitzer
was not elected to regulate the drug industry, and his interference
with the federal government agency specifically mandated to do so
constitutes a gross abuse and substantial expansion of his power.
Meanwhile,
just days after beginning his foray into prescription drug regulation,
Spitzer sued Dick Grasso, former New York Stock Exchange CEO, and
Ken Langone, an investment banker and former NYSE Board Member.
This
time, Spitzer appears to have yielded to an urge to renew his attack
on Wall Street and insert himself into a high visibility contract
dispute. While the suit has generated tremendous media coverage,
Spitzers actual legal case appears thin.
Many
legal experts believe Spitzer will have a hard time proving his
main contention that Grasso and Langone broke a New York
law governing executive compensation at non-profit organizations.
At the same time, the selective pursuit of Grasso and Langone reveals
Spitzers motives to be less than altruistic.
Grasso
was fired by the NYSE after criticism of his compensation package.
Spitzer says Grasso misled the NYSE Board of Directors into approving
the package and wants Grasso to return the money to the Exchange.
Langone,
a widely respected investment banker, was Chairman of the NYSE Boards
Compensation Committee when it developed Grassos compensation
package. Spitzer says that Langone helped mislead the Board into
approving Grassos pay structure, particularly a provision
related to deferred compensation.
Spitzer,
however, neglected to charge Carl McCall, who took over the NYSE
Compensation Committee from Langone and personally urged the Board
to approve making the deferred payments to Grasso. Prior to joining
the NYSE Board, McCall was New York State Comptroller and remains
a leading figure in the state Democratic Party. As such, McCall
stands to be a key figure in Spitzers developing campaign
for Governor of New York.
Both
Grasso and Langone vigorously deny Spitzers charges. Among
the arguments they make to refute his claims, Grasso and Langone
point out that every member of the supposedly "duped"
NYSE Board had a complete copy of Grassos compensation package
and a report detailing its provisions in plain English. They also
point out that most of the Board members were Wall Street luminaries
who had negotiated similar, complex compensation packages for themselves.
Such
is the nature of Spitzers overreaching for personal and political
gain. Still skeptical? Consider this: even if Spitzer wins his suit
on all counts, Grasso and Langone would pay damages to the NYSE,
not the state of New York. Thus, New York taxpayers are funding
Spitzers pursuit of a questionable case which can benefit
only the New York Stock Exchange and Spitzer.
Spitzers
record of taking on big business has helped him establish a public
persona as a courageous crusader. His most recent cases have begun
to reveal his true nature: a self-promoting, political opportunist.
That hardly makes him unique. But his willingness to expand and
abuse his prosecutorial power to achieve political objectives makes
him dangerous.
This
commentary originally appeared in the Albany Times-Union.
[Posted
July 29, 2004]
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