Andrew Cuomo pledged to “clean up Albany.” Running for governor of New York in 2010, the Democrat said that ending the state capital’s culture of insider deals and conflicted interests was his number one priority. Yet, in launching his second term, one of Gov. Cuomo’s first actions was to appoint as his top aide Bill Mulrow, a financial executive who has lobbied for firms that have myriad connections to state business.
Mulrow has multiple relationships with New York’s finances. He comes to the job from the Blackstone Group, the firm that recently won Cuomo administration approval for a controversial $2 billion power line that unions have slammed as outsourcing energy jobs to Canada. While Mulrow was listed as a Blackstone lobbyist working to influence the $289 billion New York state pension system, Blackstone secured hundreds of millions of dollars in new pension investment commitments for the firm -- far more than it had during the four-year period before Cuomo’s first term. And as the New York Racing Association -- where Cuomo carries significant influence, appointing nearly half of its board -- discusses re-privatization of the state’s race tracks, Mulrow is a close business associate of the only gaming mogul who has publicly expressed interest in bidding on the privatized tracks.
Neither Cuomo’s office nor Mulrow responded to International Business Times' requests for comment about Mulrow’s business dealings with New York state.
Cuomo’s adversaries see Mulrow’s appointment as a striking example of the pervasive overlapping relationships between the financial industry and government, and of the crony culture that still prevails in Albany despite Cuomo’s promises of reform.
“Our public officers law in New York demands not just the absence of impropriety but the absence of the appearance of impropriety,” said Michael Kink, of the Strong Economy For All Coalition, comprised of New York labor unions and community groups. “There’s a real question about the actual influence of Blackstone in tax and budget issues, in regulatory issues and in financial issues. To the extent that Mulrow will or will not be required to recuse himself is a real issue for Governor Cuomo and for the public. Just as Elizabeth Warren, Sherrod Brown, and Bernie Sanders have raised concerns about the revolving door in Washington, there’s a lot of us here in New York who are just as concerned about the revolving door in state government.”
Questions about conflicts of interest have become a mainstay of Empire State politics. Assembly Speaker Sheldon Silver, the longest-serving power broker in Albany, is currently the subject of an investigation over his failure to report personal income from a law firm that appeals property tax assessments. A steady stream of prosecutions of state officials led by President Barack Obama’s Attorney General-designate, Loretta Lynch, prompted Cuomo to convene the Moreland Commission, tasked with investigating public corruption. The commission was supposed to evaluate allegations of corruption in Albany, but when investigators began to look at deals involving associates of the governor, Cuomo shut the panel down.
Now Mulrow, a politically connected financier, is taking over one of the most influential positions in state government.
“The Secretary to the Governor is an incredibly powerful role, because he acts as the switchman, governing flows of information, not just to facts but to ways of seeing the world,” said Fordham Law professor Zephyr Teachout, Cuomo’s 2014 Democratic primary opponent, who criticized the governor for his close ties to the financial industry. “It should make New Yorkers pause to see that the governor who has fought for tax giveaways to big banks and billionaires is now appointing a Wall Street insider and lobbyist to have his ear.”
Mulrow has a long career at the intersection of government and finance. Before working at Blackstone, he worked at Gabelli Asset Management, a brokerage firm, and Paladin Capital, a private equity firm. During the period that Mulrow was at Paladin, the firm raised nearly $20 million in capital from the New York state pension system using a placement agent, a maneuver that was legal at the time but is now banned.
When he was state attorney general, Cuomo’s investigation of the connection between political influence and investment decisions by then-Comptroller Alan Hevesi led to Paladin being ordered to reduce the fees it was charging to the pension fund. Mulrow, a major Democratic Party player, was specifically cited by Cuomo’s office as evidence of the firm’s strong political connections to officials making pension investment decisions. Still, while Paladin had engaged in the same activity as many of the other firms caught up in Cuomo’s probe, Paladin did not have to pay a fine as most of the investigated firms did.
Cuomo campaigned on a pledge to eliminate “placement agents” who help financial firms land state pension business. However, the ban did not extend to lobbyists employed by the firms themselves, allowing Mulrow to register to lobby the state pension funds on behalf of his new employer, Blackstone, in 2011. During Cuomo’s first term, the two state pension funds approved more than $1 billion in new Blackstone investments, according to documents obtained by IBTimes and public reports.
Cuomo’s Public Service Commission also approved the $2 billion Blackstone electricity power line project over the objections of labor and environmental groups.
A Blackstone spokesperson told IBTimes that Mulrow did not contact the Public Service Commission about the electricity project and said Mulrow had no interaction with the state pension fund. New York state disclosure documents, however, list Mulrow as a Blackstone lobbyist “attempting to influence the decisions” of New York pension officials “about the investment of pension funds.”
Mulrow has had an equity stake of at least $750,000 in alternative investments in Blackstone, and of at least $250,000 in alternative investments in Citigroup, according to state financial disclosure forms resulting from his position as chair of the New York State Housing Finance Agency. As Cuomo’s top aide, Mulrow will be in a position to help select a new head of the New York State Department of Financial Services, an agency that regulates Blackstone’s private equity and state pension business. The department is also charged with enforcing the state’s ban on placement agents -- a ban that Blackstone, which was running its own large placement agency, has criticized.
Mulrow has had a multi-year business relationship with Richard Fields, a gaming magnate who expressed interest in bidding on state-owned horse-racing facilities when the Cuomo administration floated a plan to privatize the tracks. Mulrow served as a lobbyist for Fields in 2007 and 2008, and served as chairman of another Fields-owned racetrack firm in Massachusetts.
Just before Mulrow’s appointment to a top post in Cuomo’s administration, New York Racing Association officials announced that they are re-launching formal discussions about racetrack privatization. Cuomo wields substantial influence over NYRA, appointing seven of the entity’s 16 directors.
The governor’s office has not said whether Mulrow will recuse himself from deliberations with NYRA if a company controlled by Fields were to apply for the privatized franchise.