BY THE EDITORIAL BOARD / PUBLISHED: JANUARY 21, 2017
President Donald Trump vowed to “drain the swamp” when he got to Washington. Then he failed to guard sufficiently against his own conflicts of interest while nominating an array of prospective Cabinet officials who failed to complete ethics forms and did not account for their own conflicts.
But Tuesday in Harrisburg, new state Treasurer Joe Torsella carried out a badly needed reform, as his first act in office, to help drain the state government’s own ethical swamp. He barred the use of “finders’ fees” for third-party middlemen who connect private investment managers with state contracts.
Three of the last five Pennsylvania treasurers have been indicted by federal grand juries regarding their relationships with private-sector vendors.
Two years ago, former Treasurer Rob McCord pleaded guilty to extortion for attempting to use the power of his office to strong-arm $125,000 in contributions, for his failed 2014 gubernatorial campaign, from a Philadelphia law firm and a western Pennsylvania property management company. He has not yet been sentenced.
Last July, federal grand juries indicted former Treasurer Barbara Hafer, 72. She is charged with misleading the FBI and the IRS about $700,000 in consulting fees paid to her by businessman Richard Ireland after she left office in 2005.
Mr. Ireland, 79, a “finder” who received millions of dollars from asset management firms for getting them contracts with the Treasury Department, also was indicted. Prosecutors claim that Mr. Ireland offered Mr. McCord $500,000 in campaign contributions and to put him on his payroll after Mr. McCord left office. He is charged with wire fraud, money laundering and related offenses.
On Jan. 22, 1987, Treasurer R. Budd Dwyer publicly committed suicide in his office after being convicted in a $300,000 kickback scheme regarding a $4 million software contract.
A 60 percent indictment rate for public officials charged with safeguarding billions of dollars of the people’s money is a pretty good definition of an ethical swamp.
Mr. Torsella is right to invalidate third-party connections that have had a role in that quagmire, all the more so because there is no evidence that finder’s fees improve state funds’ investment performance.
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