Sen. Jon Corzine on 2005 Task Force Report to address ethics and accountability in politics

Margarine and part of a healthy diet. Plus there's only 1.5. Okay, right. Right. Yeah, it's rolling now. What diet? All that I'd stay with. It's dead, and it ain't gonna be with you. Okay, that's it. You know, I just took this... Just picked this van up from multiple. You stay air conditioning? No. Warmest toast. See, I'm surprised that they took it right away. Yeah. Well, they did take it right away. The guy changed the oil. It was like warmest toast. So we still have the same stance in them? I believe so, yeah. Yeah, we definitely have. Yeah, I think there's white, too, because we just ordered some... Unless we left it in Newark. White? Because Friedman wanted white for something. I... Today, I very much want to thank those that are joining with me.

I think a lot of you know that I asked former Attorney General, Bob Teltu, and a group of other, I believe, distinguished citizens that have had a wealth of public experience to advise me on how we can change the culture with regard to ethics in Trenton and bring the highest standards of accountability and transparency and performance also to all levels of government. And over the years, I think people know that there have been more than our fair share of car crashes with regard to the subject matter, cases of abuse of the public trust, and often these abuses have occurred in the independent agencies or authorities. The easy-pass scandal at the Turnpike Authority during the Whitman administration and the tragedy of the School of Construction Corporation under government, McGrevy.

The strong fiscal legal and management controls recommended by this task force, which you will all get a copy of what they have given me, I believe need to be put in place so that we can actually deal with these problems as we go for it once and for all. And I know people will always ask whether you're serious about this, but I once again would refer you just as I led the fight for corporate governance reform for internal audit and accountability of the auditing industry itself in Washington. I plan on bringing real change with regard to internal controls, accountability, transparency to government, whether it is in the state government itself or in the independent authorities, if I'm elected to the Office of Governor. We have to restore the public's trust,

and that's why in my first major speech, some of you may still remember that I talked about a comprehensive ethics reform package for the state ending pay to play at all levels of government, ending wheeling, the revolving door, no bid contracts eliminated, making sure that we have an elected state controller who provides both financial reviews and performance reviews as we go forward. All of these issues I think need to be applied to more than just the state government. The independent authorities were created for good reason, mostly for infrastructure construction at an earlier time and place. They were also designed to allow for financing on a revenue basis, as opposed to general obligation financing, but frankly, along with a lot of things in government, they've expanded, and I think there is a failure for the accountability and transparency in these organizations,

and I think we see it in the school construction fund in the most devastating and I think shameful way. We need to address this, the recommendations of the group of people who work with Bob, I think, are terrific. We'll work both with the state legislature and, if necessary, through executive authority and the ability to veto minutes to move this agenda. I am committed to ending no bid contracts at all levels of government. I do believe in competition. Competition leads to lower prices as long as we've cleared and made sure that people are capable of forming the job that they're asked to do, committed to ending revolving door policies that lead people going from public service and leveraging it into both contracts and careers.

I am truly committed to the elected state controller, a taxpayer watchdog, and a performance enhancer. I think under the rubric of waste fraud and abuse, there is substantial savings for this state and our public deserves every effort to try to maximize what we can find there. I don't have to think it is going to be the silver bullet that collects all problems in the state and finance everything that we have. That's why I've talked about investing and growing in our economy, but I do think there are efficiencies that we can find, consolidations that we can find, fraud and abuse that we can find, and they will help us solve our financial difficulties. The controller will provide consistent performance audits, contract audits, and I think we'll make a big difference and we'll be a challenge

and a check-in balance to the government. I am truly pleased that Attorney General Del Tufo led this brilliant mind. I think all of you know former U.S. attorney. We had a great group of people, most of whom are parked on the a turnpike right now trying to get here. John Degnan, I think many of you know, is the Chief Administrative Officer of Chubb, Saleema Farber, who most of you know is a partner at Lowenstein Sandler, Dick Leone, President of the Century Foundation, former member of the Burned Administration, Chairman of the Port Authority, many, many experiences. Rosemary Faden was the Chief Operating Officer of New York, Berkentillo Exchange, Dick Roper, who is his own policy group, Ed Steyer. I think a lot of you know, and Steyer Anderson, firm specializing in corporate integrity law, Carl Van Horn, who is Director of the Workforce Development Center at Rutgers,

but also a policy advisor, Stan Van Ness. I think everyone knows it's Chief Counsel of the Governor Hughes, Public Advocate for the State of New Jersey, and Barry Zubrow, who drove me crazy as my controller at Goldman Sachs. I, and did an outstanding job keeping us chucked and making sure that we operated our business appropriately. Let me, let me say that I'm honored that this group would spend so much time to come up with such substantive recommendations. Whether I'm elected governor or not, I think that the work that they've provided here is a very real contribution to the public debate on ethics and corruption in this state. I hope that their efforts will be utilized by both the legislature and whoever is elected governor, because I think many of the ideas here will serve the public very well.

At the point, I will ask Attorney General Del Tufo to make remarks about the report itself. Thank you, Bob. Thank you. If you think Barry drove you crazy. I appreciate being asked to do this project, and I'm very happy to have been able to be of assistance. And I want to thank all of the members of this group who are extremely experienced people in government and business and also have a lot of common sense and intelligence. We work very hard to put this together, and I thank everybody for doing it. As Senator Corzine mentioned, and my remarks really are all things that are contained in the report. But as he mentioned, independent authorities have been around for 80 years or so and played a major role in building the infrastructure for this modern technological industrial society.

And the thought was that these independent authorities would be free of electoral politics and could develop this revenue stream to pay for these capital improvements, which otherwise would have had to have been paid and satisfied by tax dollars. I want to say at the outset that we all agree that these, there are many of these independent agencies have performed very responsibly. On the other hand, too often the money dollars, the revenue dollars, have not reached their intended goals and have been diverted by incompetence or worse. I think as Senator Corzine made clear, this problem goes back for years and years, and the problem has no political allegiance. It has festered in both Democratic and Republican administrations. So the objective of the task force,

and we sent out to do our work, was to make recommendations in order to try to see that public monies are used for their intended purposes. Sometimes they just go off into the ether and are not used for what they were intended to be used for them. And secondly, we wanted to improve by suggestions and reforms, the quality and effectiveness of independent authorities. On page 22 of the report, I think as it closes, for example, we say our primary intention is to assist in ensuring that authorities will operate with maximum efficiency, because we will be depending. We need more rational and quicker road travel. We need breakthroughs and affordable housing, browns field development, incentives for business and job development and pollution control. In other words, we still need these independent authorities

to do the job that they were asked to perform, but we want them to be able to do it in a way that ensures it will be done the right way, in the most effective way, because that will advance the benefit to the public. The report addresses ways to do this. It goes into financial controls and to transparency things. And I might add that throughout, Sarbanes Oxley was a resource that we looked to, and Senator Corzai played a major role in the drafting and enactment of that legislation, which was trying to and has dealt with transparency in the private sector and private business. Now these controls and the like are very important and essential. I think we all have to know what the playing field is. But to us, one, if not the most important,

the most major and fundamental tool is simply people. We suggest that a traditional mindset in the appointment of people to positions as members of authority, and indeed for that matter in engaging staff to do the work, is to bet by those without the management and other skills to do the job. So our proposal, which Senator Corzai readily accepted, is to try to seek out the best and brightest people in our society, to organize them in categories by disciplines, and to use this resource, this talent bank, in order to fill, is intended to reach people who, in the past, have been largely outside the ambit of eligibility for these kinds of positions,

because of politics, because of their political affiliation, or because some of these appointments are paybacks for political assistance during campaigns in the light. Senator Corzai said, in March, that absolutely true, that New Jersey is the home to one of the most, I'm quoting, diverse, best educated, highly skilled, and most ambitious, and hopeful to prevail. Also, on pages 20 of the report, we talk about gubernatorial restraint as well. I'm sure all of you have been around and have experienced situations in which people have been forced into pigeonholes in authorities or appointed to boards, again, simply on a political basis, or for some type of advantage, and also, we have seen sometimes in the past gubernatorial overreach

in intruding upon the affairs of his or her enormous powers to put qualified people on these boards, and also to ensure that the controls are there. What is needed to get the best people, to put this circle together, and to make sure that this kind of restraint happens is to- Being one of the primary authors of the Sarbanes Oxley legislation, which went a long way to clean up the corporate fraud abuse and waste in the private sector. By accepting our recommendations here today, he's taking another strong leadership position. There's going to be explicit conflict of interest protections that are going to require annual disclosures and certifications by the board of directors and the senior management of all the independent agencies, assuring that there are no inherent conflicts of interest,

and that the process is fair, open, and transparent at all of the authorities. Thank you. I think Senator, questions? Let's take questions. I know there are other questions on your mind, but if we could stick to this report, and then I'll be with the press on anything else they'd like, because I'd like to speak with folks about the efforts they put forward. Senator Paul, do you expect I seem to revolve a few years ago to be reading about hiring the best of the rights to properly his administration? So that experiment not worked 100% the way it was touted. How can you ensure that what we're talking about today, as well as it is, is going to be carried out, and we're going to see it after the front of the panel. Well, first of all, there can be a much more disciplined approach to background checks, conflict checks, and three-way and four-way examination of potential nominees both at the leadership level and a step or two lower into some of these agencies.

When you take on an appointment in the federal government, there are FBI background checks, IRS checks, other things to screen out, obvious conflicts and concerns that people might have with an individual. If you're in a security area, there are security clearances that have to be confirmed before someone can fill a role. We need to have those kinds of positions, and I think that is what we're asking for here. We're going to build a talent pool that has the ability to go through that process. They'll continue to have the hearing process, but they will have had to meet certain explicit standards as a real check to that. We're going to ask people, once they're in office, to sign off on the quality of the internal controls, the quality of financial information provided, and the authenticity of the reports made to the public,

which, as was outlined, are going to be a lot more significant. That's the heart and soul, actually, of the Sarbanes Oxley reforms, is to make sure that CEOs, CFOs, controllers are accountable for the information that they provide to the public. We need to have that same discipline in the state authorities and they're handling literally billions of dollars. I think, between background checks and holding people accountable to those kinds of challenges and liabilities, if they falsely sign reports, or to go a long way towards making sure that the talent pool is not only asserted to be good, but needs strong terms and conditions. Why do we need so many authorities in the first place?

In my remarks, I think we need a whole review of government and consolidation may very well be in order. I think we have to look at that across government. I have talked about an outcomes-based review of government, and that includes the authorities. Some of these authorities could be eliminated. Very possibly. But the one thing that we're talking about here today is the equivalent of corporate governance. We need that kind of discipline within our agencies that do survive and internal controls. This school construction corporation had no effective corporate governance. The board was dysfunctional at best if actually operating notes CFO just didn't even get kindergarten as far as the checks and balances need to be done. There will be that it needs to be folded into EDA. We'll look at that. But that ought to be determined not because of the failure of corporate governance, which was dramatic and unbelievable to be honest with you.

But we need to find out what's the best way to deliver the services that are being called upon. By the way, one other thing I would say, there may be instances where historically we thought revenue matches for raising money was the right way to approach issues. And there may be times when general obligation funding may be more appropriate for some of the things we're doing. And I want to do a real cost benefit analysis. It's cheaper to finance on general obligations. You have to go to the public. And I'm more inclined to go to the public for authorization in general, as you heard me talk about the school construction. I think when people go through the background checks to be the secretary of labor, when I was screened to lead the national commission on capital budgeting and had an FBI check and a background check to get cleared for that position.

I didn't think it was particularly such an easy naive process on some of the officials. I think we do on all cabinet officials, but it's lower second and third positions often are just as important. And in fact, they're often doing and sitting on a lot of the boards of the independent agencies. So I think we need more thorough, and by the way, that is true in the federal government as well. I don't think this is naive at all. I think you will have real checks. And you need to have conflict checks as well. And that doesn't mean that Democrats can't get through that process or Republicans can't get through that process. You want to get the best people on merit. They're good people that are Republican and Democrat.

Senator, I was going to agree this. I know you report a message to local authorities, but what do you mean you expect these reforms take place into local security commission or great commission? Well, there you have to work with the legislature and some of the local county governments and other places to get the right kind of governance structure. We're going to cut the pattern that we expect to happen. You can use the executive authority for the major agencies or the agencies of the state government. We can use moral suasion and pressure with others to move to the right position. But one element that is independent of having to do that is the independently elected state controller. Go in and look at each of these and make sure that they're actually operating according to best practices. And we think we will put together the best practices package. You mentioned the local finance board here saying they don't have the resources to oversee these bond issues now.

I'm saying in some instances they haven't put in place or haven't made it a priority. And the school construction fund is one of the major places. I'll let them answer. It's different in different authorities, but most of the major state agencies have the ability to lead over the minutes. We will where the governor has the ability to bring about those changes. We'll look at the port of authority and other T.R.P.A. and other places. We'll certainly work to make sure that the standards that we believe will be best practices are followed in those places where New Jersey taxpayers have an interest. Senator, this sounds an awful lot like your own. I want to construct anybody else in the room that way. Waste brought an abuse and there's savings to be had there.

Jim, I talked about this in February. We use the term waste brought an abuse in February when I talked about state government. I asked someone to look at the independent agencies because we had not, frankly, I knew less about it and I asked what I believe is an incredibly thoughtful group of people to look at how we could best reform those practices. I've already talked about in pay to play. I've already talked about revolving door and no bid contract, wheeling, and other issues. So you wouldn't say that you're playing on his field now or trying to take some of his underway that, I don't know, maybe hurting your campaign in some way that holds something? I'm in no way doing anything other than telling people what I'm going to do if I'm elected governor. This is not playing on his field. Anybody that thinks that we don't have a corruption problem, an ethics breakdown in some aspects of the governance in the state, I think is naive. Senator, as you talk about authorities forming or doing these things, right now in the middle of the situation where Governor Cody is looking to make a move with regard to CRBA, their new executive director.

This has been injected into it from both sides, both in the US as well as the county and county organization. What should happen here? If the authority and the governor were functioning together, would you behave as governor? First of all, we'd have a selection process that would establish how we would go about getting potential candidates. I have no idea what the governor has done on this. I haven't asked him and that's not my right nor position to it at this stage. I don't really have an opinion about this particular issue. I've tried to stay out of appointments. I guess anybody would rather have it made by the next governor if you were a candidate for governor. That's completely at the discretion of the sitting governor. I respect that he's trying to do the right thing. Most people would say Dick Cody brings a strong ethic to how he has led this state government.

I think he is probably trying to do what he thinks is in the best interest of the state. I support him. I'm just anticipating what they'll say in your response to that sort of thing. What they have been saying, and I haven't been on the trail as much as some of my buddies here, but that you're tied to that culture. I think you will hear guilt by association charges right up until November 8th. I imagine you will see it on television right up to November 8th. I will stand on the record of reform that I have pushed for in the United States Senate.

I think anyone who checks my record at Goldman Sachs, we were very much involved in serious change agent elements of leadership in that particular institution. My opponent has his own issues that he has to deal with with respect to no-bid contracts, participation in pay-to-play, and a whole host of other things. I think guilt by actions is probably a more serious charge than guilt by association. Do you have any concerns about what's happening in the state? I understand that if the governor's office changes the way things are done, you think that there's a level they follow? They have serious authority to represent views in the debate with public bodies at local level or state level.

And that's not so attractive part of getting political eye. Helping by analytical, mechanical analytical work, helping developing new metals, new ceramics, new polymers, all kinds of things. Yes, I like this type of work. I just enjoy it. It's continuous fun. What can I else I can say? And I'm encouraged and supported, and that's the best thing that can be done. I started pretty early in my career. No, I'm from Latvia, from the Soviet Union. When I came to this country in 1978, well by that time I was a full professor of university for many years. The first part of my creative life was academic and I continued for the first two years. I was at Case Western University and then by changing many things, my language, social system, differences, anything I decided that I can go from academic to industry.

Because actually what I discovered, what I really enjoyed, inventing, solving problems, even more than teaching. I continued teaching and actually I was a junk professor at NJIT for a while.