NEW YORK -- At his corruption trial last year, Stanley Friedman, the Bronx Democratic boss and former deputy mayor, was asked if he had been paid $10,000 to make two phone calls to city officials on behalf of a developer.
"One phone call," Friedman corrected, with a small, satisfied smile.
The swagger is a trademark of New York politics in the age of the boom. If money is to be made in the soaring stock market and the rush of real estate, it is also there to be made by the politicians, bureaucrats and party regulars who have oiled the machinery for the private sector's profits.
A score of officials -- from some of the most powerful elected officeholders in the city, to several of Mayor Edward I. Koch's closest associates and department heads, to judges, party regulars and a state legislator -- have been indicted, convicted or forced out under a cloud in the last 20 months. More are under investigation.
The trials and investigations have exposed the gangrenous dealings between the city and the Democratic machine. Influence-peddling, patronage, favoritism, conflict of interest and skyrocketing campaign contributions that had remained legal under lax city and state statutes suddenly have been spotlighted.
While municipal corruption scandals have also erupted in Washington, Philadelphia and Chicago in the last several years, nowhere has the scope been so wide as in New York. A series of spectacular Mafia trials and a web of insider-trading scandals on Wall Street have added to the dizzying sense of a city that is closer to Gomorrah than Gotham.
In March, City Hall reporters gave the title "Greedlock" to their annual theatrical roast before an audience of 2,000 city officials and prominent New Yorkers. A white-suited Koch was depicted dancing to such lyrics as, "I'm not indicted! And I'm so delighted!"
Nonetheless, in a Democratic-controlled city that historically has seen waves of reform politics follow waves of corruption, a vigorous reform movement has yet to grow out of the revelations. Corrupt borough presidents and party bosses in Queens and the Bronx have been replaced by former close associates. Koch is talking about running for a fourth term in 1989, while one of his likely opponents, the city controller, fights off a pending city investigation into his dealings with stock swindler Ivan Boesky.
"We've got a lot more educating to do," said U.S. Attorney Rudolph W. Giuliani, who has led many of the corruption probes. "Why does it cost so much to live and do business here? Part of the answer is the amount of political corruption and organized crime we've tolerated."
Investment banker Felix Rohatyn, who served on the State-City Commission on Integrity in Government, formed in the wake of the scandals, noted, "You have political corruption, organized crime and moral corruption on a very large scale. I'm overwhelmed by it, and I'm amazed always that people are not rioting in the streets against it. The level of outrage is not as high as it should be."
Remarkably, despite the efforts of the zealous and politically savvy Giuliani, a Reagan appointee, state and city Republicans have declined to go on the offensive when the Democratic machine, like the Hydra, seems only to grow more heads. Indeed, state Senate Majority Leader Warren Anderson (R) unsuccessfully tried to block ethics legislation this spring and managed to thwart a limit on campaign contributions to city candidates.
"This has got to be one of the worst scandals ever in the country," said State Comptroller Edward Regan, the highest GOP officeholder. "But the Republican Party has laryngitis."
In the wake of a no-show job scandal in the legislature that resulted in the conviction of a Queens Democratic party aide, the resignation of an assemblywoman and investigations of more than a dozen legislators, Gov. Mario M. Cuomo (D) pushed through an ethics reform bill this summer expanding financial disclosure rules and prohibiting legislators to lobby state agencies.
But earlier this spring, Cuomo was forced to dump Washington attorney Joseph A. Califano as head of a new corruption investigation panel because legislators feared that Califano would focus his inquiries on them.
The scandals erupted quickly and unexpectedly in a city that had paid little attention to corruption since the Knapp Commission investigations of the Police Department in the early 1970s. When Koch ran for a third term in 1985, editorial writers went out of their way to emphasize the honesty of his administration. The mayor had basked in eight years of favorable publicity, devoting more and more of his time to self-promotion: high-kicking with the Rockettes, publishing a best-selling autobiography, and, at one media function, donning a gold lame jumpsuit to sing a song with a mechanical pigeon on his head.
After administrative corruption began to surface in December 1985, with the attempted suicide of Koch's close ally, then the Queens Borough president and Democratic boss Donald R. Manes, Koch went on the offensive, playing down the importance of the revelations and accusing the press of "McCarthyism." Manes succeeded in killing himself in a second attempt, days before he was to be indicted.Corruption: Part of the System?
Today, the mayor continues to insist that there never has been patronage in his administration, that his former chief of the Investigations Department is to blame for corruption not being uncovered, and that apart from one agency -- the Parking Violations Bureau -- no systematic corruption has been found, only "individual acts of corruption."
"Is corruption pervasive in city government?" he asks. "No more than you would expect from any organization which employs over 300,000 people."
Nonetheless, when pressed, he acknowledges, "I let my guard down. When I came into office 10 years ago, people said the city was going to go bankrupt in 60 days, and therefore I had to do whatever had to be done so that would not occur. . . . I felt I had to put together all these groups that were needed to win the battle to save the city of New York -- the labor unions, the banks, the government people, public officials, politicians."
Machine politicians? he is asked.
"No question," he said.
During the mayoral runoff against Cuomo in the 1977 election, Koch recounted in his book, "Politics," that he made a secret visit to Brooklyn Democratic boss Meade Esposito to ask for support. Esposito, who recently was indicted for bribery along with Rep. Mario Biaggi (D-N.Y.), later told reporters that a condition of his support was that Koch appoint an Esposito loyalist, Anthony Ameruso, as commissioner of the 7,000-employe Transportation Department although Koch's panel found him "unqualified." The panel's finding notwithstanding, Ameruso got the job.
Last month, Ameruso was convicted of perjury and faces up to seven years in prison. A state jury found that he lied about a $250,000 investment in a company to which he granted a license to operate a Hudson River ferry.
"We're talking about systemic problems -- not just isolated problems -- systemic, unethical conduct by government officials," says Giuliani, who exposed the workings of the city's Parking Violations Bureau and has delved into other agencies. "You have systematic patronage where elected officials turn over blocks of jobs in agencies to political leaders to fill."
More than anyone, Manes, known as the King of Queens, a borough of 2 million inhabitants, and Friedman, the swashbuckling Bronx boss in a borough of 1.1 million people, personified the way the system has worked.
Manes, a Democratic Party chief and elected borough president, was also a member of the city's Board of Estimate, which approves budgets and contracts. Thus, "in Queens, you had one-stop service," Attorney General Robert Abrams said. "If you wanted a city contract, you went to Donald Manes. If you wanted a judgeship, you went to Donald Manes. If you wanted a job in government, if you wanted a cable TV franchise, you went to Donald Manes."
Fernando Ferrer, who became Bronx borough president after Friedman's protege Stanley Simon was indicted for extortion of the defense contractor Wedtech Company this spring, likens the boroughs to "feudal baronies. Nothing went through without talking to Friedman," he said. The reason so much land in the Bronx lies fallow was because Friedman and his allies would veto any development "when they didn't get a piece of the action," he added.
The Parking Violations Bureau, which collects $150 million in parking fines a year, was fertile ground for plunder. During the Friedman trial, Deputy Director Geoffrey Lindenauer, a sex-therapist turned bureaucrat, testified that any company that wanted a contract to collect parking fines had to bribe Manes. When Citisource, a company seeking a computer contract, came to Friedman, Friedman insisted on becoming majority stockholder and agreed to give Manes a cut of the business to get the contract approved.
Friedman was sentenced to 12 years in jail for his part in the Citisource scandal. But many of his activities now considered ethically questionable were legal. A law partner of the late Roy Cohn, Friedman earned $900,000 a year representing clients before city agencies. Koch, in his book, called Friedman "one of the smartest, ablest, most loyal people I know." Now, however, the mayor supports the new state ethics bill provisions that bar political bosses from doing business with the city.
Friedman's power extended far beyond the Bronx. As lobbyist for the city's taxi industry on a $7,000-a-month retainer, he helped prevent the city from issuing more taxi medallions despite a severe shortage of cabs.
In the case of the $10,000 phone call, Manes had been delaying city leases before the Board of Estimate to pressure the city into renting more office space in Queens. But Friedman's client wanted to lease office space to the city in Manhattan. All it took was Friedman's phone call to Manes to get the lease. Contracts: 'An Invitation to Steal'
Noncompetitive city contracts account for $2 billion a year, 40 percent of all city contracts. "Our audits show that Koch has run a system that was an invitation to steal," state comptroller Regan said. "There were no records, no numbers, nobody in city government can tell you how many no-bid contracts were awarded last year, who got them, or how much they were worth. We guess there are a minimum of 2,000, a maximum of 5,000."
After the scandals broke, Koch set up two boards to screen no-bid contracts for favoritism. But Regan said the contracts still are not computerized to enable public scrutiny nor has the system been changed to give the Board of Estimate final approval. The board, made up of Koch, the city controller and the five borough presidents, operates in a "horse-trading" atmosphere "where there are no records, no staff," Regan said. "Contracts are approved in batches of 100 or 200. Contracts fall off the table only to reappear three months later."
Huge campaign contributions to Koch and other members of the Board of Estimate, which also approves all major development in the city, has led to charges of abuse: alleged zone changes and tax abatements in return for political contributions.
For his 1985 campaign, Koch raised $7 million, much of it from real estate companies and Wall Street bond underwriters, although he had weak opposition in City Council President Carol Bellamy, who raised less than $1 million. Twenty-two Koch supporters who contributed a total of $338,650 -- including developers Donald Trump, William Zeckindorf, and Peter and Richard Kalikow -- received tax abatements on building projects worth $444 million. Bellamy charged Koch with impropriety.
While no illegalities have been uncovered, critics claimed that many contributions did not pass what Koch now calls "the nose test." For instance, one of his closest aides, Victor Botnick, solicited a $5,000 contribution from a California consulting firm which, less than a week later, was awarded a $300,000 no bid contract to study Harlem hospital.
Botnick has since resigned, after admitting to lying about his college credentials.
In an interview, Koch called it "obscene" to think he would be influenced by contributions. A bill that would have cut allowable annual campaign contributions to city officials from $50,000 a year to $4,500 was killed in the legislature this year. Aftermath: The Machine Rolls On
During the nearly two-year ordeal that the scandals have become, attention has focused on the melodrama: Manes plunging a knife through his heart as his protege, Lindenauer, agreed to cooperate with prosecutors; Bess Myerson, the former Miss America who became Koch's close friend and cultural affairs commissioner, resigning after being found to have influenced improperly a judge who reduced the alimony payments of Myerson's companion.
But hardly changed is the pervasive sense that to do business in New York, one must know someone or hire the right law firm, consultant or architect. Myerson invoked the Fifth Amendment before a grand jury inquiring into how her companion, Carl Capasso, since jailed for tax evasion, obtained $150 million in city contracts. Last month, Koch posed in a newspaper advertisement for a company that had hired two former Koch commissioners to facilitate approval for a controversial project before the Board of Estimate.
While the names have changed, the Democratic machine rolls on, barely chastened. New financial disclosure rules and a screening panel for city appointees are in operation at City Hall, but efforts to prevent party leaders from holding elective office were killed in the legislature. Manes' deputy, Clare Shulman, took over as Queens borough president. Rep. Thomas J. Manton (D-N.Y.), former law partner of a Parking Violations Bureau contractor who admitted to bribing Manes, is now Democratic chairman in Queens.
In the Bronx, George Friedman -- no relation to Stanley Friedman but a long-time ally -- is Democratic boss, while the borough president, Ferrer, also comes out of the ranks of "regular" rather than "reform" Democrats.
"In New York, the Democratic clubhouse is still the only game in town," said Regan, who is trying unsuccessfully to promote nonpartisan city elections such as those in Boston and Los Angeles. "The reform movement is much more interested in the contras than in Queens."
In the vacuum, tentative political stirrings are evident among community and church-based organizations. Last month, South Bronx Churches, a neighborhood group, drew 1,000 blacks and Hispanics to the steps of the Bronx courthouse to hear candidates for borough president and district attorney elections in November.
"This is a place where in the past big wheels made secret deals and the people were left out!" cried the Rev. Shellie Sampson of the Thessalonia Baptist Church, to thunderous applause. "We need leaders who do more than open their mouths and close their doors."
By the end of the rally, candidates were falling over each other to distance themselves from corruption. Ferrer declared that "the political clubhouse will be left outside the borough president's door." His opponent, state Sen. Israel Ruiz, under investigation himself for questionable dealings in a development agency, charged that just because Ferrer had cleaned a decade worth of graffiti off the outside of the courthouse didn't mean "it has been cleaned on the inside."
Listening sceptically was Augustine Gonzalez, 36, an unemployed graduate of Fordham University who lives in the Harrison Houses, a Bronx public housing project. "These politicians promised us a lot of things to get in office," he said. "Once they get in, they are never there for the people. I'm here because I'm angry."
On his lapel, and on those of his fellow churchgoers, blue and yellow buttons advertised a new slogan, "Taking Charge." Wishful thinking or warning? In New York, it is too soon to tell.