Running man

Risk & Insurance, Jan, 2005 by Steve Yahn

New York State Attorney General Eliot Spitzer spent much of 2004 running against the insurance and benefits industry. Now he's gunning for governor. Supporters hail him as a populist lawyer, willing to uphold the interests of the middle class, particularly in matters of antitrust. Detractors call him a cold, arrogant litigator. Just what makes Spitzer sprint so hard?

On an overcast day last month when New York State Attorney General Eliot Spitzer quietly announced he was seeking the Democratic Party's endorsement for the state's 2006 gubernatorial race, his long-time mentor and best friend recalls a similar moment six years earlier when the now-famous consumer crusader was a little-known politician who had barely slipped into office after a nasty, protracted recount campaign by his incumbent opponent.

"We only had 17 days before Eliot became attorney general (on Jan. 1, 1999)," says transition-team leader Lloyd Constantine. "But once we got in, it was pure Eliot: He rolled up his sleeves and worked around the clock on everything, from hiring to stapling, whatever it took. He was like a player/coach."

In just six short years Spitzer, 45, now is regarded as a relentless champion of the "little guy;" a larger-than-life crime fighter driven by an almost Calvinist zeal to defend the public from both corporate crooks and individual hucksters. In what often seem like daily pronouncements, Spitzer's office cracked down on everything from "shill bidding" at online auctions, to pharmaceutical behemoth GlaxoSmithKline charged with concealing damaging information about the effect of its Paxil antidepressant drug on children, to his celebrated exposes of wrongdoing among giant Wall Street brokerage firms, mutual fund companies, and now the insurance industry.

But behind the headlines, is Eliot Spitzer the Real McCoy? The aggressive, outspoken attorney general is certainly not without critics. From the time he began his highly publicized investigation of conflicts of interest on Wall Street, Spitzer has been accused of using artfully staged press conferences to further what some see as excessive, ever-present political ambition.

"He's damned if he does, damned if he doesn't," says a veteran New York political strategist. "Since when hasn't it been okay to be ambitious, especially if you're a politician?"

Another rap against Spitzer's largely unblemished reputation with voters is that many of his office's initiatives begin with a highly publicized drum roll of draconian charges, but eventually end with a comparatively light wrist-slapping.

Spitzer, for example, declined to pursue criminal charges after Marsh & McLennan agreed to an investigation into alleged patterns of illegal bid-rigging and steering, agreed to institute a variety of reforms, and agreed to return money to businesses or individuals wronged by these alleged practices.

In what could potentially be most damaging to Spitzer's aspiration for the governor's office, or beyond, are charges that he and key staff members have been involved in sticky fund-raising controversies.

In a well-documented article in Newsweek magazine last summer, for example, senior writer Charles Gasparino told of how hedge-fund manager Stanley Druckenmiller received a telephone call the previous autumn from Spitzer's office.

The caller said, with a chuckle, that the purpose of the call wasn't a regulatory matter, but that Spitzer himself wanted to chat. Later, the magazine reported, Spitzer asked for two separate contributions, about $25,000 each from Druckenmiller and wife Fiona to the "Spitzer 2006" committee for his likely campaign for the New York governor's office.

Campaign-finance records show that Druckenmiller, who usually supports Republican political candidates, and his wife each contributed $25,000. He declined comment, but didn't deny the story, Gasparino reported. Spitzer's office confirmed the call, but noted that Spitzer rarely asks for specific donations.

AG IS NO ELIOT NESS

New York City's popular former mayor Ed Koch disagrees with Spitzer's critics who say that his actions are motivated primarily by showmanship.

"He is not interested in striking a pose as Eliot Ness," Koch tells Risk & Insurance[R]. He sees it as doing his job. He has done for the attorney general's office what Teddy Roosevelt did for the presidency: he is a trustbuster who has not been afraid of any special-interest group, no matter how powerful. He has broken up practices that had taken hold over many years and had come to be accepted practice when, in fact, they were blatantly illegal--they were never okay. He is a true hero of the public interest."

Allan Wolper, a New York-based political commentator and "Ethics Corner" columnist for Editor & Publisher magazine, notes: "Spitzer's actions seem to be holding. He is a son of New York. He knows that for the state of New York to prosper, he must serve the middle class and the working-class poor. They want somebody to trust, somebody who belongs to them. And so far Spitzer has convinced many of them that he is the one. He better not be lying."