You probably won’t recognise the name or image of Eliot Spitzer – he served as the Governor of New York for just 14 months before he had to resign in the wake of a prostitution scandal. But for those who worked in the banks on Wall Street – his presence was a formidable one.
As Attorney General of New York Spitzer focused on white collar crime – subtle, financially damaging to working people and often overlooked by politicians. He gained the nickname of the ‘Sheriff of Wall Street’ for his crackdown on financial institutions. He prosecuted investment banks such as Goldman Sachs for giving false information to investors, computer chip manufacturers such as Samsung for price-fixing products, and pharmaceutical firms for hiding the damage done by their drugs.
It was also during Spitzer’s period as Attorney General he made the rich, powerful enemies that would eventually conspire to ruin his career. Spitzer argued that the chairman of the New York Stock Exchange’s $150m severance pay was excessive because of a conflict of interest – the people who decided his pay were the CEOs of the companies he was meant to be regulating. Ken Laggoone, billionaire businessman, was one of these people, and was irate by Spitzer’s action. Spitzer had suddenly made a very powerful enemy who was looking to exploit any mistake he made. According to the film ‘Client 9’ made about the case, Laggoone hired a private investigator and a PR firm in order to find out what they could about Spitzer.
A suspicious web of links developed between Spitzer’s enemies – Laggoone, ex-CEO of AIG Hank Greenberg (who Spitzer had tried to prosecute in a case involving accounting fraud) and people Spitzer had fought within the New York Republican Party. A mysterious tip-off was made to the authorities that Spitzer had used a high-class prostitution service, and an investigation was launched. Even though clients are not usually prosecuted in prostitution ring cases and kept anonymous in police reports, lots of identifiable information was included about ‘Client 9’ (the name used for Spitzer in the report), while little was written about the other clients, or even evidence needed to prosecute the prostitution ring itself. After the report was published, Spitzer’s name was leaked linked to being Client 9, and days later he resigned.
When the news reached traders on the New York Stock Exchange, they cheered and opened bottles of champagne. It is sad to think that the man who fought for more women to be employed in upmarket restaurants, for delivery men to gain the minimum wage, who proposed a bill to legalise same-sex marriage in New York and railed against the companies that often act as if they are above the law will be remembered by many purely for the sex scandal. There is much that current politicians can learn from Spitzer – yet the story of how the vested interests he attacked colluded to destroy him acts as a warning – and perhaps an explanation for much of the government inaction on the pressing issues Spitzer fought so hard for.
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