The Magazine

Andrew Cuomo's Vendetta

From the May 17, 1999 issue: The secretary of HUD goes after his inspector general.

May 17, 1999, Vol. 4, No. 33 • By MATT REES
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SEPTEMBER 9, 1998, will be remembered in Washington as the day Kenneth Starr delivered his impeachment referral to the House of Representatives. But on the same day, another drama was playing out on the other side of Capitol Hill. Susan Gaffney, the inspector general at the Department of Housing and Urban Development, was telling a Senate committee about "a truly extraordinary series of events" involving the HUD secretary, Andrew Cuomo. Extraordinary indeed. Gaffney testified Cuomo and his top aides had been interfering with her work, smearing her as a racist and a cheat, and using dirty tricks against her. "It is very debilitating," the softspoken Gaffney told the senators. "One never knows where the next attack is coming from or what it will be."

Not surprisingly, considering the day the testimony was delivered, Gaffney's charges received little coverage. And in the ensuing eight months, she's stayed silent. But the harassment has not only continued, it's intensified. Congressional Democrats, including Henry Waxman, have joined Cuomo's crusade, and private-sector law firms have been awarded lucrative contracts to investigate Gaffney's conduct. The goal is painfully obvious: to make life so miserable for Gaffney she'll resign.

Cuomo is not, of course, just any cabinet secretary. In addition to being a son of the former governor of New York, he's one of the Democratic party's rising stars. His name was bandied about as a candidate for the Senate seat being vacated by Pat Moynihan, and he's frequently mentioned as being in line for White House chief of staff in a Gore administration (Gore lobbied for him to be appointed HUD secretary).

So why would he wage such a vigorous campaign against a harmless civil servant? Cuomo doesn't like people who stand between him and what he's trying to accomplish (the New York Times has observed that he "thrives on an almost militaristic devotion to strategy and detail"). That's put him on a collision course with Gaffney, whom he blames for undermining his two top priorities: overhauling HUD and getting good press coverage.

The truth is that Gaffney hasn't undermined him. While her office has refused to endorse his proposed overhaul of HUD, the inspector general has no authority to block a secretary's proposals. As for press coverage, the mainstream media still fawn over him--the New York Observer noted recently that "by all accounts, he has been a success at HUD"--and his only bad press has come from his quarrels with Gaffney.

Susan Gaffney is a most unlikely person to be ensnared in such a bitter dispute. For the past 29 years, she's held a variety of low profile, non-political government posts. Such is the quality of her work that she's been the recipient of numerous performance-based awards, and in June 1993 President Clinton nominated her to be HUD's inspector general. The position carries with it a staff of over 500 and involves auditing and investigating every program that falls under HUD's $ 30 billion annual budget.

Recognizing the potential pitfalls in attacking an inspector general with no apparent political biases, Cuomo has tried to put the best spin on his Gaffney offensive, claiming to know nothing about it and maintaining that he has good relations with her. "On a personal level," he told GQ last year, "I have had and do have a fine relationship with Susan." One of his deputies, Saul Ramirez, echoed this sentiment recently, telling a Senate committee that Cuomo "has had nothing but the utmost respect for Ms. Gaffney."

The claim that Cuomo has a "fine relationship" with Gaffney is greatly at odds with the facts. Following Gaffney's Senate testimony in September, Cuomo unleashed his then-director of public affairs, Karen Hinton, who told the Washington Post the testimony was "riddled with inaccuracies and false statements." She added that Gaffney "is under investigation by the FBI and members of Congress, that a dozen of her employees have made racial complaints against her, that the bipartisan U.S. Conference of Mayors has passed formal resolutions on a pattern of racism by the IG and that Deval Patrick, the former associate attorney general for civil rights, is now investigating her on the most serious charges of racism in the department's history."

Gaffney once asked Cuomo whether his aides had to resort to public and, more often, private attacks like these, and Cuomo told her he was powerless to stop them. When Gaffney questioned this, Cuomo told her his aides viewed her as "the embodiment of evil."

Cuomo's use of HUD's public affairs office to undercut Gaffney is consistent with his attempts not to leave any fingerprints on the campaign against her. Most of the dirty work has been delegated to three of his aides: Jon Cowan, Gary Eisenman, and Howard Glaser. Cowan, Cuomo's chief of staff, is best known for co-founding a now-defunct youth advocacy group called Lead . . . or Leave. (After the group folded in 1995, Newsweek revealed it had inflated the membership figures by 90 percent and quoted Cowan saying, "Sometimes you have to be a butthead to get things done.") Eisenman is a deputy assistant secretary in the Office of Housing and was previously an attorney at Cravath, Swain & Moore, an elite New York law firm. Glaser is counselor to Cuomo and worked in the New York state government while Mario Cuomo was governor. Asked to provide information about these three aides' experience in housing issues, the press office did not return repeated calls.

Cuomo refused comment for this article, but one of his press aides, David Egner, told me Cowan and Galser would speak with me off the record. When I told him I needed to be able to attribute their comments to HUD officials, the offer was withdrawn, and Egner sent a statement saying, "I am, frankly, baffled as to why THE WEEKLY STANDARD is devoting attention to this issue." The statement claimed that "many of the professional disputes between HUD and the Office of Inspector general . . . have been settled."

That tensions should exist between Cuomo and Gaffney is understandable, as one of the jobs of an IG is to uncover waste, fraud, and abuse in department operations. And while Gaffney's IG office has highlighted areas where HUD has improved, it hasn't been shy about stating what's wrong with the department, to the never-ending frustration of Cuomo. But what really rankles is that the IG's office doesn't report exclusively to him; thus it can issue reports over which he has an authority. Gaffney has observed in congressional testimony that Cuomo "sees people like me who are . . . not under his direct control as threats, as problems."

Cuomo first lashed out at Gaffney in the fall of 1995. Her office had issued a report on empowerment zones, a program under his purview providing tax incentives for businesses in select low-income urban areas. The report alleged that politics may have influenced which cities were selected for empowerment zones. Cuomo, then an assistant secretary at HUD, was apoplectic when he learned of Gaffney's conclusions. He confronted her and questioned whether her office had the authority to raise such questions (it did). He also told her, repeatedly, that he had serious reservations about the very idea of an independent inspector general.

Cuomo's attitude toward Gaffney was never quite the same after this, but after he was nominated for the top job in the department, he tried to make amends. The day he was sworn in as secretary--by Al Gore--he invited her to a luncheon at Hickory Hill, the McLean, Virginia, estate of his mother-in-law, Ethel Kennedy. Cabinet secretaries, Kennedy family members, and HUD senior staff were among the 100 guests. Amidst the revelry, Gaffney never got a chance to speak with Cuomo, but she did speak with his father. He told her that while governor he had created the first IG office in the New York state government, and he emphasized how much he valued inspectors general. It would soon become clear this was an area where father and son disagreed.

While working in state government in Albany, New York, Andrew Cuomo acquired the nickname "The Big Mamoo," a term of affection given to him by his father to connote both his status as a power-broker and his penchant for using the force of his personality to cajole people into doing what he wanted. Not long after he was installed as secretary, Cuomo began his Big Mamoo routine with Gaffney, communicating with her extensively and seeking her counsel on an array of problems facing HUD. The overtures came as a surprise to Gaffney, who was accustomed to less frequent, and more formal, contact with Cuomo's predecessor, Henry Cisneros.

Before long, Cuomo's communications with Gaffney acquired a new dimension. In addition to the contact at work, he began calling her at home, usually on weekends. During these lengthy calls, he would occasionally ask her advice on policy and personnel matters. But he would also chastise her for issuing reports critical of HUD operations. In one conversation, Cuomo told her all of the department's principal staff hated her and she was responsible for HUD's being "dysfunctional." She later told him none of the assistant secretaries she'd queried had any complaints with her performance as inspector general, but Cuomo replied that they were lying to her.

When the calls, and the criticism, continued, Gaffney got fed up. She eventually told Cuomo she would resign if he thought she was doing such a disservice to the department. He was silent for a few seconds, and then changed the subject. The calls, however, kept coming--about 10 in all--and Gaffney found them such a burden she stopped answering her phone on weekends.

Of all the cabinet-level agencies in the federal government, the Department of Housing and Urban Development has one of the worst reputations. As recently as January a federal watchdog agency labeled HUD "high risk" with respect to integrity and accountability, the only cabinet department so designated. Even Cuomo acknowledged shortly after becoming secretary that the department was "known for inefficiency and ineffectiveness."

Thus "HUD 2020," Cuomo's ambitious proposal to revamp the department. His idea was to streamline operations, enhance customer service, and make use of new technologies, all while cutting the staff by 20 percent. So bullish was Cuomo about 2020 that when he first discussed it with Gaffney, he assured her it would be a "great victory" for the reformist instincts of the inspector general's office. More ominously, he also told her she should proclaim victory, forget about looking at the plan's details, and turn her attention elsewhere.

Gaffney wasn't so easily cowed, and when she and her staff began to examine 2020, they didn't like what they saw. In late September 1997, the IG's office released a preliminary analysis of 2020, which said the proposed reforms could compound existing problems at HUD and create new ones. This was deeply distressing to Cuomo, and he asked Gaffney to allow his staff to brief her and her staff on the plan's specifics.

Up to 40 members of Cuomo's staff would convene in the conference room of one of his top deputies, and the briefers would review every jot and tittle of the reforms. Of all those in attendance, no more than five would ever speak. What's more, the briefings, sometimes four hours long, never addressed Gaffney's overriding concern, which was that the proposed personnel reductions would damage the effectiveness of a department already burdened with bureaucratic inefficiencies.

In February 1998, after the briefings, Cuomo met with Gaffney to talk about 2020. During an intense 90-minute meeting, she reiterated her reservations about the reforms. Cuomo, who was hoping for an endorsement, told her she still misunderstood what he was trying to accomplish. When she didn't budge, he told her if these conclusions became public they would be very damaging to other HUD reforms already being implemented. Gaffney still didn't back down, and the meeting ended with an agreement to disagree.

Intent on winning endorsement of his reforms, Cuomo commissioned two consultants to review 2020. He then tried to use this as leverage with Gaffney, telling her she would be humiliated if she maintained her skeptical posture while the consultants--Booz-Allen and reinventing government guru David Osborne--reached favorable conclusions. Gaffney stood her ground. The consultants did conclude 2020 was sound, but their judgment could hardly be seen as independent, given Cuomo's involvement in the awarding of the contracts.

The struggle over 2020 was not, however, the first instance of the secretary and his aides' putting the squeeze on Gaffney. In the spring of 1997, Cuomo obtained an anonymous letter charging Gaffney with intimidation of minorities, racial discrimination, and ethical wrongdoing. Among the claims in the letter was that Gaffney "spends millions of dollars of taxpayer money rounding up young African American boys in housing projects so she can get look though [sic] on television while serious white collar abuses by her own staff and rich building owners go uninvestigated."

The letter's hysterical tone should have been a clue it was a fraud. Cuomo, however, got personally involved. One day he called to speak with Gaffney on an unrelated matter, but she wasn't available so he spoke with her deputy, John Connors. Cuomo mentioned the letter to Connors--neither Connors nor Gaffney knew of its existence--and remarked, "These are terrible allegations. It's terrible people would say things like this."

He turned out to be shedding crocodile tears. As Gaffney would later testify, Cuomo's top aides, Glaser and Eisenman, placed a number of calls to the Office of Management and Budget and lobbied staffers there to give HUD's general counsel the authority to launch an exhaustive investigation of the anonymous charges. OMB refused, and while a presidential council on integrity did look into the matter, it concluded the complaint didn't warrant investigation.

Shortly thereafter, in June 1997, Gaffney met with one of HUD's deputy secretaries, Dwight Robinson, and top aides to Cuomo. The purpose of the meeting was to discuss the creation of a public affairs office within the inspector general's office. The Cuomo team spelled out its objections to this idea, citing accusations the IG's office had shared confidential information with reporters. (This was the first Gaffney learned of the accusation.) Using the charge as leverage, the Cuomo team then asked Gaffney to sign a memorandum stating she would route all future contact with the media through the HUD public affairs office. Gaffney refused, fearing it would undermine her office's freedom to disclose public reports on HUD operations and, more generally, that it would infringe on the independence of the inspector general.

Gaffney's refusal gave Cuomo's aides the opening they needed, and they promptly persuaded a career attorney in the general counsel's office, George Weidenfeller, to approve a referral to a presidential council on integrity, charging Gaffney with insubordination and illegal dissemination of privileged information. As the saga played out, Gaffney repeatedly asked what information her office had illegally disseminated, but Cuomo told her the specifics were so negative she was better off not knowing them.

There was speculation around HUD that the charges were bogus, and the final confirmation came when a Washington Post reporter called Cuomo's office in September 1997 to inquire about the treatment of Gaffney. Within a few days of the call, and facing the prospect of an unflattering article, Cuomo's aides withdrew not only the complaint but also the request that the IG's office route all contact with the media through HUD's public affairs office.

A favored tactic of Cuomo and his aides has been to portray Gaffney as a racist. Last year, black elected officials criticized her for proposing to investigate fraud in the municipal housing departments of three cities: San Francisco, Baltimore, and New Orleans. The problem? All three had black mayors, although they had been selected on the basis of criteria ranging from FBI input to funding received from HUD. Before launching the investigation, Gaffney had asked Cuomo whether this would present a perception problem. He'd told her Baltimore and New Orleans would be okay, though San Francisco might cause trouble given the city's hypersensitivity about race. He had nonetheless told her to proceed.

No announcement of the investigation was ever made, but the Baltimore Sun reported its existence, and shortly thereafter there were cries of racism from several black mayors. Cuomo's first response was silence. When the criticism continued, he let it be known he'd had no role in the selection process and that he thought black mayors were being unfairly singled out. "Many people in this nation," he thundered to a Sun reporter, "are outraged at the possibility that taxpayer funds would be used for racially motivated or politically motivated hits."

Cuomo and his aides also spoke with mayors and Democratic congressmen in hopes of stirring them up against Gaffney. The controversy forced her to put the investigation on hold, and it was eventually reoriented to look at suburban and rural areas. When Gaffney made this announcement, Cuomo's spokes woman, Hinton, couldn't pass up the opportunity to kick her in the teeth. The reversal, Hinton told the Washington Post, showed "the lack of legitimacy and fairness in the original targeting of the cities. . . . With this unfortunate situation resolved, we now want to get on with the good work of this department." (A presidential council on integrity cleared Gaffney of any wrongdoing earlier this year.)

Cuomo and his aides have also tried to manipulate a racial-discrimination complaint filed against Gaffney. In February 1998, Philip Newsome, a senior black official working in the office of the inspector general, charged that Gaffney had passed him over for a promotion because of his race. As is standard practice, the matter was referred to HUD's equal employment opportunity office for investigation. But shortly after the probe began, one of Cuomo's aides abruptly terminated it and transferred responsibility to two private law firms.

The hiring of the law firms was significant in a number of ways. According to Gaffney, each was given a contract worth approximately $ 50,000, which is considerably more than the standard government rate for such matters. Moreover, the lead attorney selected to investigate the complaint was Deval Patrick, the former assistant attorney general for civil rights in the Clinton administration. Given Patrick's views, and the fact that he'd been handpicked by Cuomo's aides, it was no surprise he concluded Gaffney was guilty.

Cuomo's aides tried to short circuit the usual decision-making process and have the Equal Employment Opportunity Commission issue a decision on the basis of Patrick's report. But the EEOC rejected this. In the ensuing months, HUD decided not to rule on the matter, and Newsome took his complaint to federal court.

As for the contracts Cuomo gave to the law firms, when questions were raised about their propriety, Cuomo had HUD retain Washington attorney Donald Bucklin of Squire, Sanders & Dempsey to investigate. Bucklin concluded the contracting out had been appropriate--and he heaped criticism on Gaffney. Nevertheless, the contracts so reeked that the General Accounting Office, a federal watchdog agency, had been investigating the matter for six months.

Cuomo's relentlessness eventually convinced Gaffney she could no longer stay silent. Early last September, she met with the secretary to spell out her objections to the way the discrimination complaint was being handled. She also reminded him of her earlier promise that if he resurrected his campaign against her, she would fight back. Now, she said, she was prepared to do that.

Cuomo said he didn't see anything wrong with the way the investigation was proceeding. The next day, however, HUD's general counsel called the IG's counsel with an offer. If Gaffney would resign and agree to have the plaintiff, Newsome, installed in a senior position within the IG's office--perhaps Gaffney's post--the discrimination complaint would be dismissed. Gaffney refused the offer and six days later delivered her testimony to the Senate.

Since she testified about Cuomo's campaign against her, the pressure on Gaffney has mounted. Representative Henry Waxman sent her a letter in March quoting the Bucklin report's criticisms of her activities and said they "raise serious questions about your conduct." He also questioned her fitness to carry out a congressionally requested investigation of HUD's public affairs office, saying such an inquiry should be conducted by "an impartial investigator."

Democratic congressman Harold Ford has also written to Gaffney with a number of pointed questions about the racial discrimination complaint. And at a hearing in March, Democratic senators John Kerry and Jack Reed asked her questions reflecting Cuomo's viewpoint. Most revealing is the mobilization of Waxman, an important Clinton administration ally, who wouldn't have gotten involved unless Cuomo had been personally upset by Gaffney's refusal to resign.

Gaffney now says resigning is no longer an option. She also insists she would prefer not to have to air HUD's dirty linen and would have been content to go about her job in relative anonymity, leaving the politics to the political appointees. But she is convinced that publicizing Cuomo's mischief is the right thing to do. "I'm not that important," she says, but "if I left, Andrew would put his own people in the inspector general's office. And if that happened, it would destroy an office that means a whole lot."

Matthew Rees is a staff writer at The Weekly Standard.