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"He's spending tons of money renovating his office," said the caller, who didn't give her name. "He told all the secretaries he'd fire them if they didn't get along with his secretary."
It was to be the first of several calls from different HDC employees received during Harding's three and a half years at the agency, a post he'd been given by Mayor Rudy Giuliani, a close friend and political protégé of Harding's dad, Liberal Party chief Ray Harding. The reports grew steadily in urgency: Harding was firing people without cause; he was buying luxury cars; he was out of the office for days at a time; he was traveling first class to resorts and claiming the trips as business.
Later, after formal requests for copies of Harding's records were made, the calls became even more furtive: Files had disappeared, a caller whispered. Employees had been accused of contacting the press.
How widely known were Harding's abuses? "Everybody knows" was the answer. "And everyone is terrified."
So terrified, apparently, that even though the goings-on were common knowledge, no one contacted the city's watchdogs at the Department of Investigation. Not the staff. Not the corporation's executives, who had to sign off on most of Harding's extravagances. And not the agency's board, all mayoral and gubernatorial appointees, who later insisted they knew nothing about what's now known to have been more than $250,000 in expenses racked up by Harding and his closest pal at the agency.
The first person to alert authorities to Harding's expense abuses was the agency's new president, Charles Brass, who as a deputy had crafted many of the housing programs for much of Harding's term. After taking office in February, Brass decided to end the agency's stonewalling on the Voice's long-pending request for expense records, saying that it was the agency's duty to comply with the Freedom of Information Law, regardless of the consequences. Brass ordered the records produced. Corporate credit card companies were told to dredge up copies of the original invoices. After reviewing those documents, Brass contacted DOI and told them there was a problem. Investigators, including federal agents, have been on it ever since.
Last week, at a City Council hearing, Eric Gioia, the new representative from Woodside, Queens, cited the Harding scandal and posed a reasonable question: Where are all the whistle-blowers?
Gioia supplied his own answer. "What we do know is that employees lost their jobs for little reason under the Harding leadership. Many may have been fearful of losing their jobs by reporting to an administration stocked with Harding relatives and an administration where adverse public disclosures were met with swift retaliation."
Gioia's concerns were echoed by another new council member, David Yassky of Brooklyn. "No one could read the Village Voice [stories about Harding] without being shocked," said Yassky. "That was a pattern of corruption that was breathtaking, and if true, it tells us that the whistle-blower laws are too weak. How was he able to get away with it? Why didn't more people come forward?"
The Voice put that question to more than a dozen current and former HDC employees in recent months.
"Where would I have gone?" sighed one longtime HDC employee, weeks before Gioia's hearing. "To City Hall? His brother was a deputy mayor. His father was the mayor's close friend." As for DOI, she said, "They would have had to tell City Hall, wouldn't they? Then Russell would find out."
Any city employee in the Giuliani era might well have reached the same conclusion. Giuliani's first DOI commissioner, Howard Wilson, was a close friend and former aide from Rudy's days at the Manhattan U.S. Attorney's office. Unlike any DOI commissioner before him, Wilson met every morning with Giuliani at the mayor's 8 a.m. cabinet meetings.
There was nothing wrong with that, Giuliani told The New York Times' David Firestone and Don Van Natta Jr. in a lengthy August 4, 1996, article about DOI's unusually close ties to City Hall.
"People have to have enough confidence in the mayor of New York City to feel that the commissioner of DOI can report to the mayor," Giuliani said.
But it went beyond mere reporting, the Times showed. It quoted unnamed DOI employees complaining that, in a major change from past procedures, DOI was no longer initiating its own major probes. Instead, City Hall was now directing and approving investigations. Moreover, investigations in which the administration lost interest, such as a much ballyhooed probe of waste and corruption in a construction project at Kings County Hospital announced by Giuliani, disappeared into what DOI employees described as a "black hole."
By themselves, those warning signals would have been enough to give pause to any city employee contemplating contacting the agency about corruption problems involving administration favorites like Harding.
But that wasn't all. The Times story, along with other accounts, detailed how DOI investigators often seemed more concerned with nailing leakers of damaging information than addressing corruption. For instance, when DOI subpoenaed a former employee of the city's Community Development Agency about allegations that the administration had shifted immigration-assistance contracts to its friends, investigators fired a series of questions at her aimed at finding out who had leaked the story.