The Harding Rules

In Scandal's Wake, New Safeguards at Housing Agency

The day after its former president was charged with massive fraud, the board of the city's Housing Development Corporation met to consider policy recommendations to prevent any recurrence of scandal in its ranks. The panel adopted 78 separate procedural changes, including this seemingly obscure requirement: "[Any] search for records at [an] off-site storage facility should be conducted by at least two people."

You could call it an inside joke, except that no one was kidding and the recommendation was made and accepted with utmost seriousness. The proviso stems from one of former HDC president Russell Harding's more astonishing claims in response to a Voice Freedom of Information Law request for his records made two years ago. Harding had aides insist that the documents had been misplaced by a private vendor "in an off-site storage facility." Never mind that most of the records sought were current and there was no reason to have shipped them to storage and that, strangely, the agency didn't seem the least bit concerned about the loss.

Senior corporation officials, on Harding's instructions, advised the Voice that "efforts have been made to retrieve these records, however the records have not been located." Further attempts would be made, officials maintained. Another letter insisted that there was "nothing unusual about the use of off-site facilities as a cost-effective method for document storage and retrieval," and that "a senior HDC staff member was at that moment "searching for the records personally."

The probers: Investigation commissioner Rose Gill Hearn (left) and U.S. Attorney James Comey (right) announcing charges against Russell Harding
photo: Keith Bedford
The probers: Investigation commissioner Rose Gill Hearn (left) and U.S. Attorney James Comey (right) announcing charges against Russell Harding

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More Tom Robbins Stories on Russell Harding:

"The Lush Life of a Rudy Appointee: How a Politically Tied Aide Spent $250,000 on Food, Fun, and Travel"

"More Lush Life of a Rudy Appointee"

"Party Harding"

"Harding's Hustle: Bonuses, Bargains, and Strip Clubs at the Housing Development Corporation"

"Low-Class Act: Russell Harding on Blacks, the Poor, and the Clintons"

"Bonus Baby: A Hefty Something Extra in Russell Harding's Last Paycheck"

"The Private Lives of Russell Harding"

"Where Are the Whistle-Blowers?"

"Harding's Conflict of Interest: After Pledging to Steer Clear of Dad's Law Firm, Son Aided a Client"

"Scandal Repair: As Harding Probe Continues, Cleanup Costs Grow"

"Russell Harding's Vanity Fair: 'Voice' Trail Led to Charges"

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Russell Harding
photo: Keith Bedford

The lone forager who embarked on that bogus quest at the storage facility, however, was either Harding himself or his best pal and next in command, Luke Cusack, according to those familiar with the episode. And, as alleged in last week's six-count federal indictment, Harding—in a failed cover-up—had already ordered many of the requested records shredded and destroyed.

But, as with all of Harding's other misdeeds and the misuse of hundreds of thousands of dollars in official assets that took place under his three-and-a-half-year reign at the agency, who was going to contradict him? Not his staff. Not even board members who ostensibly outranked him. Harding was the one with clout, wired directly to City Hall—via his father, Ray, boss of the Liberal Party, and via his own close friends and traveling companions, Tony Carbonetti and Vinnie La Padula, the top aides to then mayor Rudy Giuliani.

Hence, adoption of the new formal rule that the next time records go missing, not one but two persons—a records access officer and another official—must be deputized for the search.

The inclusion of Harding's mishandling of the Freedom of Information requests in the federal indictment against him is the first time any public official has been so charged, according to Robert Freeman, the state official who is New York's most astute guardian of the public's right to information. "Certainly it sends a message," said Freeman, the executive director of the Committee on Open Government, a division of the New York State Department of State. "We don't lie about the existence of records."

That was the conclusion as well of Harding's successor, a veteran housing planner and straight-shooter named Chuck Brass, who took over from Harding last year and, confronted with renewed requests for records, promptly decided that the law should be obeyed and the documents released. Brass had credit card reports and vendor billings gathered and, in some cases, reconstructed. When he saw the evidence of Harding's plundering of the corporation's resources, he contacted the new Department of Investigation chief, Rose Gill Hearn. In turn, she alerted the equally new Manhattan U.S. Attorney, James Comey. Together, they announced Harding's indictment last week.

The board of directors of the housing corporation also ordered its own investigation, hiring a former prosecutor named Bruce Yannett, of the law firm of Debevoise & Plimpton, to conduct it. Last Tuesday, the board listened for more than 40 minutes as Yannett described his recommendations for policy changes in the wake of Harding's wreckage. It then voted to accept them, unaltered.

Many of the policies are the rudimentary good-business practices that would be assumed to have been in place already, but weren't: Salary and benefits for the president and senior executives must be approved by the board; loans to employees should be barred. The payroll must be approved and signed by two senior officers, not one, as was the practice under Harding, who goosed his own pay tens of thousands of dollars and awarded himself a steady stream of bonuses.

The board, henceforth, should take a "more active role" in reviewing the corporation's operating budget, the panel decided. It well might. Overall operating expenses, which do not include the multi-million-dollar housing bond deals the corporation puts together, doubled from $9 million to $18 million in the first six months after Harding's arrival.

The board also decided that, from now on, any waivers of existing policies must be in writing, and promptly reported to the board's audit committee. Actually, even under Harding, the Housing Development Corporation had clear guidelines and strictures regarding business entertainment and travel. It required finding "the most economical fare available" for air travel, spending only "reasonable and customary" amounts for business meals, and paying standard "conference hotel rate" for conventions. The rules also carried an exemption, however, granting the president the right to waive them if he saw fit. Harding blithely did so, flying first class and staying at the most opulent resorts. He was so secure in his own position that he never bothered to put his own waivers in writing, an abuse the new rule will try to prevent.

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