New York, Aug 22: The wave of corporate scandals in recent years cost New York state $1bn in lost tax revenues and cost financially ailing New York City $260m, according to a state report. Enron, WorldCom and Tyco International cost the state’s pension fund another $9bn in losses and the city’s retirement system nearly $7bn, according to the study by New York State Comptroller Alan Hevesi.
“The scandals imposed a huge cost on every American,” Mr Hevesi said. “New York was hurt particularly hard.”
The balance sheet fiascoes and related stock losses hurt financial markets, which is a key industry for New York, Mr Hevesi noted. His office applied the results of a ’02 Brookings Institution analysis of the surge in corporate misdeeds to New York.

Corporate corruption cost the entire US economy about $35bn in the first year, according to Brookings, a Washington, DC, think tank. New York is 8.4% of the national economy so the scandals cost the New York economy nearly $3bn, Mr Hevesi’s office estimated.
“This estimate may be conservative because the scandals and the stock market decline hit the investment banking industry harder than other sectors of the economy and investment banking is New York’s most important industry,” his office said.
The pension fund losses were estimated using a Brookings calculation that the scandals accounted for 60% of a 28% decline in stock prices from March ’02 to July ’02. New York City continues to grapple with its worst fiscal crisis in 30 years, which has forced the city to cut spending by $3bn and lay off 4,700 workers.
Pension costs are the fastest growing part of the city budget, projected to climb 29% annually from ’03 to ’07, the city’s Independent Budget Office said recently.
Bureau Report