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Monday, February 02, 2009
GRIP Firms Gave to Gov. Group
By Jeff Jones And Colleen Heild
Copyright © 2009 Albuquerque Journal
Journal Staff Writers
As political alliances go, the four-year marriage between Gov. Bill Richardson and the Democratic Governors Association was golden.
Richardson got prestige, coast-to-coast travel and national exposure that would help fuel his presidential bid, while the DGA basked in his growing notoriety and fundraising prowess.
"It's been very beneficial," Richardson acknowledged in late 2006, when his stint with the political group — as federal liaison, vice-chair and unprecedented two years as chairman — wrapped up a month before he launched his unsuccessful quest for the White House.
Now, that political shine could be tarnishing.
Recent news reports say authorities have asked for information involving the DGA as part of the federal "pay-to-play" investigation that derailed Richardson's nomination for U.S. commerce secretary.
That probe centers on a single financial firm involved in Richardson's $1.6 billion GRIP transportation program, CDR Financial Products, and its contributions to the DGA and two Richardson political committees — Si Se Puede and Moving America Forward.
A Journal analysis shows three other firms that made millions on GRIP bond work — J.P. Morgan Securities, UBS Bank and RBC Dain Rauscher — also gave to the DGA, contributing a total of nearly $500,000 around the time the transportation financing plan was being developed and finalized.
Some of the donations were in cash, others were "in kind" services, such as catering. Swiss-headquartered UBS was by far the largest donor with about $421,000.
J.P. Morgan, UBS, RBC Dain Rauscher and one other company shared in at least $5 million in fees for handling GRIP-related bond work. They were also involved in interest-rate swaps related to the project.
Their contributions to the DGA often came in clusters while GRIP, and how to pay for it, was being planned by Richardson officials. The DGA contributions from those firms essentially dried up after early 2005, the analysis found.
The big checks from the financial firms didn't go just to Democrats.
At least two of them also gave big to at least one Republican national political group during that time period.
A Journal review of Republican Governors Association records shows that UBS gave about $75,000 to the RGA in 2003 and more than $220,000 in 2004, while J.P. Morgan contributed $50,000 to the RGA in 2004.
The Bloomberg news service reported in January that a federal grand jury had subpoenaed information from top Richardson advisers and requested DGA correspondence.
DGA spokesman Brian Namey last week refused to say whether the group has been subpoenaed, while the Governor's Office has yet to provide documents in response to a Jan. 21 Journal request seeking subpoena information.
"We are not releasing any documents at this time," Namey said in an e-mail, adding in a subsequent communication that "the DGA fully cooperates with any inquiries from state and federal agencies."
Namey declined to answer Journal questions regarding specifics about the UBS donations to his group. UBS spokesman Doug Morris also declined comment.
Representatives of RBC and J.P. Morgan didn't return Journal requests seeking comment.
Longtime Richardson political adviser Amanda Cooper was credited with helping to raise millions for the DGA in 2005-2006, while Richardson was gearing up for his White House bid.
She also headed Si Se Puede and Moving America Forward.
The now-defunct Richardson presidential campaign in its kickoff January 2007 news release boasted that Cooper "led the effort to raise $28 million for the DGA in Governor Richardson's two-year term as chair."
She apparently did that work for free: Namey said Cooper was never paid for any DGA fundraising.
Cooper did not return a Journal message seeking comment, and Richardson spokesman Gilbert Gallegos declined comment.
The DGA raises and spends millions to help elect Democratic governors nationwide.
Richardson's relationship with the group began even before he took office for his first term in 2003: The DGA was the largest single contributor to his 2002 gubernatorial campaign, giving $427,500, according to the National Institute on Money in State Politics.
In December 2002, Richardson was announced as the DGA's federal-government liaison.
Before the close of 2003, Richardson was tapped as incoming vice chair, and served in that role in 2004 — the year he chaired the Democratic National Convention in Boston.
He became DGA chairman for 2005 and 2006 and for at least some of his time at the helm headed a DGA committee that decided how the group's considerable war chest was doled out.
The DGA often picked up the tab for Richardson's travel while he plugged the organization's messages. In 2005, one Journal story outlined trips to Washington, D.C., the Kentucky Derby, the key presidential-election states of Iowa and New Hampshire, and Detroit.
On the 2002 campaign trail back home in New Mexico, Richardson began talking about refinancing transportation bonds as a means to raise money for road improvements.
By the end of 2003, he had won legislative approval for the $1.6 billion transportation plan — Governor Richardson's Investment Partnership, or GRIP.
CDR President David Rubin contributed $10,000 to the DGA a week after his firm won the first of two GRIP contracts in March 2004.
Rubin and CDR also gave a combined $100,000 to Richardson's Moving America Forward PAC and Si Se Puede, which paid for some in Richardson's group to attend the Boston convention.
The mission of Moving America Forward was to recruit Hispanics and American Indians to the Democratic Party. It raised $2.4 million.
Another Richardson initiative, the Moving America Forward Foundation, raised another $1.7 million. It was organized as a public charity and its donors remain secret.
Millions in fees
J.P. Morgan, UBS and RBC were chosen in 2003 from among nine firms that had been prequalified by the New Mexico Finance Authority to handle bond underwriting for the state.
The finance authority, which issues bonds for state and local projects, was headed at the time by David Harris, who previously served as Richardson's deputy chief of staff.
Harris organized the team of GRIP bond underwriters and advisers after the Legislature approved GRIP at a special session in November 2003, according to NMFA board meeting minutes.
Harris also helped plan the financing for GRIP and shepherded the transportation package through the Legislature.
Harris, who left the NMFA after the GRIP financing details were approved to become a University of New Mexico vice president, has declined comment. His lawyer says his client denies any wrongdoing.
Harris' successor, Bill Sisneros, said the nine firms in the NMFA underwriting pool had gone through a competitive process well in advance of the GRIP project and had been "ranked."
J.P. Morgan, UBS and RBC shared $5 million in underwriting fees with a fourth firm after GRIP bonds were sold in April 2004.
In addition to underwriting, J.P. Morgan, UBS and RBC were among the five investment banks that entered into interest rate swaps with the state for $421 million of the GRIP financing package.
CDR received $1.4 million for advising the state on the swap contracts and for handling related escrow services.
Several of the DGA contributions from the financial firms were designated to go into a special DGA account used to pay for events.
"That account cannot be used to make contributions to any candidates or party committees," Namey said.
While the DGA paid some of Richardson's expenses at the 2004 Boston convention, it isn't revealing how much was spent or on what.
The Journal review of DGA records shows it paid $190,000 in the summer of 2004 for "Catering Facilities" to the upscale Boston Harbor hotel.
Other DGA expenses that summer included $22,500 to a fireworks company, $7,795 to a riverboat company, and $2,500 to Stardust, a Boston-area band that played on a floating barge outside the Boston Harbor hotel at that year's "Governors Ball."
When asked whether the hotel tab, fireworks and band were for events involving Richardson, Namey said that, "Like other organizations, we don't make public strategic competitive information about our fundraising operations."
Democratic Governors Association contribution timeline
February to July: UBS gives $115,000
August: Richardson unveils his GRIP transportation project proposal
September to October: UBS gives $50,000; RBC gives $15,000
Nov. 5: GRIP approved in special session of the New Mexico Legislature
Nov. 21: Richardson signs GRIP legislation, leading to formation of bond underwriting team that includes UBS, RBC and J.P. Morgan
March 19: CDR Financial approved as adviser for GRIP interest-rate swaps
March 25-30: CDR chief David Rubin gives $10,000; UBS gives $50,000; RBC gives $10,000
April 30: GRIP bonds sold through the underwriting team, earning the involved firms $5 million
June to July: UBS gives $156,990 in-kind services
July 26-29: Democratic National Convention, Boston
September: J.P. Morgan gives $50,000
February: UBS gives $50,000