E-mail Story
Print Friendly
Send E-mail
Reprint story
Speakup and View Comments
Saturday, May 09, 2009
Investments that Pay Dividends
By Thomas J. Cole
Journal Staff Writer
The state's investment business has been good for Gov. Bill Richardson's political fundraising.
How good? More than $615,000.
Since first running for governor in 2002, Richardson and his political committees have collected that much from:
• Companies hired to manage state investments and;
• Affiliated firms and employees of the companies and related firms and;
• Those paid something akin to finder's fees for helping land state government investment business.
The $615,000 total is based on a Journal study of state and federal campaign-finance data compiled by the National Institute on Money in State Politics and the Center for Responsive Politics, as well as reports filed with the Internal Revenue Service.
New Mexico investments have come under heightened scrutiny since an investment adviser to the state was accused of paying kickbacks for investment work in New York. No criminal charges have been filed here, although some of the players overlap.
So why would investment companies contribute so much to Richardson? Let's follow the money.
The state has a lot of it in the bank, so to speak. As of the end of the year, the investment portfolios of the State Investment Council and the Educational Retirement Board totaled about $18 billion.
The SIC manages the state's two large permanent funds. Money for the funds is generated by oil and gas royalties and other fees from users of state land, taxes on extracted natural resources, state land sales and other fees. And, of course, investment returns.
The ERB oversees the pension fund for public school teachers and other educators. The money comes from contributions by workers and their employers and, again, investment returns.
Simply put, the State Investment Council and Educational Retirement Board are investors of taxpayer and government employee money. They need managers for their investments in public and private companies, hedge funds, real estate, debt and other instruments.
It's the job of the money managers to produce investment earnings for the state, but they also make money themselves in the form of fees for their services or a slice of earnings or both.
It's that profit motive that drives managers to pursue state investment business. And like many of those doing business or seeking business in the government arena, they make campaign contributions.
Maybe they're looking for good will. Maybe they're looking for influence. Maybe they just believe in good government.
Money circle
Which brings us back to Richardson.
As governor, he's chairman of the State Investment Council and controls the council through his appointments, including that of State Investment Officer Gary Bland.
Richardson, again through appointments, controls three of the seven seats on the Educational Retirement Board. Bland also serves on that board as a Richardson appointee.
Now, let's take a look at Richardson's run for the Democratic nomination for president last year and the contributions he received.
Campaign-finance data show he collected more than $243,000 from employees of companies that have managed state investments, workers of affiliated firms and so-called third-party marketers.
That may not sound like a lot but consider this: Companies can't make donations and the maximum a person could contribute was $2,300.
That means the contributions come from employees who either get on the same political wavelength independently, or at someone's suggestion. Let's take a look:
• Employees of Psilos Group Partners accounted for the largest chunk of the money given to Richardson's presidential campaign. They contributed $20,550.
The State Investment Council in 2005 placed $15 million with Psilos to invest in private companies in New Mexico. The ERB placed another $10 million with Psilos in 2007.
Albert Waxman, the senior managing member and CEO of Psilos, is also a Richardson appointee to the New Mexico Health Policy Commission.
• Employees of Thornburg Investment Management of Santa Fe kicked in $17,800 for Richardson's presidential campaign.
The State Investment Council hired Thornburg after Richardson took office as one of its managers of investments in public companies. As of the end of last year, Thornburg had more than $325 million in state money under management.
• Employees of EnTrust Capital of New York donated $11,500 toward the governor's run for president. The SIC made a $25 million hedge-fund investment with EnTrust in 2005.
• Workers with Vanderbilt Capital Advisors of Chicago kicked in $8,400. The SIC and ERB made $90 million in investments with Vanderbilt that are now worthless and the subject of a lawsuit alleging pay-to-play tactics.
The contributions from money managers, affiliates and so-called placement agents didn't start when Richardson ran for president.
They gave more than $296,000 to his two runs for governor, as well as at least $56,000 to Moving America Forward, a Richardson political committee set up to increase Hispanic and American Indian participation in the 2004 elections.
UBS Financial Services, an affiliate of a firm that helped a money manager get a $31.3 million investment from the State Investment Council, also contributed $25,000 to ¡Si Se Puede! Boston 2004.
That was a committee created to help cover the expenses of Richardson and his staff at the Democratic National Convention five years ago. (If the name of that committee rings a bell, it's because contributions to it by another financial services firm are at the heart of a federal pay-to-play investigation.)
Some other contributions to Richardson:
• Leo Hindery Jr., founder and a managing partner of InterMedia Partners of New York, donated $50,381 to Richardson's re-election campaign in 2006.
Just the year before, the State Investment Council placed $30 million with InterMedia for investment in private companies.
• Thomas Valenzuela, then with Valenzuela Capital Partners, contributed $44,500 to Richardson's gubernatorial campaigns.
Shortly after the governor took office in 2003, the State Investment Council hired Valenzuela Capital to manage investments in publicly held companies.
Thomas Valenzuela left the company in 2007 and it has since been renamed Lombardia Capital Partners.
As of the end of last year, Lombardia had $367.3 million in State Investment Council funds under management.
Obama car czar
Another major contributor to Richardson's gubernatorial campaigns was Steve Rattner, founder of the Quadrangle Group, a New York investment firm. Rattner gave a total of $25,000.
The State Investment Council in 2005 placed $20 million in a Quadrangle-managed fund for investments in private companies.
Rattner recently left Quadrangle to oversee President Barack Obama's efforts to restructure the nation's auto industry.
If you ask, Richardson's office, the investment council and the educational board will tell you that campaign contributions have nothing to do with investment decisions.
But there is no denying the governor has relationships with many that have benefited from government investment decisions, that those relationships involve money and that both sides have profited.
UpFront is a daily front-page opinion column. Thom Cole can be reached in Santa Fe at (505) 992-6280 or at tcole@abqjournal.com
Top 10 biggest givers to Gov. Richardson
1) Thornburg Investment Management, $101,937
2) Lombardia (formerly Valenzuela) Capital Partners, $54,800
3) InterMedia Partners, $50,881
4) Wachovia Securities, $43,210
5) UBS Financial Services, $31,150
6) Bank of America, $30,700
7) Psilos Group Partners, $25,550
8) Quadrangle Group, $20,500
9) Lehman Brothers, $20,300
10) EnTrust Capital, $14,000
Note: Includes contributions by state investment managers, affiliated companies and their employees and donations by third-party investment placement agents; includes contributions to Richardson's gubernatorial campaigns, presidential race and other political committees.
Sources: State Investment Council, Educational Retirement Board, Internal Revenue Service, Center for Responsive Politics and National Institute on Money in State Politics.
| We do not publish all comments, and we do not publish comments immediately. |
|
|
