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Wednesday, July 28, 2010
Investment Mess Part of Gov.'s Legacy
By Thomas J. Cole
Journal Staff Writer
Increased public school spending, environmental protection, tougher DWI laws, the Rail Runner train and Spaceport America.
Bill Richardson says those are part of his legacy as governor since 2003.
Here's another part:
A restructured state Investment Council that is no longer under the control of the governor.
That isn't something Richardson sought, but it's as much a part of his legacy as the growth of the film industry in New Mexico.
Under Richardson, politics stunk up the state Investment Council, which oversees management of more than $13 billion in the state's two large permanent trust funds.
Richardson friends and other political insiders pocketed tens of millions of dollars in fees on SIC investments; a former adviser to the council said he recommended investments under pressure from the politically connected.
Backed into a corner by state legislators, Richardson in March surrendered his control over the SIC.
Under a law signed by Richardson, the council was expanded from nine members to 11, while the number of gubernatorial appointees on the SIC went from six to four.
The law signed by Richardson also tightened the council's control over the state Investment Office, which manages the trust funds.
At its monthly meeting Tuesday at the Capitol, the reshaped SIC worked its way through a long agenda as it continues reviewing operations and procedures and making changes as part of an effort to restore public trust. The council is a serious bunch doing serious, hard work.
"It's an intense period," said Steven Moise, who was appointed state investment officer by the new SIC.
The only SIC member absent from the meeting was Richardson. The governor remains chairman under the reform law, but Richardson has rarely attended council meetings over the years.
The governor has used his absences from meetings to try to distance himself from the stink, saying he left decisions to the council. He's not the-buck-stops-here kind of guy.
We'll likely learn more about the roles of Richardson and others in the Governor's Office as a result of investigations by the U.S. Justice Department and the Securities and Exchange Commission.
More lawyers
Richardson's legacy at the SIC extends well beyond the law that reformed the council.
Millions of taxpayer dollars have been spent on independent reviews of the SIC and lawyer fees, and millions more will be spent.
Lawyers have been hired to prepare documents sought in federal subpoenas and to provide representation for Richardson and others in the federal investigations and related civil lawsuits.
It seems about every major law firm in New Mexico has a piece of the SIC action.
What we don't know yet is how much money taxpayers may have lost on politically driven investment deals that should never have been made. That could easily climb into the hundreds of millions.
The SIC on Tuesday approved the hiring of yet another law firm — Day Pitney, an East Coast outfit — to try to recover fees wrongly paid to political insiders on investment deals and losses on shady investment deals.
Day Pitney is providing similar representation to the New York State Common Retirement Fund. Several of the characters involved in questionable investment deals in New Mexico also operated in New York.
The federal investigations of the New Mexico investment deals are going to stretch into the new year, and many more lawsuits on behalf of taxpayers are possible as the state tries to recover fees and losses.
Richardson leaves office in a little more than five months, but it's clear the fallout from the troubles at the SIC will continue long after he's gone.
It may become known as the scandal that never ends.
UpFront is a daily front-page news and opinion column. Thom Cole can be reached in Santa Fe at 505-992-6280 or at tcole@abqjournal.com.
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