Gov. urges shift in investment council makeup - Albuquerque Journal

Gov. urges shift in investment council makeup

Gov. Susana Martinez. (Albuquerque Journal file)

Copyright © 2017 Albuquerque Journal

SANTA FE – Gov. Susana Martinez said Tuesday that she wants the Legislature to send her a bill removing all elected officials – including the governor – from the State Investment Council, as simmering disagreements between SIC members regarding an ethics code boiled over during a testy hourslong meeting that included back-and-forth allegations of wrongdoing.

Martinez, a two-term Republican governor who chairs the investment council, vetoed a 2011 bill that would have removed her – but not two other elected officials – from the 11-member SIC, which currently oversees roughly $22 billion in state funds.

She said at the time she was concerned about removing the governor, but not the state treasurer and land commissioner, from the SIC. The Legislature has not revisited the issue in subsequent years.

Martinez, whose term as governor expires at the end of 2018, said it makes sense to revamp the investment council by removing all three elected officials, a move that could reduce political tensions. She also suggested requiring minimum qualifications for appointed members.

“It's clear to me that not everyone knows the responsibilities” of serving on the SIC, the governor said, in an apparent reference to four SIC members who have refused to sign paperwork acknowledging they've read the council's ethics code.

But one of those four members, state Land Commissioner Aubrey Dunn, who is also a Republican, indicated a court order might be sought to ensure they are not barred from attending closed-door investment meetings. He also accused other SIC members of possible violations of the state's Open Meetings Act.

“We have objected to the SIC's efforts to conduct important SIC business in secret because such secrecy deprives the public of full information regarding instances where others may have violated their ethical obligations,” Dunn wrote in a letter that was also signed by Democratic state Treasurer Tim Eichenberg and two former legislators who serve on the SIC.

That drew a rebuke from Martinez and several other SIC members, who pushed Dunn to defend the assertion. He stood by the claim but declined to go into detail on it.

Among other things, the SIC's code of conduct prohibits members from disclosing confidential information they have access to through closed-door meetings and privileged legal matters, unless they are required by law to divulge the information.

Meanwhile, the governor and State Investment Officer Steve Moise also criticized a recent online report by the International Business Times that suggested hefty campaign contributions to the governor and political committees connected to her had influenced state investment decisions.

Deputy State Investment Officer Vince Smith described the claim as “ridiculous” during Tuesday's meeting, and several investment managers present for Tuesday's meeting testified they had not encountered political influence in their work for the state.

“It is so destructive to use that word loosely, because there is nothing improper that has happened,” Martinez added, referring specifically to the “pay-to-play” allegations.

The SIC was embroiled in a pay-to-play scandal during former Democratic Gov. Bill Richardson's final years in office, and for the past several years has been trying to recover money lost in politically influenced investment deals.

As of this month, the State Investment Council secured more than $37 million in settlements from investment firms and placement agents in that legal effort.

However, some SIC members have raised questions about the investment council's legal strategy, with former Democratic state Sen. Tim Jennings filing a 2016 affidavit that raised questions about whether an East Coast law firm hired by the agency had undisclosed conflicts of interest.

The SIC's staff attorney blasted Jennings on Tuesday for filing the affidavit, saying it had cost the state as much as $10 million by delaying recovery efforts.

Jennings responded by describing New Mexico as a “little bitty fish” on the national investment scene, adding, “All I wanted to know is if they had a conflict of interest.”

Despite the tensions, several SIC members said they hoped the political divides on the investment council are resolved quickly and don't linger.

“We're eating our own because of the offenses of the people who are no longer here,” said board member Leonard Lee Rawson, a former state senator from Las Cruces, in reference to the SIC's past scandals.

“We don't need to be a council that doesn't work,” added board member Linda Eitzen, one of two Martinez appointees on the council.

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