SANTA FE – Facing pressure to increase transparency, the New Mexico State Investment Council signed off Tuesday on changes to its settlement policy that require all such financial agreements to be publicly voted upon.
The SIC’s 3-year-old settlement policy had previously allowed a subcommittee of the investment body – called the litigation committee – to meet in secret and settle lawsuits behind closed doors.
Under the revised policy, the subcommittee will still be able to meet behind closed doors to examine possible settlements and make recommendations, but it will be up to the full 11-member SIC then to act on them.
“We want to make sure we’re not settling with an agreement not to disclose,” SIC member Leonard Lee Rawson told the Journal after Tuesday’s meeting.
However, he and other council members indicated the more transparent policy could make some financial firms or consultants more reluctant to enter settlement agreements with the state.
“Certainly the public disclosure of settlements has a negative impact on the size of settlements,” SIC member Peter Frank told the Journal. “But that’s something we’re going to live with.”
The State Investment Council has, for several years, been using civil lawsuits in an attempt to recover money allegedly lost in pay-to-play investment deals.
To date, the SIC has agreed to settlements totaling nearly $30 million from financial firms and consultants, or placement agents, who allegedly helped broker the politically influenced deals during the administration of then-Gov. Bill Richardson. Much of that money is being held in escrow while the state Supreme Court reviews broader legal issues raised in separate whistleblower lawsuits.
Although the SIC’s previous settlement policy had been upheld by a Santa Fe district judge’s ruling, the New Mexico Foundation for Open Government and the New Mexico Press Association recently asked the state Court of Appeals to overturn the ruling.
They argued in court filings it could allow other state and local government entities to undermine the state’s Open Meetings Act.
Daniel Yohalem, a Santa Fe attorney who is representing FOG and the press association, called the revised SIC settlement policy a “complete victory” for the state’s Open Meetings Act.
That law generally requires public meetings to be conducted in the open, though allowable exceptions to it include litigation-related matters.
“As long as the SIC in the future fully complies with the public agenda, notice and minutes requirements, then the concerns we raised in the (court filing) were addressed,” Yohalem told the Journal.
The amended policy was approved Tuesday after the SIC spent nearly three hours in closed-door discussions.
After entering into open session, there was no public debate or discussion on the revisions. The council voted 9-0 to adopt the policy with two members – state Treasurer Tim Eichenberg and Land Commissioner Aubrey Dunn – abstaining because they were not SIC members when the settlements were initially approved.
The SIC then voted to ratify nearly a dozen settlements, including a $24.25 million settlement with the Chicago firm Vanderbilt Capital Advisers that was blocked by a judge in 2013.
All those settlements had been previously approved by the SIC’s litigation committee and publicly divulged, in some cases after formal records requests were filed.