Saturday, January 16, 2010
Gov. Says He Didn't Make Investment Decisions
By Thomas J. Cole
Journal Staff Writer
The State Investment Council got together this week to hear what outside consultants found in their review of the agency.
To no surprise, Gov. Bill Richardson, who chairs the council and controls it through his appointment of a majority of its members, didn't attend the council meeting.
As I first reported last February, Richardson has rarely attended the meetings of the State Investment Council, which invests billions of dollars in state endowment funds.
Now, the governor is using his absence in an apparent bid to distance himself from the scandal that has rocked the council over the past several months.
"The reality is I left decisions to my state investment board," Richardson told reporters Tuesday. "I hardly attended meetings. I felt that I shouldn't be part of decisions."
In addition to chairing and controlling the council, Richardson also appoints the state investment officer.
Richardson attended only one meeting last year, and that was for just 45 minutes. The meeting was in May, shortly after the scandal broke at the State Investment Council.
For those of you not up to speed, federal authorities are investigating payments of tens of millions of dollars in fees to political insiders and others who worked as third-party marketers on state investments. The marketers were paid by private companies for helping them get government business.
A former investment adviser to the State Investment Council has admitted he was pressured by politically connected people to recommend certain investments — and that he did so. He hasn't yet publicly named names.
Topping the list of those who received fees is Marc Correra, son of a Richardson campaign contributor and former adviser to the governor, who shared in about $22 million before beating it out of town, apparently to Paris.
When I asked last year why Richardson didn't attend meetings of the State Investment Council, spokesman Gilbert Gallegos said the governor was briefed on actions pending before the council by State Investment Officer Gary Bland and Finance and Administration Secretary Katherine Miller, who are both council members.
So Richardson was briefed on the decisions of the council but now says he didn't take part.
The governor has also said he didn't know about the involvement of Correra and other third-party marketers in state investment deals.
Bland was forced out of his job as state investment officer in October, reportedly because he knew a lot more about the fee deals for Correra than he had disclosed.
The Governor's Transparency Policy, developed after the scandal in the state Treasurer's Office in 2005, called for public disclosure of third-party marketer fees, but the State Investment Council didn't adopt the policy.
The council discussed the policy at a meeting in November 2006 but couldn't legally vote on it because some members were absent. Those absent members included the governor.
Had that policy been adopted, the corruption of the state's investment business might have been avoided to some extent. Of course, some had a stake in keeping secret the fees paid to Correra and others.
The review of the State Investment Council, which was conducted by a Chicago firm, recommended that the council — not the governor — appoint the investment officer and that the governor's control over the council be lessened.
Richardson vetoed legislation last April that provided for additional council members who wouldn't be appointed by the governor. He now says he's willing go along with such a measure.
"Structurally, the recommendations make sense that there should be a broader base of oversight," Richardson said. But he added, "The governor needs to retain an important role."
He didn't say whether that important role included attending meetings and taking part in decisions.
The State Investment Council has signed contracts worth up to $160,000 with six law firms to provide representation to council members and employees in connection with the federal investigations and the council's internal investigation regarding fees paid to third-party marketers.
Attorneys hired separately by the state Risk Management Division are also providing representation.
Richardson is being represented under a $20,000 contract between the State Investment Council and the Santa Fe law firm of Rothstein Donatelli Hughes Dalstrom Schoenburg & Bienvenu.
Peter Schoenburg also represented Richardson in a federal investigation of a $1.6 billion highway bond deal that derailed the governor's nomination to serve in President Barack Obama's Cabinet.
That investigation ended last August without indictments, but the U.S. attorney said the state's procurement process had been corrupted and that the lack of indictments shouldn't be viewed as an exoneration for those targeted in the investigation.
UpFront is a daily front-page news and opinion column. Thom Cole can be reached in Santa Fe at 505-992-6280 or at email@example.com