Report: Investment deals may violate ethics rules
Article points to political gifts linked to firms that handle millions from state
Nearly a decade after Gov. Bill Richardson’s administration was tarnished by a scandal involving state investments, an online magazine has blasted current Gov. Susana Martinez over more than $1 million in political contributions by firms that were awarded hundreds of millions of dollars in investments by the state of New Mexico.
The story, published Wednesday by the New York-based International Business Times, says people associated with eight firms that handled $757 million in state investments contributed more than $1.2 million to Martinez, her political action committees and national Republican organizations that have supported her.
And one company that since 2001 has been awarded $200,000 by the State Investment Council once hired a polling firm co-owned by the wife of Martinez’s political consultant, Jay McCleskey.
A Martinez spokesman on Wednesday called the article “a shameless attempt to generate clicks online with a story that is short on facts and long on innuendo.”
While it’s not clear whether any of the money dealings described in the story were illegal, the article prompted state Rep. Bill McCamley, D-Las Cruces, to ask state Attorney General Hector Balderas to investigate any possible violations of state law.
“When it comes to campaign cash from managers of state investments, Martinez turned a blind eye to the ethi-
cal standards she championed,” says the article, written by David Sirota and Josh Keefe of International Business Times and Andrew Perez of Maplight, a California-based nonprofit that tracks the influence of money in politics. “During her tenure, New Mexico has been giving lucrative investment deals to financial firms whose executives have delivered big campaign donations to Martinez and to groups that have supported her election campaigns — a situation that may have violated the very pay-to-play rules that were passed in the wake of New Mexico’s previous scandals.”
The bulk of the investments discussed in the article were made by the state Educational Retirement Board, which oversees the $12 billion pension fund for teachers and other school employees in the state. Martinez does not sit on that board and appoints only two of its six members.
Although Martinez’s office did not respond to requests for comment from International Business Times and Maplight, spokesman Joseph Cueto said in a written statement to The New Mexican, “Those quoted in the article clearly state that all financial rules were followed. Critically, the governor does not even control the Educational Retirement Board, nor do her two appointees control their investment decisions, as was stated on the record by the [board] representative.”
Cueto added that all the political contributions were “publicly and properly disclosed.”
State law prohibits companies from making campaign contributions while bidding on or negotiating state contracts. But that law doesn’t stop contractors from contributing to political action companies and independent expenditure groups. And it doesn’t stop contributions to national political committees such as the Republican Governors Association or its Democratic counterpart.
Charles Wollmann, spokesman for the State Investment Council — who was quoted in the article — told The New Mexican on Wednesday, “Of course there’s a danger when politics invades the investment process. That’s why we don’t allow it. We have sued investment firms where that has happened.”
He was referring to three pending lawsuits and a $24 million settlement in another suit involving politically connected placement agent Marc Correra, the son of a Richardson confidant, who shared in more than $22 million in fees from investment firms doing business with the state during the Richardson years. The State Investment Council is responsible for managing $21.5 billion in public trust funds.
Wollman said the two firms mentioned in the story that were awarded investments by his agency — Macquarie Capital and Invesco — are “globally respected” companies that were “sourced by independent fiduciaries, vetted by professional investment staff, reviewed by the council and voted on in two open meetings.”
Though the governor chairs the State Investment Council and appoints some of its members, he said, Martinez has never referred any investment or directed the 11-member council to approve any investment. Under the council’s current structure, he said, no one member has enough influence to push through a particular investment.
The State Investment Council between 2014 and 2015 awarded $200 million worth of commitments to Macquarie Capital, an Australian firm. Since 2011, the company and its affiliates have contributed $200,000 to the Republican Governors Association. A quarter of that total was given last year while Martinez chaired the organization.
In 2013, the article said, Macquarie hired Public Opinion Strategies, a consulting firm whose partner, Nicole McCleskey, was a senior adviser to Martinez’s 2014 re-election campaign, which her husband Jay McCleskey ran.
Invesco, the other company that received money from the State Investment Council, was awarded $150 million in 2015. Its chairman, Wilbur Ross, gave the Republican Governors Association $150,000 while Martinez was running for re-election. Ross is now President Donald Trump’s secretary of commerce.
The investment firms identified in the article include:
Crow Holdings, a Dallas real estate investment firm that received a $50 million investment from the board months after its founder, Harlan Crow, contributed $50,000 to the Republican Governors Association. In late 2013, the company gave another $100,000 to the governors group. The next year, the Educational Retirement Board awarded the firm another $35 million investment. The Crow company gave the Republican group another $100,000 in 2015 and was awarded another $30 million investment.
Apollo Global Management, which received a $50 million investment from the board in 2013. Apollo executive Josh Harris gave the Republican Governors Association $25,000 in 2010 then $25,000 in 2012 while Martinez was on the organization’s executive committee.
Prudential was awarded a $50 million investment from the retirement board in 2011 and another $35 million in 2014. Since Martinez has been governor, Prudential has given $200,000 to the Republican Governors Association and another $50,000 to the Republican State Leadership Committee, a Washington, D.C.-based group that raises money for Republicans running for state offices. The group has given more than $1.7 million to Martinez-related PACs since 2012.
Bain Capital, founded by 2012 Republican presidential nominee Mitt Romney, received $40 million from the teachers’ pension in 2014 and another $50 million in July. Less than three weeks after the board approved the 2014 investment, Bain’s founding partner, Robert White, gave $50,000 to the Republican Governors Association, which later that year would buy television commercials for Martinez’s re-election.
EnerVest, which received a $37.5 million investment from the board in 2015. Before this investment, its chief executive officer, John Walker, according to the article, “steered more than $61,000 to Martinez-linked groups.”
BP Capital, an energy investment firm half-owned by Texas financier T. Boone Pickens, got a $30 million investment from the board in 2013. Pickens gave the Martinez campaign $10,400.
Contact Steve Terrell at 505-986-3037 or sterrell@sfnewmexican.com. Read his blog at www.santafenewmexican.com/ roundhouse_roundup.