Where's the money going?

[Jack Stafurik]

Here's one take on why we don't have enough money to fund education.

In one of the New Mexican's articles today "Donor gets $1.2 billion in
business from state Treasurer's Office" - here is a response from a reader.
Perhaps Bill Richardson is going to derail himself just when his big
national moment is coming.



By John Forrester (Submitted: 09/26/2005 9:36 am )

I am curious why, to date, The Santa Fe New Mexican has failed to see that
the investment scandal, and the involvement of Richardson in that scandal,
goes far beyond the investments done by the Treasurer's Office.

The Treasurer's Office is responsible for investing $4 Billion of state
funds. The State Investment Council, on the other hand, has over $10 Billion
of state funds it is responsible for investing.

Richardson appoints the majority of the Board members of the State
Investment Council (i.e. he has control over the Cuncil), including Gary
Bland, the State Investment Officer.

Immediately after taking office, Richardson had Gary Bland fire most of the
asset managers for the State Investment Council. The majority of the 11 new
money managers that were then hired were campaign contributors to
Richardson. These manager/campaig contributors have conducted Tens of
Billions of Dollars of Business with the State Investment Council.

In addition, Gov. Richardson has awarded to campaign contributors lucrative
legal contracts for work for the State Investment Council. A Little Rock (as
in Arkansas) law firm by the name of Cauley Geller (and its members) gave
$79,000 in cash and in-kind travel expenses to Richardson's 2002 campaign.
(How nice, that Arkansas law firms take such an interest in what goes on in
New Mexico)

Now, here is where the story gets really interesting. The Cauley firm was
awarded the legal contract for the State Investment Council. The Attorney
General steps in and tells the State Investment Council that they have acted
in violation of the State Procurement Code and that they must go out with a
request for proposals and let other firms bid and then award the contract to
the best firm bidding. So, the State Investment Council does what they are
told, goes out with an RFP, receives 16 responses from other firms that
would like the business, and SURPRISE, the Little Rock Cauley firm is
awarded the contract again. (Remember how Treasurer Vigil is alleged to have
been able to control RFP's to steer the business to the firm he wanted;
well, it looks like that skill also resides with Richardson).

Oh, and there was a second legal contract for State Investment Council legal
work that was awarded to a New York law firm, Goodkind Labaton, that
(together with a New Mexico firm it partnered with) gave the Richardson
campaign $90,350. (Again, how nice that New Yorkers take such a keen
interest in New Mexico).

As if all this were not enough, Governor Richardson then proceeds to use the
moneys in the State Investment Council as his own little biggy bank for
making risky loans to political donors. Let's not forget Dennis Langley, who
contributed about $35,500 to Richardson's campaign, and then was going to be
awarded a $150 million loan from the State Investment Council for a pipeline
company (until the media caught wind of it and shut it down, because we all
know Richardson bends whichever way the political wind is blowing).

Also, the State Investment Council was going to make a $34 million
investment in a company called Anila Fund until it was disclosed by the
media that the fund and its founders had legal problems. Richardson, in true
Richardson fashion, did not take the blame himself but rather blamed, and
fired, the State Investment Council's consultants.

Finally, lets talk about the consultants to New Mexico's investment funds.
Besides the State Investment Council, which has $10 billion of New Mexico
money to invest, there is also the Educational Retirement Board (which has
$7 Billion) and the Public Employees Retirement Association (which has $10
Billion). All of these funds'consultants have been under investigation by
the U.S. Securities and Exchange Commission for engaging in such unlawful
activities as (Surprise, Surprise) kickbacks.

Who gets hurt by all of this:

1. Over the past 5 years the State Investment Council has only managed to
earn an average of 1.5% per annum on its $10 Billion of investments. A 5
Year CD at the same time paid 7.32% per annum. Think how much less money is
therefore being distributed to our schools.

2. The Educational Retirement Board has earned a whopping 0.39% per annum
average return on its $7 Billion over the past 5 years. I wonder how New
Mexico's teachers who have a lot less vested in their retirement fund than
they thought feel about this.

3. The Public Employees Retirement Association has been able to earn an
average of 4.3% per annum over the past 5 years on its $10 Billion; but,
again, keep in mind that it could have earned 7.32% if it had just put the
money in a 5 year CD.

That is the price of awarding investment contracts on the basis of who is a
campaign contributor rather than who is best for the job. Richardson should
be held accountable for what he has wrought upon the citizens of New Mexico.

Come on Santa Fe New Mexican, wake up and smell the coffee, and do an
investigative report on how far this investment scandal truly reaches (i.e.
not only the Treasurer's Office, but also the State Investment Council, the
Educational Retirement Board and the Public Employees Retirement
Association) and how high it reaches (i.e. all the way up to Richardson).

New Mexicans deserve a forensic audit of all of these entities; not just the
Treasurer's office.