New Mexico lawmaker calls for inquiry into investment deals
By MORGAN LEE
Sep. 21, 2017
SANTA FE, N.M. (AP) — A Democratic state lawmaker called Thursday for an investigation after questions were raised about political donations from financial firms that have been selected to manage hundreds of millions of dollars in investments by the state of New Mexico.
Rep. Bill McCamley, chairman of the New Mexico Finance Authority Oversight Committee, has written to Attorney General Hector Balderas to ask for an investigation into any possible violations of state law.
A report published Wednesday by the International Business Times and nonprofit MapLight found that people at firms that handled state investments contributed to Republican political groups and to GOP Gov. Susana Martinez.
The governor's office says the political contributions were publicly and properly disclosed, calling the report "short on facts and long on innuendo."
McCamley has specifically asked about possible violations of state campaign disclosure rules and a law that prohibits campaign contributions from companies as they bid or negotiate state contracts. He acknowledged that state law may have little bearing on contributions to independent national political committees.
During her tenure, Martinez has taken on leadership and fundraising roles at the Republican Governors Association, a group that has received contributions from private managers of New Mexico state investments and has aided Martinez's campaigns.
"The first question is, 'Was state law violated?'" McCamley said. "If a company paid a contribution to the Republican Governors Association and then the association made a contribution to Martinez, or a contribution was made to a political action committee and not directly to her gubernatorial account — did that break the law?"
In the past, New Mexico was shaken by an alleged pay-to-play scheme involving state investments during the administration of former Gov. Bill Richardson, a Democrat.
No charges were ever filed, but the top federal prosecutor in New Mexico at the time had said a yearlong investigation revealed that pressure from the governor's office had resulted in the corruption of the procurement process so that state bond deal work went to a Richardson political donor.
Martinez, who is near the end of her second term after succeeding Richardson, campaigned on promises to root out and punish public officials who fail to report personal or political gains linked to state investments.
Martinez serves as chairwoman of the State Investment Council that oversees more than $20 billion under New Mexico's two sovereign wealth funds — money derived largely from oil and natural gas development.
The council was restructured in 2010 in the wake of the pay-to-play scandal during the Richardson administration, curbing the influence of any governor over investment strategies and the selection of outside money managers.
State Investment Council spokesman Charles Wollmann said there have been no violations of financial disclosure laws and that the council is likely to discuss whether additional disclosure is appropriate for managers regarding contributions to national political action committees.
He said the current structure of the 11-member council does not allow for any individual, including the governor, to manipulate investment decisions.
The council has been shifting funds into alternative investments, sometimes with significant management compensation, to limit risks associated with stock market losses that cost the state dearly after the 2007 financial crisis, Wollmann explained.
Fees to investment managers totaled about $130 million for the fiscal year ending in June 2016, with an additional $52 million in performance-related payments.
Martinez vetoed a bill that would have removed her from the investment council while keeping two other elected officials in place — the state treasurer and land commissioner. She signed legislation with strong bipartisan support in 2016 that loosened restrictions on the state's investment in private equity funds.
Martinez also has the power to appoint three members of the Educational Retirement Board that oversees a multibillion-dollar retirement fund for public school teachers and administrators throughout the state. One of those positions has remained vacant for two years.
Bob Jacksha, the board's chief investment officer, said Thursday the board does not make investments based on whether someone makes campaign contributions. Rather, staff and consultants control the selection process and board members don't know which managers are under consideration until final approval by an investment committee.
He said the board has asked one investment manager to explain a possible violation of federal Securities and Exchange Commission rules related to a two-year "blackout" period on political contributions.
The board's transparency policy requires managers to disclose political contributions — though not to independent expenditure groups and third-party political committees that do not coordinate directly with campaigns.
Associated Press writer Susan Montoya Bryan in Albuquerque, N.M., contributed to this report.