Thursday, September 21, 2017

Not Again?! Martinez Administration Scrutinized Over Pay To Play Allegations With Huge State Investment Funds; Is Anyone Investigating? What Has State Investment Council Been Doing? 

Is the Securities and Exchange Commission (SEC) investigating? What about the FBI? How about a federal grand jury? Anyone? Those were the questions that came in rapid fire order as news broke of a possible pay to play scandal that sounded all to familiar to Mr. and Mrs. New Mexico.

This time the lure of the state's gigantic investment funds is alleged to have been used to procure campaign contributions from the executives of investment firms to benefit a Governor Susana Martinez. In turn, the firms got hundreds of millions of our billions to invest and were compensated with hefty fees for doing so.

It was another scandal that helped propel Gov. Martinez into office in 2010 as she attacked Gov. Richardson for a pay-to-pay scandal that nearly resulted in federal indictments and for his alleged interference in state investment decisions to benefit a favored middleman who brokered investments for the state cash. Now everyone is holding their noses as the stench of hypocrisy rises to the fore in these, the waning months of the Martinez administration

Now the details. The out of state press in the form of the The International Business Times came with the scoop:

An IBT/MapLight investigation shows that when it comes to campaign cash from managers of state investments, Martinez turned a blind eye to the ethical standards she championed. 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.

Under Martinez. . . state funds managing more than $33 billion have shifted more money into higher-risk investments--resulting in below-average returns, but generating at least $729 million worth of fees in just the last 4 years. Amid that shift, New Mexico committed at least $757 million to eight financial firms while donors linked to those firms have collectively given more than $1.2 million to Martinez and political groups supporting her. 

How's that for starters? Here's some more gore:

In some cases, investments flowed to firms whose top officials gave directly to Martinez--even though the Securities and Exchange Commission’s pay-to-play rule aims to prevent such donations. Some investments went to donors to the Republican State Leadership Committee (RSLC) --which delivered money to Martinez-linked super PACs. Other investments went to donors to the Republican Governors Association (RGA), which Martinez chaired after it spent $2.5 million in New Mexico to boost her campaigns. RGA donors whose firms got investment deals include Wilbur Ross, who is now the U.S. Commerce secretary, and Republican megadonor Harlan Crow. . .

And who heads up Martinez's PACS and makes big bucks doing so?  Why, it's your old pal and mine, "Shadow Governor" Jay McCleskey. And it wasn't just the Jay PACS getting a payday courtesy of this investment wheeling and dealing. Jay's wife, pollster Nicole McCleskey, also appeared to benefit:

Macquarie Capital -- The Australian firm received $200 million worth of commitments from the SIC between 2014 and 2015. The firm and its affiliates have donated $200,000 to the RGA since 2011, including $50,000 last year while Martinez chaired the organization. In 2013, Macquarie Capital hired Public Opinion Strategies, a consulting firm whose partner, Nicole McCleskey, served as a senior advisor to Martinez’s 2014 reelection campaign. McCleskey’s husband, Jay, ran the pro-Martinez super PACs. In 2016, the SIC reported paying Macquarie $323,519 in fees. Macquarie declined to comment on the record.

As for the Governor's reaction to all this, IBT reports:

Martinez’s office did not respond to repeated requests for comment.

No comment? You would think they would be anxious to clear the air. Or maybe she's tired of attacking the out-of-town press that has repeatedly exposed her hijinks while the locals play dead.

ADDENDUM: The Governor's office gave this statement on the IBT story to the New Mexican. It attacked the report but did not discuss any specifics in the report:

A shameless attempt to generate clicks online with a story that is short on facts and long on innuendo.

And the Advance NM Now PAC, run by Martinez advisor Jay McCleskey, tweeted this reaction to the New Mexican's report on the IBT story:

Can always count on @steveterrell for lazy, fact-free regurgitating of Soros-funded "news" reports.

Terrell is the New Mexican political reporter who did a story on the IBT report for the Thursday editions. George Soros is the left-leaning billionaire known for contributing to political causes.


Steve Moise
And what about the State Investment Council? Where in the name of Marc Correra have they been? And that goes double for State Investment Officer Steve Moise who writes on his web page:

Our Council and each member of our staff is committed to fulfilling our fiduciary responsibilities in a professional, ethical, and respectable manner. We strive to merit the trust of our stakeholders. Thank you for your interest in support of our efforts.

Seriously, Steve? Fiduciary responsibility? Given the news, it appears you're making a run for the Gary Bland Award (Remember him?)

While Steve is getting stink on him, coming out of this smelling like a bouquet of roses are the Forceful Four on the State Investment Council. Four members, not appointed by the Governor and who recently refused to succumb to pressure from Moise and company to sign an ethics code that was also a "confidentiality agreement" concerning deliberations at the once again sullied SIC. Those four are GOP State Land Commissioner Aubrey Dunn, Dem State Treasurer Tim Eichenberg, former Dem State Senator Tim Jennings and former GOP State Senate Leonard Rawson.

The savvy four fought back when the SIC--controlled by Gov. Martinez--tried to get them to sign the confidentiality agreement that was aimed at getting them not to talk about the behind-closed-door sessions of the SIC. The SIC sanctioned them for the refusal. But, hey, getting sanctioned is better than getting indicted which is what some messing with the Forceful Four might want to think about.

State House Dems will have a news conference today to announce they are seeking an investigation into the possible pay-to play scandal. Meanwhile the journalists who justifiably kicked Richardson's rear end from Cruces to Clayton when he was embroiled in his own pay to play scandal are asking themselves: What the hell is the International Business Times and why are they eating my lunch?


So the favored investment firms with the Martinez/SIC rake in $745 million in investment fees in four years, and the administration and Moise et. al. wail like banshees when it's proposed that the $16 billion Land Grant Permanent Fund be tapped for $120 million a year to fund early childhood programs in the state that ranks worst in the nation in childhood poverty. The moral leg they stand on in refusing is that the immense fund is to "protect future generations." Talk about getting your legs broken. This two in a row pay to pay debacle ought to put to rest any doubt about whose interests the Santa Fe club really wants to protect. It's their own and their Wall Street benefactors.


Longtime reader Tom Miles writes of New Mexico dropping to worst in the nation in childhood poverty in the latest US Census data:

From 2012 to 2017, funding for home visiting, child care, prekindergarten, and workforce development increased 74%, from $137 million to $238 million. That’s great, and still … some 47% or approximately 20,000 New Mexico children under 5 living in poverty remain unserved or underserved. And without some kind of programmed planning to incrementally address this situation, these kids must tend to gum up entire systems. They require subject remediation, cannot avoid disrupting teachers, classrooms, schools and districts, suffer adverse childhood experiences that require costly health dollars to remediate, drop out, are too unemployable, act out, require public safety and justice resources and responses to their teenage and adult life choices, including cycles of repetition in how they raise their families; repeat most of the above. And on it goes.


Join us Monday for the latest on the ABQ mayor's race. During the campaign we've resumed Monday blogging so we look forward to having you with us.

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