Pay–To–Play with New Mexico's State Investments? - Tripp Stelnicki - Santa Fe New Mexican - Wednesday 10/18

Pay–To–Play with New Mexico's State Investments?
Tripp Stelnicki
Santa Fe New Mexican
Wednesday 10/18

Just as honeypots attract insects, opportunities for political corruption often draw a crowd, and sorting out who did what, and who got what for doing it, can often be a hard job.

But to simplify things, let me diagram to criminal conspiracy: political corruption usually is a four-handed game: a buyer and a fixer; a politician and a fixer.  The big money people and the big political people need insulation, and usually, deal-making expertise, this is why there are fixers.

Put honey into a pot and a lot of the sweet stuff sticks to the sides.  Political corruption works the same way, deals are structured so that whatever is spent on a product or a service, once the deal is made, the important people who are part of it can stick their fingers in the jar and sweep up a lot of extra sweetness.

The short-hand name for this kind of crookedness is pay-to-play…you want to do legit business with the state…you pay for the privilege.  Here are two big things wrong with this set-up…the honey fingered from the jar is stolen taxpayers’ money…and the people who pay for the finger-lickin’ opportunity have not been selected because they’re good at their job.  And frequently they are not, and so their ineptitude can cost citizens as much as their crookedness.

Here’s how one of the biggest pay-to-play scandals in recent American history went down.  In New York State, where billions of dollars in investments were “invested” with various hedge funds and private equity managers.  One of the biggest managers was the Quadrangle Group, headed by a brilliant former NY Times reporter named Steven Rattner.  A significant fixer from the finance community was Saul Meyer of Aldus Equity Advisors.  Meyer’s job was to find big managers to handle the State’s investments.  In NY, his opposite number, the politician’s fixer, was Hank Morris, and “his” politician was the State Controller, Alan Hevesi, the man in charge of most of NY State’s money.  All of them took pieces of the money placement deals for themselves and crossed their fingers and hoped to people who had bought them didn’t stink up the joint too badly with their money management.

Quadrangle only stunk up the joint one way – they provided the juice that corrupted Meyer, Morris and Hevesi.  Which I guess is why Rattner never went to jail, while Meyer, Morris and Hevesi all did.  Rattner not only stayed free, he became an important advisor to President Barack Obama.

The two fixers, Saul Meyer and Hank Morris, before they were caught, were also involved in another pay-to-play honey pot in New Mexico.  Meyer was New Mexico’s official advisor, picking money managers for the State Investment Commission, which controls assets of more than $21 Billion.  And here’s what Meyer was recorded saying about the alleged NM political fixers, the father and son team of Anthony and Marc Correra:  “Anthony and Marc … have a stranglehold over this thing.” The process is run by the governor, he says, and “they run the governor.”  Gov. Bill Richardson, that would be.

In NM, as of now, no one is going to jail.  The SIC is concentrating on recovering lost money, not punishing the people responsible for losing it.  So, it has been negotiating settlements with the buyers in this case, the people who got to manage the state’s money.  Recently, one Chicago firm, now called Vanderbilt Capital, that lost $90 million in state money, agreed to pay back a little less than $25 million.

The SIC has also targeted the two Correras, the accused political fixers, and several more money managers accused to paying to play.  Richardson, like Steve Rattner, has been embarrassed, and was forced to cough up his appointment to be Obama’s Secretary of Commerce, but there’s no present talk of prosecuting him.

This the prologue…now we go to the more recent news, that perhaps the biggest serving of NM State money-honey went to Clark Hunt and his hedge fund, and says the SIC in a lawsuit, Hunt got $300 million to play with the old-fashioned pay-to-play way.

Our guest today, reporter Tripp Stelnicki of the Santa Fe daily, the New Mexican has been covering that story.

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