By Elaine Magliaro
During the time that Chris Christie has spent serving as governor of New Jersey, the state “has funneled hundreds of millions of dollars to Wall Street firms as management fees on the state’s pension funds.” Although just a few hundred thousand dollars of that money has gone to a firm called Angelo Gordon, investigative journalist David Sirota thinks that the case warrants a closer look. In an article that he wrote for International Business Times, Sirota said that the financial firm Chris Christie’s wife works for has been paid fees by the state even after New Jersey terminated its investment with it. He reported that the New Jersey pension system had “terminated a $150 million investment in a fund called Angelo, Gordon & Co. in 2011…” Yet, he said, that did not “close the books on the deal.” Sirota added that in the three years since state officials ordered the withdrawal of the state’s money, taxpayers in New Jersey have still forked over hundreds of thousands of dollars in fees to the firm. He noted that while the fees continued to flow, “Angelo Gordon made a prominent hire: Mary Pat Christie, wife of Gov. Chris Christie…” She joined “the company in 2012 as a managing director and now earns $475,000 annually, according to the governor’s most recent tax return.”
The information about New Jersey taxpayers continuing to pay “substantial fees to a firm that employs the governor’s spouse–years after state officials said the investment was terminated”–emerged when the Christie administration released documents following a public records request.
Sirota reported that Christopher Santarelli, a spokesman for the New Jersey Treasury Department, said via email that while New Jersey “ended its investment” with Angelo Gordon in 2011, “the payments were legitimate because the state continues to hold an ‘illiquid’ investment in the firm.” Sirota said that Christie officials “declined to disclose details of what exactly that illiquid investment is and the justification for continuing to pay fees to Angelo Gordon.” He noted that Governor Christie, his wife, and executives at Angelo Gordon all declined to comment.
Pension overseers and financial experts characterized the appearance of the arrangement as deeply troubling. They saw it as symptomatic of a lack of transparency plaguing the management of public pension funds at a time when states and municipalities are entrusting increasingly hefty sums (and paying substantial fees) to Wall Street managers.
“This is extremely problematic,” Tom Bruno, the chairman of the board of trustees of one of New Jersey’s three major pension funds, said. “This governor talks about what he is supposedly doing to help the pension system, but the possibility of him and his family deriving any kind of personal benefit from a deal like this raises some truly serious ethical red flags.”
South Carolina Treasurer Curtis Loftis Jr., a Republican official who has criticized high pension fees — and whose endorsement is prized in the early presidential primary state — said of the situation: “It smells to high heaven.”
Loftis told International Business Times that the appearance of a conflict of interest “is damning and must be avoided at all cost” when dealing with the retirement money of public employees. He said, “If the state of New Jersey has a previous existing relationship with the fund, [the first lady] needs to look for a job elsewhere. The public employees of New Jersey shouldn’t have to worry about whether politically connected financial executives have an effect on their pensions. They’ve worked too hard for those pensions. They deserve these pensions without being concerned about political meddling.” He added, “Governor Christie was smart enough to get himself elected governor, and his wife was smart enough to get herself appointed to a significant job at a high performing fund on Wall Street. People that smart ought to know better than to put themselves in this kind of position.”
Sirota said that “fees paid by New Jersey to financial firms have more than tripled to almost $400 million a year, including the fees paid to Mary Pat Christie’s firm” under Governor Christie. He added that Christie’s administration “has awarded pension management contracts to financial firms whose executives made campaign contributions” to political organizations linked to the governor. He noted, too, that “executives at Angelo Gordon have made more than a quarter-million dollars worth of donations to Republican candidates and groups since 2009.”
Robert Grady, Christie’s pension investment chief, reportedly resigned after recent disclosures about campaign contributions. Sirota said that the “state’s investments in politically connected Wall Street firms are now the subject of an ethics complaint filed by the New Jersey AFL-CIO…” In a statement, the labor organization said the following about the fees paid to Angelo Gordon: “We are as concerned as ever that these are terrible deals for taxpayers and pensioners.”
Click here to read the full text of David Sirota’s article New Jersey Paid Fees To Mary Pat Christie’s Firm After State Investment Was Terminated.
New Jersey Paid Fees To Mary Pat Christie’s Firm After State Investment Was Terminated (International Business Times)