TX: Heads of firms highlighted in TRS memo have given more than $700K to Gov. Perry

Posted on: October 20th, 2010 by Patrick Brendel No Comments

Heads of firms highlighted in a whistleblower’s memo have contributed more than $700,000 to Gov. Rick Perry’s campaign fund over the years, according to Texas Ethics Commission reports.

Perry and spokespersons adamantly deny accusations of political favoritism in the Texas Teacher Retirement System leveled in a whistleblower’s memo released Tuesday by Democratic candidate for governor Bill White. The memo alleges that Perry’s appointees compelled staff of the $100-billion teachers pension fund to invest in companies with political and business ties to Perry.

An external audit by former Securities and Exchange Commissioner Roel Campos did not find “definitive evidence” of impropriety but did recommend instituting a new ethics policy. The allegations have also been forwarded to the State Auditor’s Office, Texas Attorney General and Travis County District Attorney’s Office, according to the Texas Tribune.

Written by a former TRS director, the memo detailed examples in which staff members were coerced into revising negative recommendations of firms that had given large donations to the governor’s campaign.

Among the firms highlighted in the memo was oil-and-gas private equity firm Encap Energy Group, headed by major Perry donor Gary Petersen. The managing partner has donated more than $300,000 to the governor’s reelection campaign since 2006, while colleague David Miller contributed $25,000 this year, according to TEC filings.

Also included in the memo was Dallas-based HM Capital Partners, previously known as Hicks, Muse, Tate & Furst. Founder Tom Hicks, who has since left the group, gave $50,000 to Perry in 2009 and $25,000 this year, and former partner Charles Tate donated more than $300,000 to Perry’s campaign since 2004. Lee Equity Partners initially failed to secure a recommendation from the TRS staff, but like the aforementioned companies, was subsequently approved, allegedly after added pressure from upper management. The firm is led by private equity investor, Thomas H. Lee, who gave $5,000 to Perry in 2008.

TRS Chief Investment Officer Britt Harris is quoted by the memo’s author as saying, “I manage a fund with billions of dollars in assets, upsetting a board member or friend of the fund over the investment of a few hundred million dollars doesn’t make sense.”

Harris has drawn fire in the past from teachers and administrators over several initiatives, including a pay plan that would award him nearly a million dollars in annual salary and his top managers anywhere up to $500,000 a year.

The pension fund is administered by a nine-member board of trustees, two of which are appointed by the State Board of Education and three by the governor. Four teacher members are also appointed by the governor, but only after being nominated by popular ballot of the system’s members.

Chairman R. David Kelly and board members Todd Barth and Robert Gauntt, direct appointees of Perry, have all donated to Perry’s campaign. Gauntt has given $50,000 since 2006, while Barth has donated more than $17,000 during the same time frame. Kelly contributed $500 to Perry in February, according to TEC filings.

(Photo: Flickr Creative Commons/jonmallard)

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