Defending his administration from criticism that it has injected political considerations into the management of New Jersey pension money, Gov. Chris Christie argues such talk is baseless. The governor has publicly declared his pension officials have no input in the selection of specific Wall Street managers to handle New Jersey's money. However, an International Business Times review indicates otherwise.
"There’s no appointed people in my administration who make those [investment] decisions," he said Monday in Connecticut in response to reporters' questions. "Those decisions are all made by the folks in the Department of Treasury who are career employees, and the appointed folks that are on the pension board, both Republicans and Democrats, don’t make the decisions about individual investments. They say, 'This is the general category,' and then they let the professionals make those decisions."
He added: "Nobody from me on down [in] the governor's office has any input into where we invest our money nor do the people that we appoint to the pension board. They set general goals -- and by the way, there’s both union representatives and administration representatives on that board -- and all of them have said they have absolutely no input into where the money is invested.”
In recent weeks, Christie repeatedly made similar claims at press conferences after disclosures employees of Wall Street firms doing business with New Jersey have made campaign contributions to groups backing Christie's campaigns. But the IBTimes review of New Jersey government documents shows Christie's appointees are directly involved in the selection of specific financial managers.
The minutes of the State Investment Council (which Christie appoints, and whose official mission is to "formulate policies governing the investment of [state] funds"), show his appointees not only oversee the state's due diligence reviews of specific managers but also offer guidance to New Jersey Treasury Department officials about managers. Christie appointees at times cast votes on specific investments and have spearheaded the recruitment and subsequent appointment of the official who runs the state's Division of Investment.
According to minutes of the State Investment Council, most of New Jersey's investments in private equity, hedge funds, venture capital and other so-called alternative investments are reviewed by Christie appointees on the Investment Policy Committee (a subcommittee of the State Investment Council). Typically, the minutes show State Investment Council Chairman Robert Grady reports the committee "discussed the investment and was satisfied that the due diligence that was performed was adequate and appropriate."
Grady was appointed to the council by Christie. He also serves as the Chairman of the Governor's Council of Economic Advisers, and state documents show he was in regular contact with Christie administration and campaign officials. The governor has described him as a longtime friend.
The State Investment Council debates the merits of specific investments in open session, offering advice to Department of Treasury staffers about the specific money manager being given a New Jersey pension contract. Because the council has influence over the selection of specific managers, Grady and another Christie appointee, real estate investor Jeffrey Oram, have recused themselves from deliberations that involve managers to whom they might have a financial connection.
State Investment Council documents show Christie appointees have also voted to approve or disapprove multimillion-dollar deals for specific financial managers. For example:
- On Dec. 8, 2011, Grady spearheaded a proposal to invest as much as $1.8 billion of New Jersey money in the Blackstone Group. State records show "a motion was made by Chair Grady to approve the Blackstone investments," the motion "was seconded by Council Member Oram," and the investment in Blackstone was subsequently approved on a 7-2 vote. As IBTimes previously reported, Grady's private firm was investing in one of the same Blackstone funds though Grady did not disclose that at the time of the vote.
- On July 21, 2011, the council voted on a quarter-billion-dollar investment in Blackstone Resources Select Fund. After a debate, the council voted against a motion to halt the investment.
- On June 11, 2011, the council voted to approve a financial maneuver to facilitate a specific transaction with a firm called RLJ Lodging Trust.
In addition to overseeing and voting on specific investments, Christie appointees oversee the appointment of the state official who runs the state's Division of Investment. The financial publication Chief Investment Officer reported Grady "recruited [Tim] Walsh away from the helm of the Indiana State Teacher Retirement Fund in 2010" to head the New Jersey Division of Investment. When Walsh left a few years later, Grady headed the search committee for his replacement -- on which the Christie-appointed State Investment Council then voted.