Amid a simmering national debate over fees paid by pension systems to private money managers, the Republican nominee for Illinois governor is asking voters to support him precisely because of his career as one of the more successful such money managers. Further, he is doing so while pushing to eliminate the defined-benefit pension system from which he made a fortune.
In a new advertisement, Bruce Rauner's campaign aims to counter Democratic allegations that the private equity mogul made millions from Illinois taxpayers, channeling his earnings through the Cayman Islands to avoid U.S. taxes. Instead, the spot casts Rauner as a selfless public servant who "invested pension funds for teachers and police, helping them earn far better retirement income."
A Rauner campaign official has touted the 17 percent returns Rauner's firm, GTCR, generated for the Illinois pension system.
In addition to controversy over alleged tax avoidance and pension fund profiteering, Rauner promoted a plan "to freeze state worker pensions at their current levels and switch everyone to a 401(k)-style retirement savings program," Kurt Erickson, Lee Newspapers' Springfield bureau chief, reports. "This is ironic because Rauner became rich, in part, by investing and managing public pension funds, including the Illinois Teachers Retirement System," Erickson said.
Despite assertions that Rauner has retired from GTCR, SEC documents confirm that Rauner remains a partner in a GTCR subsidiary. There are other ownership stakes in GTCR funds listed in Rauner's campaign finance disclosure forms. And according to state documents, GTCR currently manages Illinois pension funds, meaning that if elected, Rauner would appoint the board of a pension system that employs -- and pays fees to -- his firm.
Rauner's campaign ad comes as his investments hold center stage in a federal civil trial. Chicago's NBC affiliate says that the suit involves allegations "that GTCR, the Chicago-based firm where Rauner served as managing partner for decades before retiring in 2012, may have masterminded an operation to allegedly avoid responsibility for the deaths of elderly patients residing in nursing homes it had invested in." The Chicago Tribune says that GTCR is being "accused by attorneys for the estates of several former nursing home patients of engineering a complicated 2006 sale to avoid wrongful death judgments."
GTCR denies the allegations.
Watch Rauner's campaign ad here: