To protect the billions of dollars in state pension funds from political tampering, the Securities and Exchange Commission has strict regulations designed to prevent state officials from awarding pension contracts to those who financially support their election campaigns. But when it came to a 2011 pension deal,  internal emails show North Carolina Treasury officials said former White House Chief of Staff Erskine Bowles is exempt from those federal anti-corruption rules.

The emails pertain to the disclosure that a financial firm affiliated with Bowles received a North Carolina pension contract after a campaign fundraiser was held at Bowles' home for Democratic State Treasurer Janet Cowell -- the sole overseer of $90 billion pension system. The emails were released this week by the treasurer's office to North Carolina public radio station WFAE in response to an SEC complaint filed by the State Employees Association of North Carolina (SEANC). 

That complaint alleges that federal pay-to-play rules were violated in 2011 when, a few weeks after the Cowell fundraiser at Bowles' home, the North Carolina pension system's Innovation Fund gave a management contract to Carousel Capital, the private equity firm that was co-founded by Bowles and that lists Bowles on its website as a senior adviser. (The timing of the fundraiser and pension deal were first reported by International Business Times.)

In one of the 2012 emails released by the treasurer's office, a Carousel Capital employee says the firm's counsel had a conference call with the assistant general counsel of the North Carolina Treasurer's Office to discuss whether or not the Cowell fundraiser violated the SEC rule. Although Carousel listed Bowles as a senior adviser to the firm, the email offers the opinion that Bowles is not covered by the regulation. Another email shows Cowell's assistant general counsel agreeing with that assertion. 

The SEC -- not the North Carolina state government -- has the final say over whether to follow the request of SEANC and enforce its pay-to-play rule against Carousel and Bowles. The rule in question restricts contributions to state officials who control pension funds from "covered associates" of firms that do business with those pension systems. The rule defines a “covered associate” as "any general partner, managing member or executive officer, or other individual with a similar status or function."

In an emailed statement, Bowles previously told IBTimes that the fundraiser was organized by his wife, Crandall Bowles, and that he was not a participant in the event. He also said, “I have had no active role [in Carousel] since 2005."

The union filing the SEC complaint said that assertion is "problematic because Bowles has held himself out to potential clients of Carousel as senior advisor and to members of the public as having no active role in management. In short, either Carousel and Bowles are inaccurately adding the business allure of the Bowles name to attract clients, or Bowles misled the public."

The emails from the state treasurer's office do not address whether Crandall Bowles is covered under the SEC's rule's provision that campaign contributions may not be funneled "through third parties, including, for example, consultants, attorneys, family members, friends or companies affiliated with the adviser as a means to circumvent the rule." The emails also do not address whether Crandall Bowles' role as a board member of JP Morgan make her a "covered associate" under the SEC's pay-to-play restrictions. The union's complaint asks the SEC to investigate whether she is covered in light of the North Carolina pension system having investments with JP Morgan.

In an emailed statement, a spokesperson for Cowell said the North Carolina Treasurer's office "ensur[ed] contractually with Carousel that they were compliant with this SEC rule," and added that "if Carousel failed to comply with the rule, the investment would likely end."