Finance

NJ Pension Fund Investigation Needed Says AFL-CIO

September 16, 2014
By Stephanie West

Trenton, NJ – The New Jersey State AFL-CIO has filed a complaint with the State Ethics Commission calling for an investigation into lucrative pension fund management contracts awarded to top political donors to Gov. Chris Christie and the Republican Party.

In an 11-page complaint filed Friday September 12th, New Jersey State AFL-CIO President Charles Wowkanech highlighted reports exposing a disturbing pattern of big contributions to Christie for Governor or Republican organizations by firms handpicked to manage hundreds of millions in state pension funds.

“Despite clear boundaries created to shield pension investments from the influence of politics, it appears that the State Investment Council under Robert Grady’s direction and the Christie administration’s leadership clearly violated those rules,” said Wowkanech, who represents one million union members across the state. “We urge the State Ethics Commission to investigate this pay-to-play scheme on behalf of taxpayers who are footing the bill for this abuse and pensioneers being shortchanged of their retirement funds.”

Fees paid to politically connected fund managers have more than tripled under Christie, to $398 million last year alone. Many of the state’s relationships with Wall Street firms coincide with generous political contributions, even though state ethics rules require a two-year lag before a donor can be a pension investor. For example, an employee of the Blackstone Group donated $10,000 to the NJ Republican State Committee in 2011, the same year new investment business was being proposed for the firm. Another Blackstone employee donated to candidate Christie.

The State Investment Council also approved the Carlyle Group to manage $450 million in pension funds when Grady was still drawing income from his stake in the group. The conflicts were especially evident during Christie’s re-election campaign when Grady was ordered to participate in weekly conference calls involving high-level re-election and political matters with Christie’s top campaign staff.

“The presence of the State Investment Council chairman on those calls violated the rules designed to protect investment decisions from being influenced by politics,” said Wowkanech. “This serious matter affecting the pension benefits of countless current and retired former employees warrants a thorough investigation, based on evidence in the complaint that Bob Grady and Christie’s re-election team clearly used pension investments as a way to attract political contributions.”

September 16, 2014

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