I missed the conference call this morning as I’m a wee bit under the weather (on a State Committee meeting day no less) but here’s the press release, FYI.
Charlie Baker and Richard Tisei today called on Tim Cahill to immediately disclose and make public details about the current practice of using unregulated and highly compensated placement agents as middle-men between the Treasurer’s Office and financial firms seeking to manage pension funds. Additionally, Baker and Tisei called on Cahill to immediately require public disclosure of contributions to his campaign by Treasury vendors and subvendors.
The Boston Globe and other news outlets have recently published investigative reports revealing that top Cahill advisors and donors have made millions by taking commissions from pension funds invested with their clients, and that Cahill has raised more than $100,000 from employees of firms that make millions in fees from the Treasury or are regulated by the Treasury. (see below)
“I call on Tim Cahill to immediately publish on the Treasury website the list of all placement agents that have contacted the Treasury on behalf of financial firms during his tenure and the total amount of their compensation,” said Baker. “Treasurer Cahill should also contact all firms who manage pension funds or are regulated by the Treasury and force them to submit a list of all donations to his campaign by their employees, family members, or subvendors. If he doesn’t do it, he’ll confirm that he stands with the insiders over the taxpayers.”
Baker and Tisei also called for Cahill to unilaterally implement the following reforms to the placement agent system, or call on the Legislature to pass laws reforming the system where legally necessary:
Require that placement agents formally register with the Treasurer’s Office and submit to strict ethical standards similar to those applied to lobbyists registered with the Secretary of the Commonwealth.
Require that all mandated information, including all compensation and client names, be made available in real time on the Treasury website.
Require that firms that retain placement agents semi-annually record their contractual agreements with the Treasurer for review by the pension board.
End the practice of placement agents’ receiving a “cut” of investments secured. As with lobbyists, placement agents must be paid flat fees, with percentage commissions or success bonuses outlawed.
Baker and Tisei also call on the Legislature to enact stricter campaign finance disclosure requirements for all candidates seeking state office and said they would propose the following reform, if elected, should the Legislature fail to act:
All candidates for state office must meet an 80% threshold for disclosure of both the occupation and employer of donors $200 and above. The Office of Campaign and Political Finance (OCPF) will fine any candidate that fails to meet the 80% threshold 50% of the total value of underdisclosed donations, assessed quarterly.
“For too long Beacon Hill has been a bastion of abuse and secretive business dealings. Our elected officials, like Tim Cahill, have had the opportunity to create an open and transparent environment yet they have failed to enact meaningful reforms necessary to restoring the public trust. His lack of action in 8 years as Treasurer demonstrates Tim Cahill’s disdain for reform and sunlight throughout state government,” said Baker.
Tisei add, “Not only does the Treasurer’s Office need to require disclosure from organizations and individuals with business before it, the Legislature needs to enact stricter punishments for candidates that fail to comply with existing laws. The only way to make certain candidates comply is to enact stiffer financial penalties.”
Today’s announcement is just one of a number of commonsense solutions which the Baker-Tisei team will put forward throughout the course of the campaign. Please visit www.charliebaker2010.com for more information.
“Cahill ally brokered pension fund deal; Fund-raiser takes home $2.3 million fee”
Boston Globe, May 24, 2009
“He is a close political ally and prodigious fund-raiser for state Treasurer Timothy P. Cahill. When a blue-chip New York financial firm was trying to persuade Cahill and his staff to award it a lucrative contract to manage state pension money, it hired Anthony S. Rust to push their cause…Ivy paid Rust an estimated $2.3 million for brokering the deal…Rust’s introduction to Ivy came through Cahill’s closest political associate and close friend, Thomas F. Kelly, whose firm, CanAm Consultants, specializes in acting as placement agent for financial firms seeking to manage public pension funds.”
“Cahill taps firms tied to state pension investor; A $100m deal came a day after a cluster of donations…”
Boston Globe, March 21, 2010
“The contributions…total more than $100,000…Nothing obvious connects Cahill to these donors…But an extensive review of Cahill’s aggressive fund-raising practices uncovered a common link, Michael A. Ruane, a Boston investment manager…who counts the Massachusetts pension board as one of his clients…Cahill, meanwhile, offered three conflicting descriptions of his dealings with Ruane…”
“Officials lag in reporting information on donors; Cahill has lowest disclosure rate”
Boston Globe, December 30, 2009
“Cahill…has the lowest current disclosure rate for any statewide candidate. Occupation and employment information and perhaps the potential business interests of 36 percent of his major donors since 2002 have not been reported, according to a Globe analysis of campaign finance records.”