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Thursday, December 8, 2016

Christie’s Latest Scandal: How He Sold Public Pensions To Wall Street Donors

Christie’s Latest Scandal: How He Sold Public Pensions To Wall Street Donors

The media would label it Pensiongate — if they were interested.

When Governor Chris Christie (R-NJ) cruised to his first statewide election victory in 2009, his promise to responsibly manage the state’s pensions helped deliver him the governor’s mansion. It’s Democrats like Governor Jon Corzine who are playing fast and loose with public pensions, the Christie campaign argued. “Jon Corzine made it easier for his friends from Wall Street to manage New Jersey’s pension fund,” read a campaign press release.

But soon after Christie took the reins as governor, his skepticism of the relationship between Wall Street and pension funds quickly evaporated. Hedge funds managed by influential Republican donors soon landed enormous contracts to manage public pensions. Friends of The Governor benefited handsomely.

As the Investigative Fund’s Lee Fang reports, the controversy centers around Paul Singer, the billionaire founder of Elliott Associates. The month prior to Christie’s first 2009 gubernatorial victory, Singer donated $100,000 to the Republican Governors Association, a fervent supporter of Christie’s election bid. After his election, and despite his campaign rhetoric to the contrary, Christie suggested that Elliot Associates be given a contract to manage $200 million in public pensions. In 2012, the firm was indeed granted the contract.

The result of this investment was large payoffs for the hedge fund, while New Jersey public workers saw their pension returns fall below average. In 2013, the median pension return was 16.1 percent; in New Jersey, the pension program delivered a return of just 11.79 percent.

But because of fines and fees associated with a hedge fund investment, it was a lucrative business for managers like Singer. As Fang reports, Singer benefited greatly from the deal: Chris Tobe, a former trustee of Kentucky Retirement Systems, estimates that in 2013 alone, Elliot Associates collected close to $8.6 million in fees from the New Jersey public pension fund.

And Singer, it seems, is not one to let a favor go unreturned. After Christie became chair of the Republican Governors Association in 2013, Singer donated $1.25 million to the group.

Interestingly, Singer’s profitable deals with politicians do not start and stop with the embattled Governor Christie. A recent report in The Hill shows former Rep. Connie Mack (R-FL) may also have used his office to aid the notable Republican donor. Mack, now a lobbyist, has registered to lobby for American Task Force Argentina, a group that seeks to “hold medium and wealthy nations accountable for the repayment of their debts to U.S. creditors and to uphold U.S. court judgments against these same nations.” Holding impoverished South American nations accountable for their debt to American companies is an initiative Mack touted during his time in office.

As it happens, Elliot Associates is also a member of Task Force Argentina. According to The Hill, employees of Elliot management were the second largest contributor to Mack’s failed 2012 Senate run. Furthermore, another hedge fund linked to Singer is owed $1.6 billion by the Argentine government.

 AFP Photo/Jeff Zelevansky

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