Firm whose boss gave to Christie-led group gets investment
TRENTON, N.J. (AP) -- The board that oversees New Jersey's nearly $80 billion public pension fund is moving ahead with an investment of up to $100 million in a private equity firm whose chairman gave millions to a political group once headed by Gov. Chris Christie.
Spokesmen for the state treasurer's office and the company say the governor had nothing to do with soliciting the contribution, and the investment was made based on the company's performance.
"Any reports or insinuations that politics are in any way involved in investment decisions are completely baseless," Treasury spokesman Christopher Santarelli said.
The State Investment Council decided Wednesday to invest money with Denver-based KSL Capital Partners, whose chairman, Mike Shannon, donated $2.5 million to the Republican Governors Association from 2013-2014, IRS documents show.
The move comes as the Democratic-controlled Legislature attempts to prohibit the council from making just these kinds of investments.
Lawmakers sent Christie a bill that bans the state from investing with firms whose managers have given to national political groups. Christie has until early April to decide whether to veto it.
Shannon and his wife, Mary Sue, are longtime supporters of a number of Republican causes and began donating to the RGA in 2011 after finance chairman Fred Malek, their friend, introduced them to the group.
"The Shannons' contributions to the RGA have never been solicited by Gov. Christie nor anyone acting on his behalf," KSL Capital Partners spokeswoman Julie Messing-Paea said in a statement.
Council Chairman Brendan Tom Byrne Jr. said the investment doesn't violate any state rules and the opportunity came about after an internal search for opportunities.
No one on the council, which includes representatives from labor unions, objected to the decision, but Byrne acknowledged there might be a perception of a quid pro quo, though he denied one existed.
"I wanted to make sure that every council member and particularly the labor representatives on the council are comfortable with the investment and comfortable with the way it was sourced and reviewed," Byrne said. "Beyond that, it was clear from our discussion that it in no way violates our regulations."
Santarelli added that investment decisions are based "solely on the merits and performance of the proposed fund."
KSL Capital Partners, which invests in real estate and leisure businesses, had attractive returns and paid out $2.4 billion to investors from 2005 to 2014, according to a Treasury Department memorandum recommending the investment.
Investments like the one in KSL Capital might never materialize, though, if the Legislature's bill becomes law.
The measure would be burdensome for Division of Investment staff, who profile companies before bringing them to the council for review, and could result in the state selling off assets because they violate the measure's prohibition, Byrne added.
"We might have to liquidate not only assets that have helped us outperform (expected return), but we might have to get out of some of these things that disadvantageous prices," he said.
Even so, lawmakers who backed the bill have said removing the appearance of impropriety is the right thing to do.
The donation from the Shannons to the RGA was first reported by the International Business Times.