Republican Legislators Also Plan to Introduce Legislation Requiring Blind Trusts for Governors’ Investments
The controversy surrounding Gov. Jon S. Corzine’s personal finances requires a special investigator to determine whether there is a conflict of interest, said Assembly Republican Leader Alex DeCroce and Sen. Kevin J. O’Toole, who are also planning legislation to require investments of future governors be placed in blind trusts.
In a joint statement, they called for the appointment of a special investigator to determine if any conflicts do exist “so we can put to rest any lingering questions about Governor Jon Corzine’s finances and what appears to be several serious instances where the governor’s finances are in direct conflict with state business.”
Corzine’s stake in a private hedge fund known as TPG-Axon, a subsidiary of the Texas Pacific Group (TPG), has far-reaching consequences as new information reveals direct conflicts between the governor’s personal finances and state finances, the lawmakers said. Corzine’s investment in TPG-Axon is said to be in the one percent range, which could make the governor’s personal stake in the $9 billion fund as high as $90 million.
DeCroce and O’Toole cited four specific matters that deserve to be examined by an independent investigator:
- The first potential conflict is Corzine’s hedge fund and its connection with the casino industry. TPG-Axon is a subsidiary of TPG and TPG bought Harrah’s Entertainment in late 2006. TPG founders David Bonderman and James Coulter are identified in documents prepared by the Attorney General’s Division of Gaming Enforcement, and released by the Corzine campaign, as the individuals who hold the ultimate authority to make decisions on behalf of the various companies that hold the casino licenses issued in 2008 to Harrah’s, Caesars, Bally’s and the Showboat casinos in Atlantic City.
- The second pertains to hundreds of millions of pension fund dollars that have been invested into Corzine’s personal hedge fund’s parent company, TPG. New Jersey’s Division of Investment (DOI), chaired by Orin Kramer, has committed and invested $565 million in taxpayer dollars to various funds in the TPG family while the governor has been personally profiting from his investments with TPG-Axon.
- The third is TPG-Axon’s direct stake in two cable TV companies regulated by the state. TPG-Axon holds $26.6 million of stock in Comcast and has $25.8 million of stock in Time Warner Cable. As such, Corzine’s hedge fund should not be able to directly profit from an industry he regulates.
- The final matter that needs to be examined pertains to his hedge funds’ largest holding, Hewlett Packard. Corzine’s investments in TPG-Axon link him directly to the hedge fund’s holdings, the biggest of which is Hewlett Packard Company. As of the second quarter in 2009, TPG-Axon owns $428.9 million worth of HP stock. While Corzine has been governor and making millions off of an investment with TPG-Axon, Hewlett Packard has received $5.5 million to do business with New Jersey’s state government, $2.5 million of which were in the form of no-bid contracts.
Calling for an independent investigation into this matter is not an unprecedented request, DeCroce and O’Toole said. They pointed to four recent examples of special investigators looking into allegations of misconduct by state officials or judges. The most widely known example was the investigation into Attorney General Zulima Farber, where a “Special Deputy Attorney General” was appointed to conduct an independent investigation into the traffic stop.
“It is completely unacceptable that Governor Corzine’s hedge fund should be able to directly profit in any way, shape or form from government business or that the governor’s actions and those of his political appointees can be called into question because of these personal investments,” DeCroce and O’Toole said. “As such, a special investigator will put this issue to rest and ensure existing conflicts are properly corrected.”
The Republican legislators also plan to pursue legislation this fall that would require governors to place their investments in a blind trust to avoid even the perception of conflicts in the future.
“That requirement would ensure that a governor’s actions are not motivated by potential gains to his or her investments,” DeCroce and O’Toole said.
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August 24, 2009
