Neither the State Investment Council Nor the Treasurer Have Provided Answers
Senator Joe Pennacchio, (R-Morris/Passaic), sent a letter asking Governor Corzine to release a complete account of how the state pension funds decided to invest $178 million in Lehman Brothers, a now bankrupt Wall Street investment bank. The state pensions reportedly lost at least $115 million on the investment in just three months. Many investors refused to participate in the failed bailout because of the high risks involved.
“After receiving no response to serious questions about the state’s decision to invest workers’ pension money in a failing Wall Street bank, I asked Governor Corzine to begin his own investigation and publish the results in a report before Nov. 1,” said Senator Pennacchio, a member of the Senate Labor Committee.
“Public employees and retirees are asking for a complete report of why their pension money was used to bail out a bank teetering on the brink of bankruptcy,” Pennacchio said. “Voters must know whether steps have been taken to avoid future bad investment choices and higher state and local taxes they would bring.
“The State Treasurer and the Investment Council have not answered the key questions about this investment decision. Specifically, the public deserves to know whether cozy relationships with Wall Street bankers led state officials to make an investment that was not in the best interest of taxpayers, public employees or retirees.
“Letters sent to the State Investment Council and the State Treasurer have gone unanswered. Now I’m asking the governor to stop ignoring an incident that threatens to tarnish his whole administration. We need a full accounting of how the Lehman decision was made. It is not enough to say the state is contemplating ligation and then refuse to comment on the events that occurred. We need an investment process that allows for full documentation and independent oversight when the state decides to use pension money on risky bets such as the Lehman investment.”
The letter to the governor is attached.
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November 3, 2008
