Senator Joe Pennacchio, a member of the Senate Budget and Appropriations Committee who represents Morris and Passaic counties, noted sadly that it has been one year since he first asked for answers about the state’s $118 million loss on an investment in Lehman Brothers.
The $180 million investment came less than four months before Lehman, one of the largest Wall Street investment banks, went bankrupt. The Corzine administration has released almost no details of how the decision was made to put retiree savings and taxpayer contributions into a Wall Street bank that was widely reported to be teetering on the brink of bankruptcy.
“The decision to make a risky investment of this magnitude was clearly not made without the input of some appointee of the Corzine administration,” Pennacchio said. “Yet the Treasurer continues to insist that this was solely the decision of low-level employees of the Division of Investment who will be demoralized if my questions are answered.”
Pennacchio pointed out that he has no idea who is responsible for the investment decision because multiple letters asking for details have not been answered. Further, the administration responded to an Open Records Request by redacting all important details from documents that might have shed light on the Lehman decision. Pennacchio called on the Corzine administration to answer questions about how the investment was made. The response should include information about the roles played by all members of the State Investment Council, including the chairman and four commission members with close ties to Lehman.
“The state’s lawsuit against Lehman officials will never recover the full amount lost,” Pennacchio. “It is far more important that legislators find out whether investment decision making has put $60 billion in state pension money at unnecessary risk. The veil of secrecy that the Corzine administration wants to keep over its many financial dealings may help Wall Street, but it leaves Main Street New Jersey distrustful and angry about how its money is invested.”
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April 13, 2009
