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Senate Judiciary Hearings On Pension Fund Corruption Continue

January 25, 2010, 12:00 am
By Corey Pein
The New Mexico Senate Judiciary Committee hearings that began Jan. 21 with testimony from whistleblower Frank Foy, who alleged "stonewalling" by the Richardson administration, continue today.

The meeting was supposed to start at 2 pm, but it's a little past 3 pm now, and Senators are just beginning to make their way up from the floor.

Keep checking back here for updates, and be sure to check out the New Mexico Independent's liveblog, where I'll also be chiming in.



This time, committee Chairman Sen. Cisco McSorley, D-Bernalillo, has invited the State Investment Council. McSorley made a point last week that the hearing featuring Foy was rather one-sided. Today, we'll likely hear a defense of the SIC's investment practices, but it'll be a surprise if agency reps address the specifics of Foy's allegations.

Update 3:44 pm: Senators and staff are beginning to filter in. McSorley, who is rocking a Winnie the Pooh tie today, is telling Republican Sens. John Ryan and William Payne, both of Bernalillo County, that he intends to conduct these hearings bipartisanly.

That's Payne and McSorley, in the photo above.

Update 4 pm: Legislative Finance Committee financial economist Dan White is laying out the costs to the state of litigation facing the SIC. He says the SIC has asked for budget increases totaling $5.7 million in the current fiscal year, thanks in part to legal expenses.

"There was no procurement process of any kind done with these contracts," White says of the SIC's legal contracts.

(That's White in the photo, with SIC spokesman Charles Wollman behind him.)

Update 4:07 pm: White says the single largest SIC legal contract, worth well over $3 million so far, has gone to the Paul Hastings Group.

"If you don't appropriate the [additional] money, Paul Hastings doesn't get paid," White says.

However, White questions whether the work Hastings has done legitimately qualified for an exemption in state law that allowed his contract to be awarded without a competitive bid.



Update 4:27 pm: Senators are asking the SIC's in-house legal counsel about the agency's response to the Foy/Vanderbilt case.

The SIC general counsel, Bryan Augustin Otero, is pictured to the right, seated in between White and Wollman.

By way of asking how the SIC might hurry up in its response to Foy's records requests, Sen. Payne points out that the agency is on the same side as the whistleblower.

"No, we are not stonewalling," Otero says.

He adds that "the authorities"--apparently the FBI and/or the Securities and Exchange Commission--are getting first dibs at SIC documentation.

Update 4:48 pm: A little earlier, Otero said he expects the expensive-looking outside litigators to recover substantially more than they cost.

State Land Officer and SIC member Pay Lyons is waiting in the audience to speak.

Update 4:52 pm: Now he's up. Lyons says former State Investment Officer Gary Bland killed an effort to investigate SIC practices.

Update 5:30 pm-ish: Sen. John Ryan says the SIC is working at cross purposes with Foy, when they should be working together.

"There's going to be some hesitancy [by the public] to believe what the SIC comes up with," Ryan says.

But McSorley says Foy is at least as conflicted as the SIC, because Foy has a financial stake in the outcome of the case.

Update 5:40 pm-ish: Lyons says he initially "wanted to run [Hastings] out of town," but that the $4 million investment in his firm could return $400 million.

 

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