Wednesday, July 22, 2009

Perry appointees on Texas State Board of Education (SBOE) install third rate investment advisor with ties to Spanish toll road builder

Shady deal: State's new financial advisor connected to Cintra contracts

Dirty Rat


Terri Hall
San Antonio Express-News
Copyright 2009

Something smells fishy and it only gets more suspicious the more is known about the decision to dump investment advisors R.V. Kuhns and hire New England Pension Consultants (NEPC), a Massachusetts-based financial consulting company, to provide investment advice for the $18 billion Permanent School Fund. Texas Governor Rick Perry continues to dive headlong into his plan to raid public assets to invest in risky privatized toll road schemes.

Texans nearly universally oppose handing over our Texas roads to foreign corporations, like Spain-based Cintra, and such deals are beginning to incite abject panic among many teachers and public employees who have recently seen their retirement funds cut in half only to face the constant threat of pilfering by politicians overseeing the management of the funds. Texas Monthly Editor, Paul Burka, called the proposal "immoral" and "irresponsible."

After Perry's proposed Revolving Fund, designed to snag public employee pension funds to invest in controversial 50 year foreign-owned toll road contracts, got soundly defeated in the special session July 1-2, the Texas State Board of Education (SBOE), controlled by Perry supporters, wasted no time installing a new investment advisor with ties to Cintra.

Cintra is in the midst of negotiating at least two private toll contracts (public private partnerships or PPPs) that would hand portions of I-635 and I-820 in Dallas and Ft. Worth to Cintra for a half century at a time.

Government likes the big up front sums of cash or revenue sharing schemes that the private operators dangle, and the private operators enjoy sweetheart deals chalk full of non-competition clauses and guaranteed returns on investment.

PPP toll roads are failing all over the globe, and private capital is so scarce that now more than ever politicians are seeking pots of money they control to invest in the deals, like public pension funds.

The Dallas Police and Fire Pension System is an equity partner in those two North Texas projects. NEPC acts as the investment counselor to the Dallas Police and Fire Pension System. Coincidence? Nothing involving the billions on the table is coincidence. It gets of the members of the SBOE, Rick Agosto, has a conflict of interest with NEPC (which the company reported but Agosto did not). According to the Texas State Teachers Association, RVK had been ranked as the strongest management company in all criteria by the agency. NEPC consistently ranked third.

So teachers, indeed, have reason to panic. What initially smelled like a rat, now wreaks of a coup d'etat rife with conflicts of interest. As they did only weeks ago, Texans need to a send a message loud and clear to politicians: hands off our public investments!

© 2009 San Antonio Express-News:

To search TTC News Archives click HERE

To view the Trans-Texas Corridor Blog click HERE