Co-published by Newsweek

The Trump administration is seeking to limit protests on the National Mall in Washington, DC and in nearby city parks and squares in new rules the National Park Service has proposed in the Federal Register. The parks service argues the regulations are just a routine update. But many opponents see them as an attempt to curb the rights of Americans to assemble and speak out at the very monuments that proclaim the nation’s uniqueness as a free and democratic country.

The proposed regulations’ largest impact is likely to be felt at the White House, where Americans have historically made their voices heard on national issues. The plan would nearly seal off the area surrounding the presidential residence, with only a five-foot-wide stretch of sidewalk remaining open to the public.

The suffragettes who stood in front of the White House in 1917 demanding the vote for women would have been hard-pressed to fit in the tiny space now proposed to be available to the public. More recently, the 2014 demonstration against the Keystone XL oil pipeline, where hundreds of people were arrested after locking themselves to the White House fence with plastic zip ties, would have been impossible under the proposed rules.

“The symbolic value of getting arrested on the sidewalk was very powerful for them,” Arthur Spitzer, legal co-director of the American Civil Liberties Union of Washington, DC said of the Keystone protesters.

Some areas around the White House have already been temporarily closed to foot traffic in response to “fence jumpers” who have attempted to enter the White House grounds. The new rules would make those closures permanent, even though jump-proof fencing was recently installed.

The government’s proposals would effectively ban stages and sound systems for spontaneous demonstrations like those that erupted in response to the Trump administration’s travel ban or against the administration’s policy of separating children from their parents at the U.S.-Mexico border, because permits would be required for their use.

In an email, Brent Everitt, a National Park Service spokesman, said the new rules were proposed to address newer monuments, like the Korean War Veterans Memorial, the Vietnam Veterans Memorial and the Martin Luther King, Jr. Memorial, which were built since the rules were last revised. (For the most part, the ACLU has not taken issue with those proposals.)

He argued that changes to White House rules were made in response to a request by the Secret Service. Everitt also commented that another change, a permit requirement for structures built in some Washington parks, “are in reaction to events that occurred since the last update,” namely, the Occupy protests in McPherson Square, whose makeshift buildings “created health and safety hazards for participants and for the city at large.”

Many of the government’s proposed rules would violate the Constitution, the ACLU contends in its formal comments on the changes.

“…the amendments now proposed harken back to the era in which the courts had to be called upon to protect the right to dissent in the nation’s capital,” the organization wrote, noting that some of the newly proposed regulations would also violate court orders issued in previous ACLU cases and which are currently in effect.

The ACLU is among more than 38,000 groups and individuals that have weighed in on the proposals during a 60-day comment period that ended October 15. The civil liberties group charges that the limit on protests on the sidewalk facing the White House is a “stealth proposal” because it is buried at the end of the 26-page rules document; no discussion of it is included in the Federal Register publication of why the rule is necessary.

Spitzer said the provision appears to be a response to White House annoyance with protesters.

“That’s my suspicion,” Spitzer said. “I do know that no one in the National Park Service was working on this until the Trump administration came to power.”

The administration is also requesting public comment on charging demonstrators for permits to recover government costs for large events. It has not formally proposed charging fees, but the ACLU said in its comments that doing so would amount to “charging Americans a fee to exercise their constitutional rights.” The 1963 March on Washington in which Martin Luther King, Jr. gave his I Have a Dream speech likely would have been impossible, the ACLU contended, had the government been able to recover its costs for the event.

The government is legally obligated to read and consider all public comments before its rules go into effect. But, if final regulations, such as those proposed are published, “The green light would be on for lawsuits on behalf of people who want to demonstrate,” Spitzer said.

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Dianne Feinstein’s husband and the UC system are no strangers to controversy surrounding their investment and business practices.

Co-published by Splinter

University of California regents approved a nine-figure investment in a private equity fund run by a major donor to Democratic Senator Dianne Feinstein, whose husband sits on the regents’ board. The investment was disclosed just as some of the private equity fund’s overseers and advisers were pumping thousands of dollars of donations into Feinstein’s campaign, according to documents reviewed by Capital & Main.

In the fall of 2017, UC regents decided to shift $100 million worth of university endowment and pension resources into the RISE fund, operated by TPG. That firm was founded by David Bonderman, who has forged extensive business relationships with Feinstein’s husband, regent Richard Blum. Over the past quarter-century, Blum served as a TPG executive, founded a fund overseeing TPG’s Asia business and partnered with TPG on numerous investment deals with his own investment fund, Blum Capital. The $100 million investment was UC’s first investment with TPG.

Securities laws require public officials to make investment decisions on the basis of merit, not personal relationships or political contributions.

Since 1992, Bonderman and his wife have donated more than $32,000 to Feinstein’s political campaigns. Additionally, donors associated with the RISE fund’s board and advisory panel have contributed more than $65,000 to Feinstein’s campaigns and political action committee. That includes $15,400 of donations in the three-week period surrounding the disclosure of UC’s investment in the RISE fund. Those donations came from Salesforce founder Marc Benioff and his wife, Lynne, as well as from Ariel Investments president Mellody Hobson. Marc Benioff and Hobson, who is married to George Lucas of Star Wars fame, sit on the RISE Fund’s Founders Board.

In general, securities laws require public officials to make investment decisions on the basis of merit, not personal relationships or political contributions. A 2010 Securities and Exchange Commission rule was explicitly designed to deter financial firms from using campaign contributions to influence investment decisions.

“The decision by the UC regents to make an investment in a fund run by a close friend and business partner of Richard Blum raises potential issues of institutional corruption.”

Blum argues that there is no conflict of interest.

“I’ve never heard of the RISE Fund,” he told Capital & Main. “We used to be partners with TPG. We’ve done investments together. But I have nothing to do with TPG or the RISE Fund… [The University of California investment office] never checks with me on anything.”

Blum conceded that, in addition to his business and personal relationships with Bonderman and TPG, he also knows another top TPG and RISE Fund executive, Jim Coulter, and added, “I occasionally get together with [UC Chief Investment Officer] Jagdeep [Singh Bachher] and we talk about philosophy.”

Singh Bachher is in charge of oversight and management of UC’s investment in the RISE Fund.

Capital & Main asked TPG if it had disclosed its executives’ relationships with Blum and donations to Feinstein. In a statement, TPG said that it “adheres to the strongest compliance standards and all political donations are subjected to compliance review and clearance, and in the case of federal officials are publicly disclosed through the Federal Election Commission. TPG responded in the ordinary course to due diligence questions posed by UC in connection with its investment.”

The University of California forwarded the regents’ conflict of interest policy and made no other comment. Senator Feinstein did not respond to a request for comment by press time.

“The decision by the UC regents to make an investment in a fund run by a close friend and business partner of Richard Blum raises potential issues of institutional corruption,” said Jay Youngdahl, an attorney and pension expert. “When money saved for workers’ retirement is placed into high-fee investments that benefit those close to politicians, questions need to be asked and answered. Investment funds in several states have suffered problems with similar practices.”

Blum, Bonderman and the UC system are no strangers to controversy surrounding their investment and business practices.

Blum in recent years has faced questions about his overlapping business and political interests. In 2013, he was lambasted by investigative journalist Peter Byrne when Blum’s real estate firm, CBRE, got a $118-plus million contract to sell and lease U.S. Postal Service property. In 2015, the Postal Service’s inspector general recommended that the contract be terminated. Blum was also criticized by Michael Hiltzik of the Los Angeles Times for his role in using CalPERS, the state employees’ retirement fund, to purchase the for-profit higher education firm ITT. At the same time he was investing in ITT, which has now been shut down (at a significant loss to CalPERS), Blum was voting to increase UC tuition by 32 percent.

More recently, Blum Capital was blamed by Payless ShoeSource’s creditors for bankrupting the chain to provide $350 million in dividends to Blum Capital and its business partner on the deal, Golden Gate Capital. In the Blum and Golden Gate-initiated bankruptcy, Payless closed 700 stores, laid off hundreds and sued former employees to repay for small signing and relocation bonuses the company had given out.

Similarly, the SEC fined TPG $13 million for misleading investors in December 2017. In June 2017, Bonderman resigned from Uber’s board after making a comment widely seen as offensive to women. And in 2015, TPG was sued by its former communications director, Adam Levine, who had also worked as deputy press secretary for George W. Bush. Levine claimed in legal filings that the firm “miss-billed [sic] expenses, flouted compliance rules, and gave inaccurate information about its investment team,” according to Reuters. The lawsuit was dropped later in the year, according to the firm.

Meanwhile, the UC Retirement Plan has lately been engulfed in scandal over pay-to-play allegations.

In early September, the pension trade publication Institutional Investor published a report showing that the retirement system’s chief investment officer faced “serious charges of mismanagement.” The report also highlighted allegations from an anonymous tipster with inside information that Bachher had placed $250 million in a fund run by a former UC regent, Paul Wachter, who had participated in Bachher’s hiring. The investment was opposed by other top investment staff at UC, the article said.

Copyright Capital & Main

Congressional District 10

 

Josh Harder

Jeff Denham

 

 

 

 

 

 

 

 

 

 

Read Larry Buhl’s Pro-Trump House Votes Could Haunt Heartland Incumbent Jeff Denham

District Terrain: Central Valley.

Facts: As the Valley’s traditional ag mantra of Guns, Jesus and Water gives way to concerns about health care and immigrant rights, the Republican candidate faces an uphill battle to win reelection.

Incumbent: Jeff Denham.

Challenger:  Josh Harder.

Large Financial Backers: Bravo Ag Group, Google, Phillips 66 (Denham). Labor PACs, Democratic Party PACs, American Association for Justice (Harder).

Issues: Health care, immigration, economy/taxes.

Takeaways: In elections past, Jeff Denham has artfully navigated between ingrained rural conservatism and the needs of his low-income constituency. But now Denham finds himself squeezed between Donald Trump’s policies and his district’s increasingly stressed constituents.

Polling: Opinion surveys say the race is too close to call — but Harder is beginning to eclipse the incumbent.

Key Endorsements: California State Sheriffs’ Association, U.S. Chamber of Commerce, Stanislaus County Farm Bureau (Denham). Modesto Bee, Latino Community Roundtable (Stanislaus County), Brady Campaign to Prevent Gun Violence (Harder).

Challenger’s Chances: If Harder maintains his momentum, the first-time candidate could topple Denham.

From Buhl’s story: “Big-box retailers and plentiful Starbucks make sections of Modesto resemble Southern California’s megalopolis. One resident quipped that his city is ‘90 minutes from everywhere you’d rather be.’” 

 

Congressional District 21

 

David Valadao

TJ Cox

 

 

 

 

 

 

 

 

 

Read Larry Buhl’s Trump May Blow Reelection Headwind at David Valadao

District Terrain: Central Valley from the outskirts of Bakersfield to the western portion of Fresno County.

Facts: Agriculture is the leading industry in this largely rural district. Nearly three-quarters of the population is Latino, and it is among the poorest districts in the state.

Incumbent: David Valadao.

Challenger: TJ Cox.

Large Financial Backers: Agricultural organizations, Chevron, Koch Industries (Valadao). Labor PACs, Democratic PACs, American Society of Anesthesiologists (Cox).

Issues: Immigration, water policies, economy.

Takeaways: While the district tends to lean left, Valadao’s willingness to break from the Republican Party on immigration issues has earned him wider support among voters.

Polling: Surveys indicate a victory for Valadao remains likely.

Key Endorsements: California Pro-Life Council, National Rifle Association, Peace Officers Research Association of California (Valadao). End Citizens United, 314 Action, American Federation of Teachers (Cox).

Challenger’s Chances: Poor.

From Buhl’s story: “Whether voters hold Valadao accountable for his repeated efforts to repeal Obamacare, and his failure to protect Dreamers, remains to be seen.”

Congressional District 45

 

Mimi Walters

Katie Porter

 

 

 

 

 

 

 

 

 

Read Judith Lewis Mernit’s The Education of Mimi Walters.

District Terrain: Inland Orange County.

Facts: There are signs that Congressional Republicans have generally fallen from favor in Orange County through their votes to substitute the Affordable Care Act with a GOP replacement.

Incumbent: Mimi Walters.

Challenger:  Katie Porter.

Large Financial Backers: Dow Chemical Company, Amazon.com, Blue Shield of California (Walters). Labor PACs, Emily’s List, End Citizens United (Porter).

Issues: Health care, immigration, taxes.

Takeaways: Polls suggest that nearly two-thirds of this traditionally Republican district’s residents disapprove of Donald Trump’s performance. To win, Mimi Walters will have to prevent that dislike from rubbing off on her.

Polling: Late polls show UC Irvine law professor Porter pulling ahead of Walters.

Key Endorsements: U.S. Chamber of Commerce, Howard Jarvis Taxpayers Association, Orange County Business Council (Walters). The Brady Campaign to Prevent Gun Violence, Sierra Club, Stonewall Democrats (Porter).

Challenger’s Chances: A first-time candidate’s slight lead could spell the end of Republican dominance here in November.

From Lewis Mernit’s story: “Hillary Clinton beat Donald Trump in CA-45, a sign that at least some of its conservative voters might be more loyal to ideals of diversity and tolerance than they are to their party.”

See More Congressional Summaries

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Earlier this year, Capital & Main sent reporters to six congressional districts that were considered safely Republican but had favored Hillary Clinton in the 2016 election. Did Clinton win there because California Republicans were turned off by Donald Trump, or was something else afoot — were demographic shifts changing the political complexions of conservative bastions, or, perhaps, did constituents feel their congressional representatives were voting against their own local interests?

We also covered two red districts handily won by Trump (represented by Tom McClintock and Devin Nunes) for signs of discontent. Capital & Main rolled out the first stories February 1, before any polling had been conducted, and our reporters found significant dissatisfaction with incumbent Republicans in all these districts. Since publication, signs and polling have indicated further erosion of the GOP’s grip, which may result in an unprecedented political turnover on November 6.

During the next week we’ll present updated summaries of our original stories written by Kelly Candaele, Judith Lewis Mernit, Larry Buhl, Steve Appleford and Donnell Alexander.

Congressional District 25

Steve Knight

Kate Hill

 

 

 

 

 

 

 

 

 

Read Steve Appleford’s Is Steve Knight Too Out of Touch to Be Reelected to the House?

District Terrain: Northern Los Angeles County’s high desert, parts of east Ventura County.

Facts: The district has long been home to aerospace giants and defense contractors, but is additionally seeing an expansion of investment in solar energy. It has also experienced an accelerating increase of its Latino population.

Incumbent: Steve Knight.

Challenger:  Katie Hill.

Large Financial Backers: Alliance Coal, National Automobile Dealers Association, United Services Automobile Association (Knight). Labor PACs, American Association for Justice, Planned Parenthood (Hill).

Issues: Affordable health care, taxes (including the state’s new gas tax), immigration.

Takeaways: Knight, a second-generation district congressman, may not be able to overcome the 25th’s anti-Trump sentiments.

Polling: Late polling shows political rookie Hill pulling ahead.

Key Endorsements: Howard Jarvis Taxpayers Association, U.S. Chamber of Commerce, National Right to Life Committee (Knight). NARAL Pro-Choice America, Emily’s List, Sierra Club (Hill).

Challenger’s Chances: Very good.

From Appleford’s story: “Economic progress has been accompanied by growing homelessness, which once barely existed here.”

Congressional District 48

Dana Rohrabacher

Harley Rouda

 

 

 

 

 

 

Read Judith Lewis Mernit’s The Great Awakening of CA-48

District Terrain: Coastal Orange County.

Facts: Clinton won this affluent district in 2016. Incumbent Dana Rohrabacher cultivates the image of a pot-smoking surfer, but Trump is very unpopular in CA 48.

Incumbent: Dana Rohrabacher.

Challenger: Harley Rouda.

Large Financial Backers: GOP and conservative PACs, General Atomics, Scotts Miracle-Gro (Rohrabacher). Labor PACs, Mortgage Bankers Association, National Association of Home Builders (Rouda).

Issues: Health care, the economy, immigration.

Takeaways: Rohrabacher, a former Reagan speechwriter, is fighting for his political life against a novice opponent.

Polling: U.C. Berkeley, Siena College and Monmouth University all call this a virtual tie – but with a slight edge going to Rouda.

Key Endorsements: National Rifle Association, Council for Citizens Against Government Waste PAC (Rohrabacher). Human Rights Campaign, Sierra Club, California Labor Federation (Rouda).

Challenger’s Chances: Rouda has pulled slightly ahead in recent polling.

From Lewis Mernit’s story: “People in coastal Orange County mostly want to be left alone, to not have government taking away their money or policing their behavior.”

Congressional District 49

Diane Harkey

Mike Levin

 

 

 

 

 

 

 

Read Kelly Candaele’s The Dream Coast Under Pressure    

District Terrain: Northern coastal areas of San Diego County, a portion of southern Orange County.

Facts: The district has changed hands between parties several times over the last 25 years.

Incumbent: None. Its GOP representative, Darrell Issa, barely won in 2016 and decided not to run this year. The Republican candidate is Diane Harkey; Mike Levin is her Democratic opponent.

Large Financial Backers: Edison International, Occidental Petroleum and Watson Pharmaceuticals (Harkey). Labor unions, American Association for Justice, Progressive Action PAC (Levin).

Issues: Gun laws, health care, immigration.

Takeaways: The district’s traditional loyalty to the GOP, because of its support for military spending, may be eroding from fears of shrinking housing affordability and a revulsion over Trump’s immigration policies.

Polling: Latest surveys show Levin beginning to walk away with the seat.

Key Endorsements: Howard Jarvis Taxpayers Association, Susan B. Anthony List, San Diego Patriots (Harkey). San Diego Union-Tribune, League of Conservation Voters, Everytown for Gun Safety (Levin).

Challenger’s Chances: Good and getting better.

From Candaele’s story: “The 49th District is where changing demographics and Trumpism’s existential jolt have exposed political fissures that have yet to be re-aligned.”

See More Congressional Summaries

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Co-published by Newsweek

Only the shaken confidence in Brett Kavanaugh by three senators stands in the way, Saturday, of the Supreme Court nominee’s lifetime appointment to the nation’s highest court. Republicans Jeff Flake and Lisa Murkowski, and Democrat Joe Manchin, will have little more on which to base their votes than the words of Kavanaugh himself versus those of his various accusers.

Below are six of the main lies Kavanaugh is accused of telling under oath, followed by a discussion with three legal experts on his behavior. The feature ends with a list of 13 other alleged lies, with thanks to GQ, the New York Times, Vox, the Washington Post, and Current Affairs.

1. May 9, 2006, SJC nomination hearing to the DC Circuit Court of Appeals, response to Senator Richard Durbin (D-IL) and the late Senator Ted Kennedy (D-MA), again about his knowledge of the “Memogate” emails.

“I’m not aware of the memos, I never saw such memos that I think you’re referring to. I mean, I don’t know what the universe of memos might be, but I do know that I never received any memos and was not aware of any such memos.”

Distance from the Truth: Kavanaugh made the denial under oath multiple times to committee members. Senator Patrick Leahy (D-VT), however, recently posted confidential emails on Twitter that he says were in Kavanaugh’s possession, proving his previous denials are, Leahy wrote, “just FALSE!”

2. May 9, 2006, SJC hearing on Kavanaugh’s nomination to the DC Circuit Court of Appeals, response to Senator Durbin (D-Ill.) about the judicial nomination of William Haynes, the Pentagon’s director of torture policy during the George W. Bush administration.

“I was not involved and am not involved in the questions about the rules governing detention of combatants or—and so I do not have the involvement with that.”

Distance from the Truth: Kavanaugh has since been doubly implicated, both in significant involvement with Haynes’ judicial confirmation for Bush and in having a hand in Bush detention and interrogation policies. Newly discovered emails from 2002 prove the former, Senate Democratic Whip Dick Durbin (D-IL) charged last month, and “show that Kavanaugh played a substantial role in the decision to nominate Haynes.”

3. September 27, 2018, Senate Judiciary Hearing, on explaining partying activities during the summer of 1982.

“I never attended a gathering like the one Dr. Ford describes in her allegation.”

Distance from the Truth: Both Kavanaugh’s later testimony and his personal calendars detail attending parties throughout the period of the alleged assault, uncannily similar to the one Christine Blasey Ford describes.

4. April 27, 2004, SJC confirmation hearing of Kavanaugh to the DC Circuit Court of Appeals, response to Senator Orrin G. Hatch (R-UT) on whether as Associate White House Counsel he had direct knowledge of Memogate memos stolen from Democrats on the Judiciary Committee and leaked to the White House.

“No. Again, I was not aware of that matter in any way whatsoever until I learned it in the media.”

Distance from the Truth: Kavanaugh made the denial under oath multiple times to committee members. Senator Patrick Leahy (D-VT), however, recently posted confidential emails on Twitter that he says were in Kavanaugh’s possession, proving his previous denials are, Leahy wrote, “just FALSE!”

5. September 27, 2018, Senate Judiciary Hearing, denying a New York Times report that “Renate alumnius” [sic] on his yearbook page was a sexual boast.

“That yearbook reference was clumsily intended to show affection, and that she was one of us…It was not related to sex.”

Distance from the Truth: Sean Hagan and three other former Georgetown Prep students counter that the reference was intended as degrading, albeit unsubstantiated. “So angry. So disgusted. So sad. Integrity? Character? Honesty?” Hagan posted on Facebook after the testimony.

6. September 27, 2018, SJC hearing, response to Senator Amy Klobuchar (D-MN) about whether he “drank so much that you didn’t remember what happened.”

“But I did not drink beer to the point of blacking out… Passed out would be—no, but I’ve gone to sleep, but—but I’ve never blacked out.”

Distance from the Truth: Former Yale freshman roommate James Roche: “I saw him both what I would consider blackout drunk, and also dealing with the repercussions of that in the morning.”

Capital & Main asked congressional committee veterans and a former federal prosecutor to examine Kavanaugh’s September 27 testimony, as well as additional statements flagged by journalists as probable Kavanaugh mistruths. They were asked if the nominee’s character, temperament and credibility under fire warrant his elevation to the Supreme Court.

Former assistant U.S. attorney Nick Akerman

“[Kavanaugh] came out with an opening statement that basically tried to take away the committee’s ability to really cross examine him,” says trial lawyer and former assistant U.S. attorney Nick Akerman. “Because, I think, he realized that if he left himself open to being questioned by committee members and open-ended cross examination, he’d wind up getting himself into trouble — exactly as he did.”

Akerman cut his prosecutorial teeth in the 1970s with the Watergate Special Prosecution Force under Archibald Cox and Leon Jaworski. Any kind of “he said, she said” equivalence between Blasey Ford and Kavanaugh during the hearings, Akerman argues, quickly foundered on the wealth of persuasive detail in Blasey Ford’s account that was made even more compelling when it dovetailed with the personal calendar that Kavanaugh introduced as supposedly exculpatory evidence.

“I don’t think Kavanaugh realized what he was doing,” Akerman says. “I mean, the fact that he tried to keep [the possible party date] to a weekend as opposed to a weekday during the summer is a bit ridiculous. There’s just enough little details in there that when you start adding them up all point towards him lying. This is somebody who should not be on the U.S. Supreme Court.”

Former Rep. Elizabeth Holtzman

When Akerman was building cases against all the president’s men, Elizabeth Holtzman was holding Richard Nixon accountable for his abuses of executive power and for flouting the Constitution. As a first-term congresswoman from New York City serving on the House Judiciary Committee, she cast key impeachment votes against Nixon. Like Akerman, Holtzman also notes the contradictions around Kavanaugh’s interpretation of the calendar in his testimony, but what really stands out to her is how loosely, she says, Kavanaugh plays with facts.

“First of all, there was no left-wing conspiracy,” she says. “If you listen to Dr. Blasey Ford, you know that she was a very reluctant witness, and this was not an effort to undo a conservative appointment; it was to let people know about what he had done. … His claim that there was no corroboration also wasn’t true. Because there is corroborative testimony — testimony that she gave about her therapist, that she told the therapist, that she told her husband; there may be other people that she told.”

Kristine Lucas, Leadership Conference on Civil and Human Rights

Kristine Lucius, executive vice president of policy for the Leadership Conference on Civil and Human Rights, which opposes the nomination, has been through her share of confirmation fights. But her experience as the legal and policy adviser to the former Senate Judiciary Committee chair, Democrat Patrick Leahy of Vermont, did not prepare her for what played out at last week’s hearing.

“What we saw in Brett Kavanaugh’s testimony was someone belligerent and vindictive, and threatening and partisan,” Lucius says. “Even setting aside the significant sexual assault allegations, I have real concerns about how the Supreme Court will be viewed if he is confirmed.”

Holtzman also expresses concern on this point.

“He said, ‘What comes around, goes around’ — and that’s a kind of a threat,” Holtzman says. “Is he threatening the people that support Dr. Blasey Ford? Is he threatening the Democrats? Is he threatening people who oppose his nomination? Who is he threatening? We don’t need a Supreme Court justice who is going to use his position to get revenge.”

Lucius recalls past confirmation fights from her time with the Judiciary Committee, when past drug use or a sexual allegation would sometimes surface in her background briefings of a nominee for committee members. What never seemed to emerge was a consistent standard of concern by senators. It was at such moments that she saw confirmation votes as a “decency test” for each individual member.

“This is 100 percent on the shoulders of the senators,” says Lucius. “They are deciding what the standard is going to be for the highest court in the land. And that has as much to do with their institutional role as [it does] their own moral compass.”

Copyright Capital & Main

Retired U.S. Supreme Court Justice John Paul Stevens told an audience Thursday afternoon that he once was a strong supporter of Supreme Court nominee Brett Kavanaugh, but no longer believes Kavanaugh should become a Supreme Court justice. The 98-year-old Stevens expressed his view to a packed room at a Unitarian Universalist church in Boca Raton, Florida.

“I thought he had the qualifications to sit on the Supreme Court and should be confirmed if he was ever selected, but I’ve changed my views for reasons that have no relationship to his intellectual ability or his record as a federal judge,” Stevens said. “He’s a fine federal judge and should [have] been confirmed, [but] his performance during the hearings changed my mind.”

Stevens said he agreed with news and legal commentators who have suggested that Kavanaugh had demonstrated potential bias and alienated too many people who might come before the court, such that “he would not be able to perform his full responsibilities. I think there’s merit in that criticism … Senators should really pay attention to it for the good of the court.”

Stevens said he was once such a strong admirer of Kavanaugh that “I have a picture of him in my book.” He was referring to his 2014 work, Six Amendments: How and Why We Should Change the Constitution. In it, Stevens criticizes the Citizens United v. FEC Supreme Court decision, which allows corporations to spend unlimited amounts of money to influence elections. Stevens famously wrote the dissent in that case, an opus that was some 90 pages.

Stevens’ book describes an opinion written by Judge Kavanaugh on the same matter.

“The issue in the case was whether a Canadian citizen and a citizen of Israel living in New York temporarily could make expenditures in elections that were going on at the time,” he told the Boca Raton audience. “Following Citizens United, they brought a proceeding in federal court asking for an injunction against enforcing the statute that prohibits expenditures by foreign citizens in American elections, and Judge Kavanaugh wrote the opinion upholding the statute…. I thought that was a very persuasive opinion. And one of the cases that he cited in that opinion was my dissent on Citizens United, which showed the fact he was a very good judge and had very good taste.”

The event moderator, Palm Beach Post columnist Frank Cerabino, asked if there were similarities between the confirmations of Kavanaugh and Justice Clarence Thomas, since they are both polarizing figures. Stevens said that, ultimately, there was nothing that would have disqualified Thomas. Stevens added that although he frequently disagreed with Thomas on cases, “As a person, I’m very fond of him. He’s a very decent, likable person. You cannot help but like Clarence Thomas – which I don’t think necessarily would be true of this particular [judge].”

(Audio from the event is attached below)
 
 

Copyright Capital & Main

Co-published by Westword

If you are a Wall Street executive looking to land a lucrative contract to manage Colorado retirees’ pension money, a federal anti-corruption rule is designed to deter you from trying to use campaign cash to influence state officials who oversee those investment decisions. Despite that regulation, however, Republican Treasurer Walker Stapleton’s gubernatorial campaign is being boosted by a political group partially sponsored by financial firms that receive giant investments from the pension fund Stapleton helps run, according to documents reviewed by Capital & Main.

During Stapleton’s tenure as a trustee of the Public Employees Retirement Association (PERA), four real estate investment firms have been given contracts to manage more than $1 billion of Colorado state employees’ retirement savings. During the 2018 election cycle, donors from those firms have delivered more than $492,000 to the Republican Governors Association, which has been blanketing Colorado with ads supporting Stapleton’s candidacy.

In addition, members of a Denver law firm that is registered to lobby at the federal level for another major PERA money manager have collectively given almost $20,000 to Stapleton’s campaign and to a Colorado-based super PAC whose stated mission is to promote Stapleton’s gubernatorial bid. That is on top of a separate $2.2 million worth of anonymous dark money that has flooded into super PACs supporting Stapleton — cash whose source is impossible to trace.

Stapleton’s campaign did not respond to Capital & Main’s questions about the investments and donations.

While Stapleton and his political apparatus have been vacuuming in money from fossil fuel donors and other corporate interests with business before the state, the financial industry donations stand out because they are potentially governed by the Securities and Exchange Commission’s 2010 “pay to play” rule.

Passed in the wake of major pension corruption scandals across the country, the rule is designed to penalize financial firms that direct campaign contributions to public officials who have the power to steer state investments to donors’ financial firms. It is meant to deter such campaign cash from helping those officials — and includes broad anti-circumvention provisions aimed at preventing donors from routing contributions through third-party groups that then support the election campaigns of those public officials.

Stapleton is covered by the rule because as treasurer he is a member of PERA’s board of trustees. He serves on the board’s investment committee, which directly oversees the pension system’s investments — and as a recent Capital & Main investigation revealed, PERA fees paid out to Wall Street firms have skyrocketed during Stapleton’s tenure.

If Stapleton is elected governor, he will leave the pension fund’s board but will appoint three members of PERA’s board, potentially giving him even more influence over which financial firms get pension investments — just after a campaign that has seen Stapleton and Colorado-based super PACs supporting him rake in more than $422,000 from donors in the financial industry, according to state records and data compiled by the National Institute on Money in State Politics.

Ethics expert Craig Holman told Capital & Main that “there has been a slow but steady rise of Wall Street firms seeking an end-run around the SEC pay-to-play rules by giving to outside groups, such as RGA or super PACs, and allowing these outside groups to spend their money promoting the public official responsible for awarding contracts to Wall Street.”

He added: “Laundering campaign money through third parties can be even more corrupting than direct contributions to the candidates, given that third-party donations and spending on behalf of the same candidates have no limits.”

In response to Capital & Main’s open records requests, PERA officials have blocked the release of all details of fees paid to the investment firms in question.

In an emailed statement, PERA spokesperson Luc Hatlestad wrote that PERA includes “language in our management agreements that require the manager to agree to not provide gifts, money, property, etc. with the intention of influencing or appearing to influence the conduct of any PERA staff member or Trustee.”

On the question of whether Stapleton is involved in real estate investment decisions that could enrich campaign donors, Hatlestad added: “The PERA Board is responsible for setting the strategic asset allocation of the PERA funds and has delegated the decisions on specific funds and individual securities to PERA’s investment staff. Therefore, PERA Board members do not have involvement in choosing specific investments.”

However, a PERA newsletter sent out this week made clear that as a trustee, Stapleton is given access to secret granular information about each real estate investment.

“The PERA Board receives information on each Real Estate fund investment made and has the ability to access property-level information as desired,” the newsletter said. “This information, while not publicly available, allows Trustees to have detailed information on the holdings within the portfolio. Fund disclosures made to the Board by staff include a fund overview, investment strategy, a summary of key investment personnel, historical investment performance, and fees.”

The RGA did not respond to Capital & Main’s questions, but RGA spokesman Jon Thompson has previously asserted the organization’s “anti-earmarking policy and other compliance policies ensure that candidates to whom the RGA contributes do not receive prohibited funds.”

“The Modern Campaign-Finance Loophole”

Management of PERA, a public pension fund on which one in 10 Coloradans rely as a replacement for Social Security, has been a top issue for Stapleton during his two terms as state treasurer, and he has been a frequent vocal critic of the system’s long-term financial outlook. A former investment banker and director of acquisitions at Lamar Companies, a commercial real estate firm, Stapleton has frequently touted his experience as a real estate investor.

The SEC rule bars financial firms from earning fees from state pension funds if their executives direct campaign donations to public officials who can influence the funds’ investments. The rule was created to try to make sure investments are made on the basis of merit, not political influence. It applies not only to donations made to a public official before an investment is initiated, but also to donations when investments are in a state’s portfolio — the idea being that donations should not influence public officials’ ongoing decisions to expand or terminate those investments.

“Elected officials who allow political contributions to play a role in the management of these assets and who use these assets to reward contributors violate the public trust,” SEC officials wrote in the rule’s preamble.

The rule has stemmed some of the flow of Wall Street money directly to candidates for state offices that have power over state and local pension systems — and the commission has periodically taken action against firms that violate the rule. Republicans have responded by attempting to overturn the rule in court.

However, in recent years, the GOP has found a way around the rule entirely. Groups like the RGA have served as what the Wall Street Journal deemed “the modern campaign-finance loophole,” using its third-party status to rake in financial industry money and then spend big to support public officials covered by the SEC rule.

While RGA officials assert that the group does not deliberately steer prohibited money around the SEC rule, the same Wall Street Journal report noted that multiple former officials of both the RGA and its Democratic counterpart, the Democratic Governors Association, “described the practice of guiding donations as an open secret.” The result: In the last election cycle, firms managing state pension cash delivered nearly $1.3 million to the RGA, which then supported the election campaigns of state officials controlling those pension funds.

Now, in 2018, the loophole is once again open — this time in Colorado.

“TIAA Does Support the Republican Governors Association”

According to campaign finance disclosures filed with the Colorado Secretary of State’s office, the RGA has funneled $3.4 million to a state PAC created “to support the election of Walker Stapleton for governor.” Campaign finance disclosures and PERA records show that among the RGA’s donors are contributors from four firms that currently manage about $1.4 billion in PERA assets — roughly a third of the system’s real estate portfolio — across 24 different investments. According to a PERA document, nine of the investments in question were made after Stapleton joined the board of trustees as state treasurer in 2011.

Firms that manage PERA money and whose donors have given to the RGA in the 2018 election cycle are:

• Crow Holdings, which gave the RGA $225,000 while managing roughly $105 million in PERA assets. Crow Holdings is run by Republican megadonor Harlan Crow.
• TIAA, which contributed a total of $175,000 to the RGA in the 2018 election cycle, while it manages more than half a billion dollars in assets for PERA across seven different funds.
• Prudential Financial, which gave the RGA $50,000 while its funds manage $624 million of PERA assets
• Morgan Stanley, whose executives gave the RGA more than $42,000 while the firm manages $142 million worth of PERA investments.

TIAA and Prudential have also donated a total of $180,000 to the Democratic Governors Association, which has given $250,000 to a super PAC supporting Representative Jared Polis’ gubernatorial bid.

A TIAA spokesperson told Capital & Main: “TIAA does support the Republican Governors Association and the Democratic Governors Association and, consistent with law, we give explicit written instructions that none of these funds may be used to support or oppose any individual candidate or ballot initiative.”

The remaining three firms declined, or did not respond to, requests for comment.

Lobbyist Money and Dark Money

There is also the case of Apollo Management, which has not donated to the RGA or to Stapleton, but which employs Brownstein Hyatt Farber Schreck LLP as a registered lobbying firm in Washington, DC, according to federal records. PERA has committed $330 million to four active Apollo investments. During Stapleton’s tenure, that includes an $80 million Apollo investment in 2013 and a $100 million investment commitment to a newly launched Apollo fund.

Those investments are in PERA’s portfolio as firm namesake Norman Brownstein, his wife and other Brownstein, Hyatt employees have given more than $10,000 directly to Stapleton’s campaign. Denver’s Norman Brownstein, who in 2018 was personally registered as a lobbyist for Apollo, also gave another $10,000 to Better Colorado Now — a super PAC whose stated mission is “to oppose Democrat candidates for governor and support Walker Stapleton for governor,” according to Colorado disclosure records.

The Brownstein law firm lobbies for Apollo at the same time PERA has contracted the law firm to serve as its board’s fiduciary counsel since 2011 — when Stapleton first joined PERA’s board. State records show that the law firm’s contract with PERA was renewed by the pension system’s board in March 2018, as Brownstein donors’ contributions were flowing to Stapleton.

PERA officials declined to comment on whether it is appropriate for Brownstein to serve as the pension system’s fiduciary counsel while Brownstein is simultaneously registered to lobby for a Wall Street firm managing hundreds of millions of dollars of PERA retirees’ savings.

“We require our attorneys/employees to follow state and federal laws,” Brownstein spokesperson Lara Day told Capital & Main in an email. “In addition, we provide our attorneys/employees ethics training including training on campaign finance rules.”

Day said that Brownstein has never lobbied PERA on behalf of Apollo Management.

In addition to disclosed contributions from donors linked to PERA money managers, other groups promoting Stapleton have received large infusions of anonymous dark money — which can also complicate enforcement of the SEC rule.

In September, Better Colorado Now received a $500,000 donation from the Colorado Taxpayers Advocate Fund, a 501(c)(4) nonprofit that “exists to educate citizens and Colorado public officials on issues of public policy,” according to its website. The fund contributed a further $400,000 to Coloradans for Fiscal Responsibility, a separate super PAC set up “to support Walker Stapleton for Governor,” according to state records.

The Colorado Campaign for Jobs and Opportunity has received a total of $1.25 million in contributions from the Workforce Fairness Institute, a 501(c)(6) nonprofit that has spent heavily on a variety of anti-union causes, as well as a $100,000 donation from Vital for Colorado, a dark-money group created to oppose efforts to regulate fracking. The group has spent nearly all of the cash it has received on TV advertising in support of Stapleton, according to state campaign finance disclosures.

Because that cash comes from groups that do not have to disclose their donors, there is no way to know whether the money came from financial firms that have PERA investments and are covered by the SEC rule.

There is also the question of finance industry donors who do not currently manage PERA investments but who have given more than $422,000 of disclosed donations to Stapleton and Stapleton-supporting PACs. There is no way to know whether they will in the future solicit Colorado pension investments from Stapleton’s PERA appointees if he is elected governor.

“Pay-to-Play Practices Are Rarely Explicit”

To date, the SEC has not invoked provisions in the rule that bar donors from doing indirectly what they are prohibited from doing directly. Those provisions, though, remain on the books.

“Pay to play practices are rarely explicit: Participants do not typically let it be publicly known that contributions or payments are made or accepted for the purpose of influencing the selection of an adviser,” SEC officials wrote. “As it is not possible for us to anticipate all of the ways advisers and government officials may structure pay to play arrangements to attempt to evade the prohibitions of our rule, the rule includes a provision that makes it unlawful for an adviser or any of its covered associates to do anything indirectly which, if done directly, would result in a violation of the rule.”

Public Citizen’s Craig Holman said that “historically, the SEC has been quite vigilant in enforcing its pay-to-play rule, but it has yet to address this third-party loophole. The anti-circumvention clause provides the SEC with the authority to close this loophole, especially in egregious cases. The end-run by Wall Street is becoming so common these days it is well past time for the SEC to act – or risk losing the entire value of the pay-to-play rule itself.”

Last year, New Mexico Democratic Sen. Tom Udall called for the SEC to invoke the anti-circumvention provisions in an age that has seen ever-more money flow around regulations and into elections.

“We have to make sure that the campaign finance rules that are still on the books are updated to reflect these new and dangerous circumstances — to ensure that no one is able to circumvent these laws by using super PACs, dark money groups or other campaign spending vehicles,” Udall said. “The public deserves to feel confident that decisions made with public money are not being influenced by big money donors.”

Copyright Capital & Main

When asked about the latest woman to come forward and accuse him of sexual assault, Supreme Court nominee Brett Kavanaugh shrugged off the charge this week as though he were unfairly trapped in some Kafkaesque trial. “This is ridiculous and from the Twilight Zone,” he said. “I don’t know who this is and this never happened.” End of story. Or is it?

There is something about many of Kavanaugh’s answers that doesn’t ring true. Perhaps his verbal parries, retreats and blank silences in response to Senate questioning have proven too artful for his own good. In trying to elude his Judiciary Committee interrogators by offering what appears to be a filigree of fibs and half-truths, Kavanaugh has continually painted himself into corners, which he tries to escape through petulant outbursts. Viewers of these fitful displays of temper, which exploded at yesterday’s hearings, could not be blamed for thinking Kavanaugh was no K, the protagonist of Kafka’s novel The Trial. Instead, he seems like a man who could not tell the truth if his life depended on it.

Below are statements from Kavanaugh that have been passionately rebutted by others — or, in some cases, by Kavanaugh himself. Whether he’s dissembling about his youthful love affair with alcohol, or denying knowledge of the pornographic hobbies of his mentor, former Judge Alex Kozinski, Kavanaugh emerges as a man at war with straight talk and even, at times, with his own self-image. Then again, it could be that his TV-show references are too retro. To get to the heart of his predicament, he probably should drop the Twilight Zone allusion and go for Black Mirror — it somehow seems more fitting.

1. The Woman Question 

Kavanaugh: “Sexual assault is horrific. It is morally wrong. It is illegal. It is contrary to my religious faith.”

Dr. Blasey Ford: “Kavanaugh was on top of me while laughing with Judge, who periodically jumped onto Kavanaugh. They both laughed as Kavanaugh tried to disrobe me in their highly inebriated state. With Kavanaugh’s hand over my mouth, I feared he may inadvertently kill me.”

Julie Swetnick: “In approximately 1982, I became the victim of one of these ‘gang’ or ‘train’ rapes where Mark Judge and Brett Kavanaugh were present.”

Kavanaugh: “I have never sexually assaulted anyone in high school or otherwise.”

Deborah Ramirez:  “I remember a penis being in front of my face. . . . Brett was laughing. . . . Somebody yelled down the hall, ‘Brett Kavanaugh just put his penis in Debbie’s face.’”

2. Zero for Conduct 

Kavanaugh, when asked by Fox anchor Martha MacCallum if he’d ever drank so much he couldn’t remember the previous night: “No, that never happened.”

Dr. Elizabeth Swisher, a former classmate: “I saw him very drunk many times and there is no way he remember[ed] everything about every night.” Swisher added that it would be “a lie [to say he] never had a blackout.”

Kavanaugh: “I drank beer with my friends, usually on weekends. Sometimes I had too many.”

James Roche, Kavanaugh’s freshman roommate: “I do remember Brett frequently drinking excessively and becoming incoherently drunk.”

3. Abortion

Kavanaugh:  “As a general proposition I understand the importance of the precedent set forth in Roe v. Wade.”

Kavanaugh as a Bush White House lawyer: “I am not sure that all legal scholars refer to Roe as the settled law of the land at the Supreme Court level since Court can always overrule its precedent.”

Kavanaugh‘s dissenting opinion in Garza v. Hargan: “The Government has permissible interests in favoring fetal life, protecting the best interests of a minor, and refraining from facilitating abortion.”

4. The Nonpartisan Bench 

Kavanaugh: “My only loyalty is to the Constitution. I have made that clear, I am an independent judge.”

Kavanaugh in 1999, on the Supreme Court ruling against Richard Nixon’s possession of the Watergate Tapes: “That was a huge step with implications to this day that most people do not appreciate sufficiently . . . Maybe the tension of the time led to an erroneous decision.”

Kavanaugh: “I’m not going to get within three ZIP codes of a political controversy.” 

Kavanaugh: “This whole two-week effort has been a calculated and orchestrated political hit fueled with apparent pent-up anger about President Trump and the 2016 election, fear that has been unfairly stoked about my judicial record, revenge on behalf of the Clintons and millions of dollars in money from outside left-wing opposition groups.”

5. Judge Kozinski

Kavanaugh: “I do not remember receiving inappropriate emails of a sexual nature from Judge Kozinski.”

Heidi Bond, former Kozinski law clerk: “I do not know how it would be possible to forget something as pervasive as Kozinski’s famously sexual sense of humor or his gag list, as Kavanaugh has professed to in his hearings. Kozinski regularly regaled his clerks with jokes from his gag list, and many list members were former clerks.”

Copyright Capital & Main

Co-published by Newsweek

It’s a little peculiar to watch a C-SPAN clip from mid-June and hear the Chair of the Senate Judiciary Committee, Charles Grassley (R-IA), waxing sympathetic about women who came forward claiming they were sexually harassed by a federal judge.

“Being a whistleblower, or saying something’s wrong — sometimes you ruin yourself professionally,” Grassley says. “But because of these women’s bravery, we can hopefully begin to make real significant changes to these powerful imbalances that allow harassment to thrive.”

The venue was a committee hearing focused on developing a better process to address sexual harassment claims in the federal judiciary branch. More than a dozen women alleged that acts of sexual misconduct had been committed by the powerful former Ninth Circuit Court of Appeals’ Chief Judge, Alex Kozinski, who had resigned from the bench last December under a cloud.

Contrast the Senator’s show of sympathy at this hearing to his office’s recent treatment of the women who have come forward with accusations of sexual assault against U.S. Supreme Court nominee Brett Kavanaugh, a Washington, DC Circuit Court judge.

The Senator has rushed ahead with the nominating process in spite of several allegations of sexual assault against Kavanaugh. He refused to back an FBI investigation into sexual assault claims made by Christine Blasey Ford, the Palo Alto University psychology professor, that Kavanaugh assaulted her at a party in the early 1980s when they were both teenagers. Grassley gave Ford repeated ultimatums to appear before the Senate Judiciary Committee and, even before the committee had an opportunity to hear her testimony, he scheduled a vote on the nominee for this coming Friday. In a tweet that was later deleted, Mike Davis, the committee’s chief counsel on nomination, wrote that he was “unfazed and determined” to see Kavanaugh confirmed.

Heidi Bond, one of the women Grassley described as brave, apparently noticed the dissonance. She sent a letter to Grassley last Saturday urging him to treat Ford with respect. “Every attack that is being leveled at Dr. Ford could be applied to me as well, and in that regard, it feels personal for me, and I suspect for many victims of harassment and assault,” wrote Bond, who left the legal profession and is now a romance novelist who goes by the pen name Courtney Milan. She asked that Grassley establish a timetable to hold an impartial investigation into Blasey’s claims.

Judge Kozinski’s alleged harassment of Bond and others – and the efforts that grew out of it to combat sexual misconduct in the judiciary – have been an important if buried footnote in the headline-grabbing hearings that have been defined by harrowing allegations of the nominee sexually assaulting as many as three women as a teenager and college student.

Kavanaugh clerked for Kozinski in the early 1990s and remained friends with him over the decades. Kozinski helped Kavanaugh secure a clerkship at the Supreme Court with Justice Anthony Kennedy, who he will replace if confirmed. Yet Kavanaugh claimed – under oath – in early September to be completely unaware of his mentor’s predilection for porn and sexually explicit jokes, in spite of the fact that it was considered an open secret, as the Intercept, Bond and others have pointed out.

The Kozinski scandal galvanized the leadership of the 30,000-employee-strong federal judiciary to take action, thanks to a group of current and former law clerks who, in a letter sent to Chief Justice John Roberts and others in December 2017, demanded reforms to the process for bringing harassment claims forward.

A group of women lawyers gathered 700 signatures in “just a matter of a few days,” in a testament to the “power of women’s informal networks,” according to Sara McDermott, a Los Angeles attorney and a member of Law Clerks for Workplace Accountability.

In response, Roberts established a Working Group, which issued a report in early June. Based on input from anonymous surveys and interviews with court employees, the Working Group determined that “inappropriate conduct, although not pervasive in the Judiciary, is not limited to a few isolated instances.”

But the U.S. Equal Employment Opportunity Commission’s Jenny Yang, in written testimony before the Senate Judiciary Committee, cautioned against drawing optimistic conclusions from a small number of formal complaints, given that 70 percent of individuals experiencing harassment never report it.

She also acknowledged that the structure of the federal judiciary brings with it built-in risk factors for sexual harassment — “significant power disparities and ‘high value’ employees’ who often operate by their own rules,” and “workforces lacking diversity where men typically dominate leadership posts.”

Jaime Santos, from Law Clerks for Workplace Accountability, put it more bluntly when she testified at the June hearing that judges are “more demigods than they are employers.” Santos added that law clerks and externs from “numerous federal courts shared with us that they had felt demeaned, belittled or humiliated during their clerkships or externships. Some shared stories about being asked sexual questions during job interviews, hearing their judge or co-clerks speak about female attorneys in derogatory and objectifying terms.”

When the report emerged in June, Grassley, who is now leading the dash to vote on Kavanaugh’s nomination, seemed to echo the response of Law Clerks for Workplace Accountability in describing the report as overly vague, and said it “kicks the can down the road.”

For her part, McDermott said she is “glad that there is movement,” but worries that without more specifics there will not be the kind of culture change that is needed in the judiciary. She would like to see a national reporting hotline supplant a process that often requires a complainant to report to the chief judge of a circuit or district court. The courts’ leadership should require reforms of the lower courts based on best practices, she added.

“Judges are the ones who hear sexual harassment claims” in court, as well as other claims of workplace misconduct, says McDermott. “If the judiciary can’t get a handle on these sorts of workplace issues even within their own ranks, it’s hard to be sure that the judge sitting on your case is going to take these things seriously.”

“But also, I think we should be holding the judiciary to a high standard,” she added. “These are people who, [in their] job, must be fair and impartial. Historically, we have asked that they be of higher moral character than the average person.”

Copyright Capital & Main

Co-published by WNYC and Sludge

New York State’s former top pension investment officer was appointed to the board of a natural gas conglomerate after the pension system bought up the company’s bonds, rejected demands to divest from fossil fuels and supported multimillion-dollar pay packages for the company’s executives after the firm’s stock price had dropped.

Vicki Fuller was appointed as a director of The Williams Companies on July 31st — the same week she left her position as the chief investment officer of the New York State Common Retirement Fund.

The CIO job — appointed by State Comptroller Thomas DiNapoli — is considered one of the world’s most powerful financial positions, directing $207 billion of investments for a system responsible for safeguarding the retirement savings of more than a million current and former state employees and their beneficiaries. Fuller will be granted $275,000 worth of salary and company stock every year for the part-time position serving on Williams’ board.

On the Spot: NY State Comptroller Thomas DiNapoli

The move comes during an increasingly bitter policy debate between the comptroller’s office and environmental groups over whether the pension fund should divest itself from fossil fuel companies that contribute to climate change. In correspondence with DiNapoli over the last two months, major environmental groups have asked whether Fuller’s new position is a reward for her and DiNapoli’s ongoing opposition to selling off the fund’s fossil fuel holdings.

As September’s Climate Week commences in New York, those same pro-divestment groups on Monday sent a letter to the state ethics commission requesting a formal investigation of a comptroller’s office that has already seen one leader sent to prison in an influence-peddling scandal, and another bond investment official recently convicted on bribery charges.

“Ms. Fuller’s appointment calls into question the integrity of the management of the New York State Common Retirement Funds by New York State Comptroller Tom DiNapoli,” wrote 30 groups to state ethics officials. “It is outrageous to us that a person can one day be CIO of the New York state pension funds and the next day take a well-compensated appointment as a board member of the corporation into which she oversaw – or even directed – large investments while helping to shield the company from an adverse divestment decision by the funds.”

DiNapoli’s office says they’ve already reviewed the matter and found nothing wrong. In an August letter to environmental groups, his counsel, Nancy Groenwegen, wrote: “We are not aware of any facts to support a conclusion that Ms. Fuller’s post-[Common Retirement Fund] appointment as an independent director on the Williams board creates a conflict of interest, nor are we aware of any decision under the State’s ethics laws by the Joint Commission on Public Ethics or its predecessor agencies that would prohibit her from accepting such an appointment.”

The controversy combines ongoing concerns about Albany corruption with the simmering debate over whether Democrats like DiNapoli are following through on their promises to do all they can to combat climate change. While DiNapoli escaped a primary challenge in his current reelection bid, environmental groups furious with his opposition to divestment are now pressuring him as he heads into a general election campaign against Republican investment banker Jonathan Trichter.

“This creates red flags because the CIO job is the most powerful appointed financial position in the state of New York,” said former Deputy New York Comptroller Thomas Sanzillo, who served under DiNapoli. “There needs to be an independent review because there is a perception of a conflict of interest.”

The decision to launch an investigation will be up to the Joint Commission on Public Ethics, which is largely comprised of commissioners appointed by a governor who himself has ties to Williams. Capital & Main previously reported that a Cuomo-led political group raked in $100,000 from Williams earlier this year, and Cuomo’s own re-election campaign this year is run by a registered lobbyist for Williams who is on leave from her firm. At the same time, Williams is asking the Cuomo administration to approve a controversial pipeline that environmentalists say threatens the state’s waterways.

Comptroller’s Office Cites Internal Review

As comptroller, DiNapoli serves as the sole trustee of the state’s pension system. He appointed Fuller CIO in 2012. During Fuller’s six-year tenure in that $365,000-a-year job, the pension fund more than doubled its total stock and bond holdings in Williams. New York’s state pension fund is now one of Williams’ 100 largest institutional shareholders, according to Nasdaq records.

Last year, as a major shareholder, the pension system voted to support an executive compensation program that paid the company’s top officials $62 million between 2014 and 2016 — a period that saw the firm’s stock price plummet nearly 20 percent. This year, nine days after Fuller left her state job, the comptroller’s office voted against the company’s executive compensation program.

Under Fuller, the pension system in early 2015 added $110 million worth of Williams bonds to the state’s portfolio. That same year, Moody’s changed Williams’ financial outlook to “negative” in a report warning that its bonds could be particularly risky investments.

The company and its affiliates, wrote Moody’s, were “weakly positioned for their respective [bond] ratings owing to their high financial leverage and the execution risk on growth projects.”

The specific bonds New York purchased were downgraded in 2016, but have since returned to investment grade, according to the comptroller’s office.

DiNapoli, a former assemblyman from Long Island, took over the office in 2007 following the resignation of then-Comptroller Alan Hevesi in a fraud scandal. Later, Hevesi also pleaded guilty in a pay-to-play scandal in which he steered $250 million of pension fund investments to a private equity fund after receiving nearly $1 million in gifts from the founder of the fund.

In 2009, DiNapoli issued an executive order that created a new code of conduct for the comptroller’s office. It established wide-reaching policies governing conflicts of interest and financial transparency. In 2016, those policies were lauded by an outside contractor that was hired by the comptroller’s office to review its ethics rules. However, DiNapoli’s updated code of conduct still did not place any limitations on the type of employment investment officers can seek after leaving the comptroller’s office or any other post-employment ethics guidelines.

While environmental groups are calling for an independent investigation of Fuller’s move, the comptroller’s office says it has already conducted its own internal review, according to the letter from DiNapoli’s counsel.

In the lead-up to Fuller announcing her plan to retire from her government job, Fuller was told of an ethics advisory that requires state officials to recuse themselves from matters involving companies offering them post-government employment, and to wait 30 days from the recusal before discussing that employment.

Fuller told the comptroller’s office “that the company had no matters pending” before the pension fund, and DiNapoli’s office said it “confirmed that there were no investment matters involving the Williams Companies pending during the relevant time frame of May-July 2018.”

During that time, however, state officials had the ongoing power to buy or sell the pension fund’s holdings in Williams — and the pension fund considered resolutions for Williams’ May 10th shareholder meeting. Additionally, Williams was also at that time asking for input from the pension fund and other stockholders on a proposed merger and financial reorganization of the company.

For its part, Williams said Fuller’s appointment to the company’s board had nothing to do with decisions at the pension fund.

“Ms. Fuller came to the company’s attention through a third-party recruitment firm that was engaged to assist the company in replacing a retiring director,” said Williams spokesperson Keith Isbell. “She did not meet with any members of the company’s board or management until after the May 2018 announcement of her retirement from the NYS Common Retirement Fund.”

Isbell said Fuller will not be expected to interact with the New York state pension fund in her role on Williams’ board. Both Fuller and DiNapoli declined interview requests for this story.

A Larger Debate Over Divestment

The battle over Fuller’s move underscores not only ongoing concerns about the revolving door between business and government in Albany, but also environmentalists’ demands for investors across the globe to sell off their holdings in fossil fuel companies. Already, institutions representing more than $6 trillion of capital have committed to divest, and in New York City, Mayor Bill de Blasio and city Comptroller Scott Stringer have supported divestment and announced new investments in renewable energy.

More than six percent — or roughly $13 billion — of New York’s state pension fund is in fossil fuel-related investments, according to a report by the activist group Fossil Free. While DiNapoli was running for reelection the year before the state bought Williams’ bonds, he said he would consider following environmental groups’ demands to divest the fund from fossil fuel companies.

However, DiNapoli has since refused to divest, even as New York City pension funds divest and state legislators and the governor have demanded the state follow suit. In 2016 — less than two years before being appointed to Williams’ board — Fuller led the fight against legislation that would require divestment. She argued that shareholders should instead engage with companies to show them that climate change is a significant risk to their business model.

“We do actively engage our portfolio companies, but we’re patient,” Fuller said at an October 2016 roundtable hosted by state senators Liz Krueger and Brad Hoylman at Baruch College. “So if we think a particular issue requires our attention we will engage the company, write a letter, propose resolutions, vote against board members. And if we are not successful the first time we keep coming back. That approach has borne fruit for us. Some people don’t believe in engagement, but I can tell you the proof is what we’ve been able to accomplish.”

To support this assertion, the comptroller’s office has touted DiNapoli-led shareholder resolutions prompting fossil fuel companies to more thoroughly disclose environmental information. Those include a resolution that led to an agreement with Cabot Oil and Gas requiring the company to disclose its policies on using toxic chemicals for fracking; a resolution compelling ExxonMobil to conduct a study of its impact on climate change; and resolutions prompting DTE Energy, Dominion Energy and Southwestern Energy to detail how they would comply with the 2015 Paris Agreement that committed nations across the globe to carbon emission reductions.

Groups like 350.org counter that the most powerful way to reduce fossil fuel development and reduce carbon emissions is for large institutions to divest from oil and gas companies, thereby denying them investment capital.

“Engagement with the fossil fuel producers isn’t working – they’re determined to stick to their business model,” 350.org founder Bill McKibben said in 2015, when New York lawmakers first introduced legislation that would require the pension fund to divest its fossil fuel holdings.

With DiNapoli still opposing divestment three years later, McKibben in May 2018 authored a Rolling Stone magazine essay that said: “Because of (DiNapoli’s) high-profile insistence on ‘engagement’ with the industry, he’s become a stand-in for a thousand other political ‘leaders’ who can’t quite summon the nerve necessary to break with the fossil-fuel industry, even when science and economics are making it clear where the future must lie. It’s so much easier to keep doing what you’ve always done – but at this point inertia is the planet’s most powerful enemy, and DiNapoli is threatening to become inertia’s avatar.”

DiNapoli Touts Work on Climate Change, But Critic Says He’s Being “Used.”

DiNapoli has continued to stake out a public profile as a crusader against climate change. He has said he views climate change as a “material risk for our portfolio” and his office has shifted some of the pension fund’s investments into companies that reduce their carbon footprint. Earlier this month, the pension fund was praised by the Asset Owners Disclosure Project for its work addressing climate risk.

“I continue to speak out when the Fund’s portfolio companies fail to take the steps necessary to adapt to the changing world,” DiNapoli said at the time. “Those of us who are working to make the Paris Agreement a reality may take separate avenues, but we share a common goal — to help build the growing low carbon economy. I am proud that the Fund is part of that worldwide effort.”

The office does not appear to have used that kind of leverage against Williams during Fuller’s tenure. And more generally, some of the fund’s highest profile moves against the industry have not always generated significant results. For example, after DiNapoli made headlines forging the deal with ExxonMobil to publish a study on how climate change could affect its future business, the company used the study to simply reiterate its commitment to a business based on fossil fuel profits.

Meanwhile, the fossil fuel industry has aggressively used DiNapoli to deflect increasing pressure from the divestment movement. In just the last year, the Independent Petroleum Association of America published five separate blog posts and two newspaper essays citing DiNapoli’s opposition to divestment — and embrace of shareholder engagement — as a reason other public officials across the country should reject environmentalists’ demands.

“With the retirement money of New York’s working families on the line, let’s hope that the State Legislature supports Comptroller DiNapoli and pushes back against fossil fuel divestment,” said one of the association’s essays.

“DiNapoli as the sole person in charge of the pension fund’s investment strategy has made it clear that he has no plans to divest,” said another. “Let’s hope the fiduciaries of other pensions across the country follow suit.”

Sanzillo, the former deputy comptroller, said it all adds up to “a rather sophisticated game” in which DiNapoli has become a shield for the industry.

“Why has DiNapoli allowed himself to be used by the industry as their poster child for responsible shareholder engagement?” he asked. “The industry has basically said [DiNapoli] is the greatest thing in the world, and the reason they said that is because he pulled punches on the shareholder work and he is not being forceful….It looks cynical. It looks like he was saying he was pressuring the companies, and then he backed off, and that’s a game that cynical shareholders do play, and there’s something wrong here.”

DiNapoli has rejected suggestions that his anti-divestment strategy is a deliberate defense of the oil and gas industry. Instead, he has asserted that ownership stakes in fossil fuel companies give him necessary leverage over those firms, and he has also insisted that he is fulfilling his fiduciary obligations to generate the largest possible investment returns for pensioners.

“The New York State Common Retirement Fund and the State Comptroller are not being used by anyone,” said DiNapoli’s spokesperson, Jennifer Freeman. “The State Comptroller, as the trustee of the (pension fund), is acting as a prudent investor, committed to ensuring the New York State and Local Retirement System is able to pay retirement income to state and local workers. The Fund’s interest is in protecting its long-term value so public workers have peace of mind that their retirement funds are growing and the cost to taxpayers is minimized.”

In 2017, a study from the Suffolk County Association of Municipal Employees found that the state could forfeit up to $2.8 billion of investment returns if it divests from fossil fuels.

But those projections — and DiNapoli’s underlying argument — have been questioned.

A May report by Corporate Knights found that New York’s pension fund would have generated an additional $15 billion of returns had it sold off its fossil fuel holdings and reinvested them in renewable energy. A July report from the Institute for Energy Economics and Financial Analysis found that in the past three to five years, “Global stock indexes without fossil fuel holdings have outperformed otherwise identical indexes that include fossil fuel companies.”

“Investors with long-term horizons should avoid oil and chemical stocks on investment grounds. They face a sustained headwind,” wrote Jeremy Grantham, the legendary asset manager who co-founded the investment firm GMO. “Ethical arguments for divestments are simply not necessary. They are a pure bonus.”

Critics of the oil and gas industry have asserted that corporations are not properly accounting for their exposure to climate-related losses. Last week, U.S. Senator Elizabeth Warren introduced legislation that would require more climate-related disclosures. At the same time, a new book by journalist Bethany McLean finds that natural gas investments are on shakier financial footing than their quarterly financial reports suggest.

Sanzillo said that if New York state’s pension fund embraces divestment, it can play a pivotal role in the climate change fight because of its sheer size.

“This is the third-largest fund in the United States,” he said. “If the comptroller tells his money managers that we need a portfolio that is fossil-free, every large money manager in the world will have to adapt.

“It tells JP Morgan, Morgan Stanley and all the other major financial advisers that this is the product institutional investors want, and you better come up with it, or you aren’t going to have customers any more,” Sanzillo said.

This story was produced in partnership with WNYC public radio and Sludge, which covers money in politics.