An open-government group and the state press association are asking a court to overturn legal agreements that have repaid taxpayers millions of dollars from a long-running scandal because the State Investment Council failed to comply with the Open Meetings Act.
An attorney for the New Mexico Press Association and the Foundation for Open Government argues that the settlements with investment advisers, consultants and money managers were negotiated and approved by a portion of the full State Investment Council, called the Litigation Committee.
“A major purpose of this strategy was to avoid compliance with the Open Meetings Act by the SIC,” writes Daniel Yohalem, a Santa Fe attorney, who drafted the brief for the public watchdog groups.
“All the litigation settlements made by the committee must be reconsidered by the committee following procedures that comply with the Open Meetings Act,” according to the filing, which was submitted Monday to the New Mexico Court of Appeals.
The 11-member State Investment Council is chaired by Gov. Susana Martinez and has as permanent members the state treasurer, land commissioner and Department of Finance secretary. Public members are appointed to staggered terms. They are: Peter Frank, Leonard Lee Rawson, Scott Smart, Harold Lavender, Linda Eitzen, John Young and Tim Jennings.
The litigation committee comprises Frank, Eitzen and the legal counsel for Martinez.
In his brief, Yohalem cited the investment council’s own policy that the entire membership is consulted only if there is not a unanimous decision by the committee.
In cases going back almost a decade, the investment council so far has approved a total of $32.4 million in secured settlements from investment managers and individuals “who allegedly subverted the state’s investment process for their own benefit,” according a recent release issued by the SIC.
A large chunk of the settlement money is being held in escrow by courts pending legal issues as to who has standing in the litigation. The filing by the media organizations would be considered as part of a larger case before the Court of Appeals on the legality of the settlement process. One district judge in Santa Fe approved the investment council’s process, while another stayed the largest award amid questions.
The investment council has argued that the settlement process is in the best interest of taxpayers.
In a statement Monday, it reiterated that position.
“Public discourse regarding litigation strategy and attorney/client matters will ensure minimal recoveries to state taxpayers, if not eliminate them entirely,” said spokesman Charles Wollmann. “Our current litigation policy, validated by the District Court, has helped the SIC secure more than $32 million for state permanent funds, all of which have been fully disclosed through IPRA, press release and public court filings. The Council believes as fiduciaries, it is critical to maximize recoveries for taxpayers and school funding, while complying fully with NM public records law.”
But Yohalem argues that the law already allows the investment council to meet in private to discuss litigation as long as it advertises the meeting and cites the exemption to the Open Meetings Act. There is nothing in the law, however, that allows the subcommittee to act on its own, without referring its recommendations to the full investment council for a public vote.
“The State Investment Council had no business setting up this committee unless it was going to do anything other than advise them,” Yohalem said in a telephone interview.
“The Litigation Committee has never issued public notice of its meetings, produced agendas, kept limited minutes or ratified its settlement decisions in open public meetings,” he wrote in the brief. “If the lower court decision is allowed to stand, nothing will prevent other public bodies from circumventing the Open Meetings Act by delegating their authority to committees.”
Contact Bruce Krasnow at email@example.com.