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Enough with these 'surprises' in Florida's state investment scandals

Call me kooky, but I do not want to learn about a formal investigation of the state of Florida's investments by the Securities and Exchange Commission — 16 months late.

One more bombshell. One more delayed revelation. The feds seem to be looking into whether Florida and Wall Street were misleading investors about the risks that were being taken here.

This is what should happen when that kind of letter shows up in Tallahassee:

Alarm bells go off. Air-raid sirens sound. Gov. Charlie Crist, Chief Financial Officer Alex Sink and Attorney General Bill McCollum — who sit as the board overseeing the investments — hold an emergency joint news conference.

Instead, this became public well more than a year later, only in a response to a public records request from the St. Petersburg Times.

The state's explanation is lame. Hey, it says, this is old news — it disclosed a preliminary SEC inquiry on its Web site, didn't it? The formal letter itself was, you know, confidential. Apparently until it wasn't.

If the people of Florida ever get their arms around this scandal, they might riot.

Over the past year my colleagues Sydney Freedberg and Connie Humburg have documented a pattern of losses, laxity, closeness and coverup.

We're talking about a pot of money that currently is around $132 billion, but which took big losses in the financial meltdown -— despite audit after audit over the years warning of the risk. The money includes the state's pension fund, the short-term funds of hundreds of local governments that invest with the state, the hurricane catastrophe fund, and the Citizens Property Insurance Corp.

Freedberg and Humburg also have reported:

• Wall Street firms and others with a stake in the game lavish Florida politicians with campaign contributions, either "bundled" in batches from their employees, or disguised through third parties.

• Florida lost $250 million in a failed Manhattan real estate deal. Auditors also had repeatedly warned Florida about real estate risk for years. For months the state refused requests for public records of the deal.

• Florida is unusual in that its attorney general also is a trustee of its investments — creating a difficult conflict of interest since the attorney general cannot investigate himself.

• Major developments have been kept from the public, and sometimes even from Crist, Sink and McCollum, such as the State Board of Administration filing of a claim for $682 million against now-defunct Lehman Brothers.

• Reviewing thousands of e-mails and other records, Freedberg and Humburg found a pattern of stonewalling or even deception to representatives of local governments and other investors. One city was so upset that it asked the FBI to investigate.

• In all of these matters, both Sink and McCollum have frequently refused to be interviewed — even though Sink, a Democrat, and McCollum, a Republican, are running for governor. How are they fit to be governor, then?

Every step, every subpoena, every piece of paper, every legal action from now on shuld be trumpeted loudly.

Beyond that, Florida needs to ask whether the state's top three politicians, and especially its attorney general, are really the people to be overseeing the state's investments.

The next little "surprise" needs to get somebody fired. Including the three bosses.

Enough with these 'surprises' in Florida's state investment scandals 11/09/09 [Last modified: Monday, November 9, 2009 9:24pm]
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