Make us your home page

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Private ventures create another level of secrecy in public investment

The issue of "side letters'' offers another window into the new world of openness at Florida's State Board of Administration.

The state has plowed billions of public employees' nest egg dollars into complex, private ventures. Florida has entered into more than 130 "side letters'' with these private investment managers.

In a growing national scandal, state and federal regulators are investigating whether any of these firms made improper payments to intermediaries to land public pension business in New York state and elsewhere.

Among those under scrutiny is the Carlyle Group, one of the nation's largest private investment firms.

In New York, Carlyle paid millions to a political consultant's firm in exchange for help obtaining investments from the pension fund. Last month, Carlyle agreed to pay $20 million to end an inquiry by New York's attorney general.

Florida has invested hundreds of millions of dollars in at least six deals with Carlyle.

The state's "side letters'' could contain the names of placement agents, the intermediaries who private investment managers may have paid to win huge blocks of public pension money.

Placement agents can make 1 to 2 percent of the value of a pension fund investment. So if a state agrees to invest $100 million, the placement agent can make $1 million to $2 million.

When Florida's oversight board met in April, Attorney General Bill McCollum asked SBA executive director Ash Williams if Florida had potential problems.

Williams said no, because when it comes to private deals, Florida requires investment firms to disclose the use of placement agents in the "side letters.''

"To the extent a manager is paying a placement agent, we will not pay those fees,'' Williams said. He stressed that in Florida, things are done "in the sunshine.''

"So you feel comfortable assuring us that there have been no kickbacks?'' McCollum said.

"I do," Williams answered.

The SBA refused to make the side letters available to the St. Petersburg Times. The agency said reviewing the letters would be a "labor intensive and costly project'' and would require "redaction of trade secret and confidential material.'' The newspaper narrowed its request, and the SBA released four side letters but is still withholding others, including those with Carlyle.

The three trustees with oversight of the SBA — Gov. Charlie Crist, Chief Financial Officer Alex Sink and Attorney General McCollum — have not obtained copies of the letters.

McCollum's aide called the side letters "part of the day-to-day operations of the SBA.''

Case closed.

— Sydney P. Freedberg

Private ventures create another level of secrecy in public investment 06/06/09 [Last modified: Monday, June 8, 2009 3:04pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Rays power their way to 5-1 win over Orioles before embarking on crucial road trip

    The Heater

    St. PETERSBURG — The Rays didn't get many hits in the early going Wednesday, but they got a couple that went a long way and that was enough to beat the Orioles, 5-1.

    Rays right fielder Steven Souza Jr. (20) hugs catcher Jesus Sucre (45) after Souza's solo home run in the seventh inning. [WILL VRAGOVIC   |   Times]
  2. Man accused of sexually assaulting 5-year-old girl


    ZEPHYRHILLS — Pasco sheriff's deputies have charged a Zephyrhills man with sexually assaulting a 5-year-old girl in his care.

    Brett Campbell [Photo Courtesy of the Pasco County Sheriff's Office]
  3. Florida GDP growth in first quarter 2017 ranks 21st among states, still outpacing U.S.

    Economic Development

    Florida's gross domestic product or GDP rose 1.4 percent in the first quarter, slightly faster than the nation's growth of 1.2 percent and placing Florida 21st among the states for growth rates, according to the U.S. Bureau of Economic Analysis.

    Not too hot. Not too cold.

    These Jackson Square Townhomes began hitting the west Hillsborough County market late last year and continued to be sold into the first quarter of 2017. The real estate sector was the biggest driver of Florida's gross domestic product, which rose 1.4 percent in the first quartrer of 2017.  [JAMES BORCHUCK   |   Times]
  4. Coming to Netflix in August: 'The Defenders,' 'Death Note' and more

    Krysten Ritter, Finn Jones, Charlie Cox and Mike Colter in Marvel's The Defenders.
  5. Report: $36 million worth of guns stolen in Florida in four years

    Public Safety

    An estimated $36 million worth of guns was stolen in Florida from 2012 to 2015, according to an analysis released this week by the Center for American Progress.

    Broken glass litters the floor of Tampa Arms Co. after thieves drove a pickup  through the front of the gun store and stole more than 40 weapons, including handguns and semiautomatic rifles. [JAMES BORCHUCK   |   Times]