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.''
— Sydney P. Freedberg