Favors offered to pension official: E-mails show that firms doing business with North Carolina helped the chief investment officer's daughter.

Mark Johnson

Oct. 23, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- RALEIGH Firms doing business with the state offered favors to North Carolina's chief pension investment officer such as helping her daughter with a job search, internship and resume-writing.

The head of one investment firm passed along a free airline ticket so that Pat Gerrick's daughter, Meredith, could attend the Bermuda International Love Festival in February, a celebrity-packed weekend on the island.

The information about the favors was included in e-mails released under public records requests.

Treasurer Janet Cowell, who fired Gerrick in August from her job overseeing the $60 billion-plus pension fund, has imposed reforms aimed at disclosing all relationships with and fees to investment firms.

Cowell, a Democrat elected in 2008, said Thursday that she will impose the same gift ban on her department that Gov. Bev Perdue has placed on the agencies under her control. Cowell this week dispatched a letter to firms doing business with the state explaining that gifts are forbidden.

Gerrick said the favors were offered but not accepted. Her daughter didn't take the internship, received job advice but not a job and didn't use all the resume tips. The investment firm CEO who provided the airline ticket didn't pay for it, just passed it along.

She said the investment industry is a "relationship" business, but she never improperly benefitted from her friendships with agents and managers for companies that manage parts of the pension fund. She said she disclosed to then-Treasurer Richard Moore friendships with agents and managers before doing business with them.

"There's not one firm that was hired that didn't go through the due diligence process," Gerrick said. "And I know I can't have any manager give my daughter a job or give my daughter money. All of the decisions I made were based on what would help the fund perform."

The disclosures thrust North Carolina into a national controversy over the use of placement agents, middlemen who helped line up investment firms to handle hundreds of millions of dollars in state pension money. Federal officials are examining how to regulate this relatively new Wall Street niche. Agencies such as the Securities and Exchange Commission and New York's attorney general are investigating pay-to-play schemes in which investment managers and placement agents used political connections to get pieces of the pension fund business. New Mexico's chief investment officer resigned Thursday amid such an inquiry.

The treasurer's office under Cowell has not used placement agents.

One placement agent used by the treasurer's office when Gerrick worked there was Lloyd Bridge Advisory, whose CEO is the first lady of Bermuda, Wanda Henton Brown, a friend of Gerrick's. Brown passed the airline ticket to the Love Festival to Gerrick, but Gerrick said someone else paid for the ticket. It was intended for a musician who fell ill and the purchaser, whom Gerrick could not remember, wanted Gerrick's daughter to have the ticket.

The assistance for Gerrick's daughter came from placement agents and investment firms alike.

In January 2008, Gerrick e-mailed Daniel Weiss, the managing partner at the Angeleno Group, investment managers who were paid $1.4 million in fees by the treasurer's office last year. Weiss sent an e-mail to a colleague explaining that he just got off the phone with "Pat Gerrick in NC" and that her daughter was interested in a real estate job.

"I thought you would be a great conversation partner for her in thinking about job opportunities and the real estate landscape more generally. I gave Pat your number so you may hear from Meredith directly."

In November 2007, Gerrick traded e-mails with Bill Rogers, a founder of the Halifax Group, money managers who were paid $229,000 by the treasurer's office that year. Rogers wrote that he hoped Gerrick "will accept my offer of (a top Halifax official's) help for the kids; and if you will send me a copy of their resume, I'll try some other job sources too." Gerrick thanked him and said she will "forward the appropriate information to" her son and daughter.

In August 2007, Gerrick e-mailed her daughter that Nina Lesavoy wanted to look over her resume. Lesavoy headed Cue Capital, a placement agent for the treasurer's office in both 2006 and 2008.

In January 2007, an official at Credit Suisse, which received $2 million in fees from the treasurer's office that year and twice as much the following year, e-mailed to Gerrick about an unpaid internship in the firm's Madrid office: "We will be excited to have her for the summer." Gerrick said her daughter never accepted.

Nadim Barakat, a managing director at Credit Suisse, helped Gerrick's daughter edit her resume in July 2007, according to the e-mails. The following summer, when Gerrick's daughter was moving to New York City, Barakat provided Web links to a real-estate agency and reassured Gerrick that a colleague "is also following up on a real estate broker." Gerrick said her daughter found an apartment on her own. "Just because you see people being helpful," Gerrick said, "doesn't mean she used that help."

"Yes, people offered to talk to her, counseling, what you need to do to get into real estate. All people were doing was giving her background information."

Gerrick said her relationships in the industry, which predated her 2004 arrival in North Carolina, helped her get pension money invested in high-performance funds that otherwise wouldn't use public money, she said.

Gerrick also emphasized that she was not the sole decision-maker picking a fund manager. She and her staff crafted an investment strategy and then scrutinized funds to see if they fit the strategy. If she had a relationship with anyone at that fund, she disclosed it to the treasurer, who was Richard Moore for most of Gerrick's tenure. Moore did not return a telephone call Thursday.

Staff researcher Marian Paynter contributed

Newstex ID: KRTB-0038-39091589