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White Says Texas Investments Politically Connected
BY JAY ROOT and RAMIT PLUSHNICK-MASTI

Democrat Bill White on Tuesday accused appointees of Gov. Rick Perry of pressuring Texas teacher retirement system managers to make potentially risky investments that gave state business to politically connected companies.

A 2009 government whistleblower memo released by White's campaign for governor describes a series of ethical lapses and insider deals at the $100 billion Teacher Retirement System of Texas, where private investment firms whose executives made huge contributions to Perry allegedly got special treatment.

An external investigation into the allegations found no illegalities. White said at a Tuesday news conference that the dealings still were improper.

The leaked memo was written by the retirement system's former director of private market investments. Executives associated with companies mentioned in the memo have given Perry hundreds of thousands of dollars in campaign contributions, records show.

The retirement system issued a statement Tuesday saying an external party investigated the allegations after the memo was written in spring 2009 and "found no improprieties with respect to how the investment decisions in question were made." The results of the investigation also were sent to the State Auditor's Office, the statement said.

White is treating the memo as an October surprise in the governor's race, and held a news conference in front of the retirement system's Austin offices Tuesday while standing in front of a chart illustrating money flow at the system.

"Rick Perry takes care of his friends because they take care of him, and that philosophy trickles down," White said in a statement issued earlier Tuesday by his campaign. "Now we see Perry donor-appointees have been taking money out of teachers' pockets, and Perry donors have reaped millions in fees."

Perry, campaigning at Abilene Christian University, dismissed the accusations.

"That has been fully investigated by an outside group and by the TRS and it was forwarded on to the appropriate audit committee and there is no 'there' there," the Republican said.

The memo was written by Michael Green, who directed the private markets wing of the retirement system's in-house investment department. He declined to comment when reached by The Associated Press.

In the memo, Green said professional staff had been "manipulated by board members" appointed by Perry, all to the detriment of teachers who depend on the fund for retirement income. The document says in-house investors faced repeated pressure to approve investments with favored firms.

The chief investment officer at the retirement system, Britt Harris, "pressured TRS' staff and adviser to change their recommendations to decline investments with" at least two EnCap funds, according to the memo. EnCap is led by senior managing partner Gary Petersen, who has given Perry more than $300,000, according to electronically available records at the Texas Ethics Commission.

Other firms that were initially turned down but later approved by the retirement system include HM Capital Partners, formerly known as Hicks, Muse, Tate & Furst, the memo said. Executives associated with the firm also have given large sums to Perry, including Tom Hicks, a billionaire and former chairman of the University of Texas Investment Management Company.

The memo also alleges staff were required to approve investment recommendations for system managers who had retained Alfred Jackson, a managing partner in Capital Point Partners, as a "placement agent" for teachers' pension money. Jackson has donated thousands of dollars to Perry's campaign.

Jackson acknowledged the contributions Tuesday, but denied the other allegations in the memo, insisting he is not a placement agent. He said he knows members of the retirement system board, and has made presentations to the board, but never has recommended where the funds' money should be invested.

Jackson called Green's memo "politically driven."