WRAL Investigates

Cowell: Public financing would prevent conflicts of interest

A "pay-to-play" investigation in New York's state pension fund has renewed questions about campaign finance in North Carolina.

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A "pay-to-play" investigation in New York's state pension fund has renewed questions about campaign finance in North Carolina.

New York Attorney General Andrew Cuomo said Tuesday that a former political power-broker and an investment executive have pleaded guilty to accepting kickbacks from investment firms doing business with the state's public pension fund.

Because of the scandal, the Securities and Exchange Commission is considering beefing up limits on contributions from people doing pension business with states.

A USA Today survey found that some executives mentioned, but not charged, in the New York scandal gave to politicians across the country, including to North Carolina State Treasurer Janet Cowell and her predecessor, Richard Moore.

Moore was criticized three years ago by Forbes magazine for raising campaign money from investment fund managers. The magazine labeled the practice "payola," and it became an issue during his unsuccessful bid last year for the Democratic gubernatorial nomination.

Moore consistently dismissed the criticism, saying in 2006 that "it would be incredibly short-sighted for me to manage the state's money based on political concerns."

A month before last year's election, Cowell received a $4,000 check from Pamela Joyner, the founder of investment firm Avid Partners. Records show the firm was paid as a "placement agent" for lining up a state pension contract in 2005.

Joyner also is a longtime friend of Patricia Gerrick, whom Cowell fired last month as the state's chief investment officer.

Gerrick told WRAL News on Thursday that she fully disclosed her friendship with Joyner. She called Joyner "highly ethical" and said decisions involving North Carolina's public pension fund were based on investment strategy, not her relationship or any contributions.

Cowell last month implemented new ethics guidelines for the State Treasurer's Office, requiring all employees to disclose any payments made to placement agents for helping pension managers find funds in which to invest.

While acknowledging that she has accepted contributions from investment fund managers, Cowell said she would prefer public financing for treasurer elections. She has lobbied for two bills pending in the General Assembly that would create a public campaign financing system for the office.

"Hopefully, we can get a public financing program," she said. "But, in the current system, that is one of the donor bases I have utilized."

Jane Pinksy, director of the Coalition for Lobbying and Government Reform, credited Cowell for pushing public financing, but she said questions will linger until politicians stop raising money from people doing business with the state.

"I don't think we have politicians in North Carolina who do the kinds of things that we saw in New York, but even the perception is not good for our government," Pinsky said.