- Special Sections
- Public Notices
State Investment Officer Gary Bland is the latest fall guy in the unraveling cloak of connections and contracts. It wasn’t exactly a surprise.
The surprise is that Bland lasted this long.
His was a political appointment that didn’t compute. A total unknown, Bland had managed a pension fund for Boeing. Suddenly he was responsible for New Mexico’s Permanent Funds, one of the nation’s biggest trust funds. Even though he’d peaked as a vice president for his last 16 years with Boeing, the governor called Bland “a leader who will take the office in a new direction.”
I always wondered how Bland ended up here. We now know he was close to the governor’s pal Anthony Correa, who is in the news a lot lately.
It didn’t take Bland long to stumble. An advisory group failed to do its homework on the first two investments to be made directly into companies under a new program. Bland and the equally inexperienced Economic Development Secretary Rick Homans walked away with black eyes. The program chose a new advisor, Fort Washington Capital Partners.
In the course of writing an investigative story on that episode, I heard financial people call Bland everything from a huckster to incompetent. The most charitable view recognized Bland’s unenviable balance between politics and finance: “I think Gary Bland is caught in the crossfire,” said a high-tech entrepreneur. “He’s smart enough to see the mission and the problem. I feel sorry for him.”
A newbie can be forgiven an early flub, but it didn’t end there. Bland and Homans proposed a joint-powers agreement that would have the Economic Development Department evaluate, investigate and recommend companies for state investment money; the State Investment Office would even pay the department 1 percent of the amount invested in companies. Woohoo!
Homans would suddenly enter the fiduciary arena, but neither he nor his deputy secretary du jour (he was on his third in a year) had any investment experience. He promised to hire some, but legislators wisely killed that idea.
About then Bland proposed that the state invest in derivatives, hedge funds, short selling and other risky instruments. Investor and occasional Republican candidate Gregg Bemis was the only one at that particular meeting to object.
That summer the state almost became the owner of a new pipeline. The SIC was considering a $150 million investment in pipeline construction from Farmington to Gallup and south to Las Cruces. State Land Commissioner Patrick Lyons, a council member, backed the idea because it would move more gas out of the San Juan Basin. The governor suggested a $130 million investment instead. Then we learned the company’s CEO contributed to the gubernatorial campaign.
There followed the revelation that Bland replaced most of his agency’s private advisers; six of the new advisers had contributed to the governor’s political committees, reported the Albuquerque Journal. That wasn’t a factor in hiring the firms, Bland insisted.
We should have taken the hint when Deputy State Investment Officer Deborah Gallegos, a former vice president of JP Morgan Fleming Asset Management, resigned just before the pipeline deal broke “to pursue other opportunities.”
In 2006 Fort Washington Capital Partners also resigned — two and a-half years before its contract was up. Something about a tiff over investing up to $20 million in Virgin Galactic and another company with Spaceport ties.
As usual, the bigger picture adds some perspective. There was long-standing criticism that New Mexico’s Permanent Fund investments were helping grow jobs out of state. Bland’s marching orders were to direct some investments here. He tried to do that and had some success with it.
But the difficulty of balancing politics and good investment practice, which dogged him from the beginning, was his undoing.
© New Mexico News Services 2009