NJ admonishes CVC for political-contribution violation

CVC Capital Partners and New Jersey’s state pension will continue their relationship, despite a hiccup around a political-contribution violation.

A managing partner at the firm, Christopher Stadler, who runs CVC’s private-equity activities in North America, inadvertently violated New Jersey State Investment Council’s rules on campaign contributions last year.

Stadler, whose name is misspelled in state campaign contribution documents as Stadtler, in May 2015 made a $2,600 contribution to the State Assembly campaign of Democrats Paul Vagianos and Christine Ordway. The contribution was rescinded in August, according to documents from the New Jersey Election Law Enforcement Commission.

The address given for Christopher Stadtler on the state documents is the same address in New Jersey for Christopher Stadler. CVC declined to comment. A spokesman for the New Jersey State Treasurer’s office did not return a request for comment.

State Investment Council rules prohibit investment firms, or individuals at the firms, from contributing to state officials while the firms are working with the state pension. Individuals are allowed to contribute to officials for whom they are entitled to vote, but only as much as $250, the rules state.

The rules call for ending relationships with investment managers that violate the political-contribution policy while working with the state.

New Jersey committed 100 million euros ($111.8 million) to CVC in 2013.

Rather than ending its relationship with CVC, the State Investment Council “strongly admonished” CVC for the “inadvertent” political contribution that violated the policy, according to minutes published this week from the Council’s January meeting.

CVC had asked for an exemption to the policy, and Council granted the exemption, “with a strong message of admonition,” according to the minutes.

Chris McDonough, director of the state Division of Investment, said the public interest would be best served by granting the exemption, as the pension system has a relationship with the firm, which has a “top quartile record of performance.”

Council also recognized CVC “demonstrated the violation was unintentional and inadvertent,” the minutes said.

New Jersey’s state pension was embroiled in a political-contribution flap with one of its investment managers, General Catalyst, in 2014 and 2015. An executive-in-residence at the firm, Charlie Baker (now governor of Massachusetts), made a $10,000 contribution to the New Jersey Republican State Committee in May 2011, shortly after he joined the firm.

In December 2011, the state pension committed $25 million to General Catalyst’s GC Group VI LP.

The problem arose because the commitment was made seven months after Baker made his political contribution. State policy mandates a two-year waiting period after a political contribution is made by an investment firm, or an “investment management professional” at the firm, before the system can engage the firm, according to a New Jersey audit report.

Investigators found General Catalyst never included Baker’s contribution on a political-contribution-disclosure form prior to receiving the commitment from the state pension system.

Eventually, investigators determined General Catalyst did nothing wrong in not reporting the contribution, as the firm believed Baker, as an executive-in-residence, was not required to report.

Action Item: Read New Jersey SIC’s political-contributions policy here: http://bit.ly/1RzXzM3

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