The Quadrangle Group and four other defendants have agreed to pay nearly $12 million to settle their involvement in the kickback scandal involving New York State Common Retirement Fund, according to New York Attorney General Andrew Cuomo.
Under the agreements, Quadrangle will pay $7 million, GKM Newport Generation Capital Services will pay the equivalent of $1.6 million, political consulting firm Global Strategy Group will pay $2 million, California lobbying firm Platinum Advisors will pay $500,000, and unlicensed placement agent Kevin McCabe will pay $715,000, according to the attorney general’s office. In addition, all of the parties agreed to comply with the Attorney General’s Public Pension Fund Reform Code of Conduct.
Cuomo had alleged that Quadrangle won a $100 million investment from the state pension fund by engaging in improper “quid pro quo” arrangements.
Quadrangle said in an April 15 statement issued by the attorney general: “We wholly disavow the conduct engaged in by [Quadrangle co-founder] Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund. That conduct was inappropriate, wrong, and unethical. We embrace the reforms in the Attorney General’s Code of Conduct, including the campaign contribution and placement agent ban, which are vitally necessary to eliminate pay-to-play practices from the public pension fund investment process. We urge others in the industry to follow.”
We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund. That conduct was inappropriate, wrong, and unethical.
Rattner had been one of the key people at Quadrangle, a media-focused firm that has investments in such companies as movie studio Metro-Goldwyn-Mayer. He quit Quadrangle in 2009 to run U.S. President Barack Obama’s auto bailout task force, a post he then left a few months later to return to private life.
Jamie Gorelick, Rattner’s attorney, said in a statement that Rattner did not agree with the characterization of events released last week, including those contained in Quadrangle’s statement: “Mr. Rattner does not agree with the characterization of events released today, including those contained in Quadrangle’s statement. Mr. Rattner shares with the New York Attorney General the goal of eliminating public pension fund practices that are not in the public interest. He looks forward to the full resolution of this matter.”
In a conference call in mid-April, Cuomo said that there has been a “constant refrain” of alleged kickbacks afflicting New York Common, the third-largest U.S. public pension fund, for decades. “Everyone does it, everyone knows about it and no one’s done anything about it,” he said. “Well, that is changing.”
Cuomo noted that his probe has resulted in six guilty pleas, settlements with 15 firms, including The Carlyle Group, and more than $130 million of recoveries.—Megan Davies of Reuters, with additional reporting by Jonathan Stempel of Reuters and VCJ