Appendix One: Research Methodology
http://www.spot.us/pitches/337-investors-club-how-the-uc-regents-spin-public-funds-into-private-profit/story
http://www.spot.us/pitches/337-investors-club-how-the-uc-regents-spin-public-funds-into-private-profit/story
Posted by Peter Byrne on 09/22/10
This investigation primarily focuses on the intersection between the official duties and the business interests of Richard C. Blum, Paul Wachter, and Gov. Arnold Schwarzenegger. All three men have been members of the regents’ investment committee since 2003 (although Schwarzenegger does not attend meetings).
Due to the size of UC’s investment portfolio, as well as the complexity and often subterranean nature of the regents’ personal business interests, it was necessary to design a computer-based method for tracking down possible conflicts of interest.
To find correlations between the regents’ personal business pursuits and UC investments, we reviewed documents available on the web sites of the U.S. Securities and Exchange Commission (SEC), the University of California, and other government agencies. We also used commercial databases that aggregate SEC information, and we custom-designed databases from public records to enable keyword searching. For instance, we digitized the regents’ financial disclosure statements and compared that data with digital lists of UC investments made by both the UC Treasurer’s in-house staff and UC’s external managers.
Using the same methods, we also created dossiers on the investments and financial ties of several regents who, due to their business interests, appear to have the greatest potential for conflicts: Sherry L. Lansing, George M. Marcus, Bonnie Reiss, Russell Gould, Bruce D. Varner, Monica Loranzo, Hadi Makarechian, Mark Yudof, and Leslie Tang Schilling.
Methodology for investigating Blum Capital Partners
Founded in San Francisco in 1974, the activities of Blum Capital Partners span the globe, with several of its private investor partnerships residing in income-tax havens, such as the Cayman Islands. The $2 billion plus firm’s public and private equity holdings include higher education, information technology, medical technology, air transport, casinos, real estate, banking, and, until December 2005, military construction and weapons manufacturing.
Since private equity deals are mostly unregulated by government bodies, the identities of Blum Capital Partners’ investors are cloaked. But public institutions are required to disclose the amount and the rate of return of their investment in private equity firms. For example, CalPERS has reported large investments in Blum Capital Partners, as has the Carpenters Pension Trust of Southern California, the Alaska Teachers Retirement System, the New York State Common Retirement Fund, and the Regents of the University of Michigan.
As a regent, Mr. Blum is also required to file annual economic disclosure statements related to his business interests based in California (but not those outside the state). For a more comprehensive accounting of his business interests and income, we turned to the economic disclosure statements filed annually by Mr. Blum’s spouse, Sen. Dianne Feinstein (D-California), whose wealth is estimated to be as high as $100 million, and whose 200-plus page disclosure statements are almost exclusively dedicated to tracking the labyrinthine activities of Blum Capital Partners. These documents are packed with eye-boggling acronyms for investment funds (e.g., TPG OFF VI SPV, L.P.), which are buried inside complexly nested financial relationships. But in conjunction with SEC filings and other data, these disclosure statements expose the lineaments of Mr. Blum’s vast and intricately balanced holdings, many of which are financed with public funds.
We also examined reports in the financial trade press, investor newsletters, and corporate press releases that pertained to Blum Capital Partners and its business associates. Ultimately, we gathered and sorted and perused more than 12,000 pages of documents. Approximately 1,000 pages were scanned or engineered into a searchable format. These records, however, are only the tip of the proverbial iceberg: Mr. Blum’s business dealings have planetary reach and go back in time nearly a half-century.
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