Chicago Teacher Pension Money Invested With Rahm Emanuel's Friends and Donors
It is the kind of transaction Mayor Rahm Emanuel’s much-touted ethics reforms appeared designed to halt: Chicago teachers’ pension money flowed to financial companies connected to some of the mayor’s friends and top donors. Emanuel, whose administration appoints some members of the teachers’ pension-fund board, received campaign cash from those same financial firms despite his own 2011executive order purportedly preventing donors from receiving city business.
“When Mayor Emanuel took office, he said he was going to stop the culture of pay-to-play,” said Alderman Scott Waguespack, who is among a group of lawmakers asking the U.S. Securities and Exchange Commission to investigate whether the donations also violated that agency’s anti-corruption rule. “This is an example of his failure to follow through on those promises.”
Emanuel’s office declined an International Business Times request for comment.
According to city documents obtained by IBTimes, the firm affiliated with Illinois’ Republican Gov. Bruce Rauner -- a longtime friend of Chicago’s Democratic mayor -- as well as executives at private-equity giant Madison Dearborn have gained substantial investments from the Chicago Teachers’ Pension Fund (CTPF) since Emanuel took office. The documents also show the CTPF has an indirect equity stake in Grosvenor Capital Management. Executives at the latter two firms have donated nearly $1.8 million to Emanuel’s campaign and political organizations since 2011.
The teachers’ pension money went to the donors’ firms even though the Chicago Teachers Union has become one of Emanuel’s most outspoken opponents after the mayor shuttered 50 schools across the city and proposed cutting public employees’ retirement benefits. SEC rules are designed to prohibit campaign contributions to city officials from executives at firms managing city pension money. Those rules are in addition to the executive order signed by Emanuel that purports to prohibit campaign donations from city contractors and subcontractors.
“Pay-to-play practices unfortunately remain all too common in pension funds,” said Jay Youngdahl, a fellow at the Initiative for Responsible Investment at Harvard University. “It encourages a toxic milieu in which pension trustees may place their own interests or the interests of those who appointed them above the interests of the people whose healthy retirement depends on the funds. For an investment manager to donate hundreds of thousands of dollars to a public official charged with appointing trustees to a fund, while at the same time providing investment services and soliciting business from a pension fund, is a clear red flag.”
The CTPF, whose board includes two appointees from Emanuel’s board of education, declined to comment, as did Rauner’s company, GTCR. Michael Sacks, the CEO of Grosvenor who also serves as atop Emanuel administration appointee, told IBTimes that while the teachers’ pension system does have an indirect equity stake in Grosvenor, it does not pay fees to the firm. A representative of Madison Dearborn asserted that federal and municipal rules barring donations from companies managing pension money do not apply to the firm.
The new disclosures follow a November report showing other Chicago pension funds overseen by Chicago Teacher Pension Money Invested With Rahm Emanuel's Friends and Donors:
