Candidates support public's right to know

By R.G. RATCLIFFE, Houston Chronicle Austin Bureau, JOHN WILLIAMS
Houston Chronicle
September 17, 2002, Tuesday

AUSTIN - Gov. Rick Perry and his Democratic opponent, Tony Sanchez, Monday urged managers of the state's higher education trust funds to resume disclosing the performance of individual high-risk investments.

The Houston Chronicle reported Monday that the board of directors of the University of Texas Investment Management Co. quietly voted last year to keep secret the gains and losses of its individual private equities managers.

Sanchez is a University of Texas regent and a former UTIMCO director. The decision to keep the investment returns secret was made after Sanchez left the UTIMCO board last year.

The $1.7 billion private equity portfolio of the Permanent University Fund has lost 15.96 percent of its value in the year ended July 31, according to UTIMCO officials.

The PUF, made up mostly of oil and gas royalties from state lands dedicated to higher education, benefits the University of Texas and Texas A&M University systems.

Private equities funds are high risk, but they also hold out the promise of better returns than could be achieved on the public stock market. The investments typically are in things such as venture capital for start-up companies or in undervalued companies that investment bankers believe they can make profitable.

Through spokesmen, Perry and Sanchez said the performance of individual private equity fund managers should be made public.

"Governor Perry certainly believes public disclosure would be beneficial," said his spokesman, Gene Acuna. "The people of Texas can only benefit from having information regarding the investment funds for the state's largest universities."

Sanchez spokesman Mark Sanders said the candidate is "hopeful that the board will make the results of the public's dollars as transparent as possible."

"It's the people's money. They need to know what is happening," Sanders said.

UTIMCO officials contend that the details of individual managers' performance fall under state open records law that permits keeping records secret if their release would put the state at a competitive disadvantage. The officials say some top managers will not accept money for investment if full disclosure is required.

UTIMCO is seeking an opinion from Attorney General John Cornyn that the records may be closed.

Cornyn said Monday he does not know how his office will rule on the UTIMCO request.

He added, however, that the UTIMCO board faces a big test because "Texas law says that the public has a right to know."

"That's the presumption, and anyone who argues for anything less has the burden to come forward and point out in the law where the law specifically exempts or renders confidential that information or part of it," Cornyn said in Houston.

Higher education officials had promised to make performance figures on private equity managers public after a 1999 report by the Houston Chronicle that almost a third of the state's $1.7 billion in investments had gone to managers with personal or political connections to UTIMCO board members.

The UTIMCO board consists of two University of Texas regents, one from Texas A&M University, the UT chancellor and five investment professionals.

NOTES: Chronicle political writer John Williams contributed to this story.