Orders release of data on portfolio results

By: R.G. RATCLIFFE
Houston Chronicle Austin Bureau
September 26, 2002, Thursday

AUSTIN - Attorney General John Cornyn ruled Wednesday that if the state's higher education trust fund's private equities investment managers want to keep their records secret they will have to go to court to do so.

Cornyn ruled that University of Texas Investment Management Co. must publicly release the investment returns for the individual managers of the high-risk, $ 1.7 billion private equities portfolio of the Permanent University Fund.

The overall value of the portfolio has declined by 15.96 percent over the past year.

Cornyn said that if the private fund managers objected to the release of their information, they should have voiced those objections to him before he ruled.

"It is unclear what arguments the third parties could raise that would require UTIMCO to withhold the submitted remaining value and internal rate of return information," wrote Cornyn's assistant attorney general, Nathan Bowden.

"Thus we find that UTIMCO must release the submitted information in full," Bowden wrote. "If any of the interested third parties believes that the submitted information is proprietary and therefore excepted from public disclosure, it may pursue its legal remedies in court."

The UTIMCO board of directors and the UT Board of Regents voted last week to release the information in reaction to a Houston Chronicle report about how UTIMCO had broken a 1999 promise to publicly disclose returns on the secretive funds which directly invest money in businesses.

But UTIMCO President Bob Boldt said that up to 30 percent of the fund managers might object to releasing the information. He said the general partners of the private equity funds would claim exception from disclosure under a provision of the state's Open Records Act that protects companies from the release of information that would cause them competitive harm.

Cornyn, who twice earlier this year ruled that UTIMCO could keep the records secret, said Wednesday that last week's votes by the university regents and the UTIMCO board clearly showed that higher education no longer objects to releasing the information.

Cornyn told the Chronicle in an interview Wednesday that he felt he had no legal discretion in denying release of the records earlier this year when UTIMCO objected to the public disclosure.

"I am pleased UTIMCO has chosen to forgo that exception (to disclosure)," Cornyn said. "The preference would be to have the information open." vCornyn issued two separate rulings Wednesday favoring public disclosure on open records requests that UTIMCO had received from the Chronicle and Austin freelance writer Lucius Lomax.

University of Texas and UTIMCO officials had promised to make information on its private equities managers public in 1999 after the Chronicle reported that almost $500 million in investments had been made with managers linked to UT regents or then-Gov. George W. Bush.

During a routine follow-up on that story, the Chronicle discovered that UTIMCO had reversed that public disclosure policy in October 2001 as the nation's financial markets slid downward.

Cornyn in April and August had ruled that UTIMCO did not have to release the records in response to requests from Dallas businesswoman Kay McCord or Lomax. UTIMCO's attempts to deny the records to the Chronicle were still pending before Cornyn when he ruled Wednesday.