Chicago, IL –(ENEWSPF)—October 28, 2014. A new report on Forbes.com reveals potential self-dealing and conflicts of interest involving billionaire governor candidate Bruce Rauner’s private equity firm, GTCR, and the shroud of secrecy that hides the firm’s dealings from public scrutiny, including exempting it from compliance with the Freedom of Information Act (FOIA).
Authored by former Securities and Exchange Commission attorney and nationally recognized fiscal watchdog Ted Siedle, the article exposes potential conflicts of interest buried in GTCR’s own SEC filings.
Self-dealing schemes and exorbitant hidden fees could harm all Illinois taxpayers, since retirement systems for Illinois municipal employees and teachers are among the public pension funds that, by Rauner’s own admission, have supplied two-thirds of his firm’s income.
Red flags in the Forbes report include:
“Family & Friends” Funds: Rauner’s firm permits itself, other GTCR executives and special “family and friends” funds to invest at lower cost in the same companies his firm purchases for public pension funds. Rauner may profit by holding those shares or by selling them to public pensions at a guaranteed, riskless mark-up.
Hidden Fees: Rauner’s firm permits itself to “contract with any related person,” including other companies it wholly owns, to provide services that investors—primarily public pension funds—must pay for, even if another entity is better qualified or cheaper. Siedle notes that “a recent internal review by the SEC found a majority of private-equity firms inflate fees and expenses charged to companies in which they hold stakes.”
Enforced Secrecy: Rauner’s firm prevents government entities and the public from having access to documents necessary for them to make informed decisions about funds for which they are investing and which hide any conflicts of interests GTCRauner may have. “[I]nformation may be withheld from limited partners that are subject to Freedom of Information Act or similar requirements,” the GTCR documents reveal.
Given all this, Siedle concludes, “[B]efore Rauner can be deemed fit to serve as governor of Illinois, an in-depth review of his secret dealings with state pensions is called for.”
Source: Illinois Freedom PAC