New Mexico Treasurer Backs New Anti-Corruption Policy

DALLAS — New Mexico Treasurer Doug Brown has endorsed a series of proposed changes to the state’s investment policy designed to eliminate opportunities for corruption.

The changes outlined at Tuesday’s meeting of the New Mexico Board of Finance include a move to an electronic-auction platform for securities trading, disclosure of commissions paid to brokers and advisers, and continuous quarterly audits by an independent auditor to determine if all trades and transactions comply with state law and policies.

“We want to send a clear message that it is no longer business as usual in the treasurer’s office,” Brown said. “We are working diligently to rebuild public trust and show the investment community why New Mexico is a great place to do business.”

The board will consider public comments on the proposals on Dec. 6, and is expected to adopt the amended investment policy at its regular monthly session on Dec. 13.

Brown was appointed to the treasurer’s post on an interim basis by Gov. Bill Richardson on Nov. 3 after Robert Vigil, the elected treasurer, resigned Oct. 26 as the House was set to consider his impeachment.

Vigil and Michael Montoya, his predecessor as treasurer, were indicted in September on federal charges of extortion for allegedly taking kickbacks from investment advisers in exchange for contracts to place the state’s short-term funds with brokerage firms.

Montoya has pleaded guilty to one charge and has agreed to cooperate with prosecutors. Vigil has pleaded not guilty to 26 charges.

In his plea statement, Montoya said during his eight years as state treasurer, “I discovered it was quite easy to get bribes from people who wanted to keep or to obtain business with the state treasurer’s office.”

Scott Stovall, director of the Board of Finance, said the most significant change in policy is the adoption of electronic trading when investing the state’s short-term funds.

“The use of electronic trading will increase the competitiveness, the transparency, and the timeliness of trades,” Stovall said. “There are several platforms that could be used. The state treasurer’s office is going to look at several, and determine which best fits the state’s trading requirements.”

The Treasurer’s Office oversees an investment portfolio of nearly $5 billion in public money, including bond proceeds that are not needed yet and tax revenues slated for distribution later in the fiscal year.

Stovall said the proposed new investment policy includes changes proposed earlier by the board, and suggestions from the Treasurer’s Office and others.

“The overall guiding thought behind these new policies is the best interest of the citizens and state of New Mexico,” he said. “These guidelines are a combination of the best practices of other state treasurers, suggestions from the Treasurer’s Office, and recommendations by the Government Finance Officers Association.”

Stovall stressed that the proposed investment policy is a dynamic document that can be amended if and when necessary.

“We still have fiduciary and forensic audits under way,” he said. “Those are to be completed very soon, and we’ll also be making some recommendations for policy changes from their findings.”

The new policy includes a revised five-member investment committee, including the state treasurer, the state treasurer’s investment officer, the head of the Board of Finance, and two private members, one appointed by the treasurer and one by the director of the board of finance. The committee will oversee the internal controls on the investment portfolio, and recommend needed changes to the investment policy.

Other changes include revisions to strengthen the ethics and conflict of interest provisions, and the removal of mutual funds and variable rate securities from the list of approved investment vehicles.

The marked-up version of the investment policy is available on the state treasurer’s Web site at www.stonm.org or can be obtained by contacting the treasurer’s office at 505-955-1120.

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