STATE’S INVESTMENT COMMISSION GAVE “THUMBS DOWN” TO PORT PROPOSAL
The S.C. State Ports Authority (SCSPA) recently announced its intention to name a proposed $700 million terminal after the most powerful politician in the state – S.C. Senate president Hugh Leatherman.
How’d that go over? Um, not well.
In fact the move – widely regarded as a sop to secure additional taxpayer funding for the agency in the state budget – has opened the SCSPA up to a flood of new scrutiny. And criticism.
So … what compelled the SCSPA to attempt such a desperate gambit?
According to our sources at the agency, the ports’ “Leatherman play” was initiated after the agency failed to convince the leaders of the state’s scandal-scarred pension fund to invest in their infrastructure expansion plans.
Wait … what? The notoriously corrupt S.C. Retirement System Investment Commission (SCRSIC) actually took a pass on the ports?
Yes …
According to our source, the SCSPA went to the investment commission – which is controlled by Leatherman crony Reynolds Williams – and wanted it to “finance certain capital projects.” The commission wasn’t interested, though, because the rate of return on the investments – said to be around three percent – wasn’t high enough.
Commissioners were “looking for higher returns as their portfolio consistently underperforms.”
“The three-percent is not bad for fixed income bonds but (the commission) was not interested,” a source at the SCRSIC confirmed.
Interesting …
As we’ve been noting for years, South Carolina’s corrupt pension fund managers have consistently doled out massive bonuses to the very bureaucrats who have labored to produce some of the worst results of any large pension fund in America (at the highest price, too).
One reason for the abysmal results? Terrible investment decisions. Of course the deeper the hole gets – the harder commissioners push for bigger paydays.
“They are ‘swinging for the fences’ and that is the very last thing a pension fund should do,” our SCRSIC source said. “Especially one with a reputation for whiffing on higher-risk alternative investments.”
As we’ve said from the beginning of this debate, we believe government should continue to maintain public ownership of critical infrastructure – like our ports. But for the better part of the last decade we’ve repeatedly argued that private investment (and management) of these facilities was a far better method of maximizing competitive advantage.
It would also be a far better method of securing the funding the SCSPA desperately needs if it hopes to have any chance of remaining competitive in the shipping business.
14 comments
Palmetto Rebuke? No harm in asking.
Dumb ass Cockroaches
Should have told Reynolds Williams they would name a terminal after him
The little turd would have eaten ones and shit hundreds for the recognition
This doesn’t make a lot of sense. If 3% is a pretty good return on a fixed income bond, then there should be private investors waiting to snap up those bonds. The fact that the SCSPA is apparently trying to name something after Leatherman to convince the SCRISC to invest in it indicates there is no private investors willing to touch this debt.
I would like to see a law passed in SC that no building, no structure, no road, etc., could be name after a politician unless they had been legally pronounced and proven to have been dead for at least one hundred years.
And after one hundred years, feel free to name sewerage treat plants. prison grounds and buildings, waste dump areas, other forsaken areas, etc., after the politician of your choice.
Hugh Leatherman meets your requirement.
I say we pass a law saying that every future building should be named according to which name gets the most internet write-in-votes.
Maybe it’ll be the Ruben Studdard port terminal.
Please don’t refer to the Port as the SCSPA! Jimmy has removed that from the Port’s slogan and symbol. As far as Newsome is concerned, it is the SCPA. As I stated before, at a manager’s meeting, he told everyone that he hates the state, he hates the governor, he hates the board of directors. He went so far as to try and have the email domain name changed from .SCSPA.com to SCPA.com. Alas for poor Jimmy – someone else owns it.
If you receive an email from an employee at the Port, pay close attention to the signature that was mandated to be added to all employees email. STATE has been removed.
You’re making Jimmy angry when you say SCSPA!!! :-)
I just heard that Hershel Harper was named the Chief Investment Officer of the UAW Medical Trust. Come and sit down boy have a cigar. He’s the guy that just stepped down from the SC Retirement Commission if I remember correct.
It’s good that RSIC is not investing in this project. There are plenty of good infrastructure opportunities out there, they don’t need to take a bad deal just because it’s in their own backyard.
One point of correction for this article, RSIC’s alternative investments were the best performing asset classes as of June 30, 2015. Real Estate, Private Equity, Hedge Funds, and Private debt (all broadly classified as “alternatives”), led the pack. It’s on page 3 of report presented to the Legislature.
http://www.scstatehouse.gov/CommitteeInfo/SenateFinanceSpecialSubcommitteeToReviewInvestmentOfStateRetirementFunds/August202015Meeting/Mike%20Hitchcock%20Presentation%20Senate%2008%2020%202015.pdf
Commodities got tattooed because of oil/energy prices and EM Debt lost out because of FX (foreign exchange). These MAY be classified as “alternatives” but they are usually viewed as real assets and fixed income (respectively). Nevertheless, they did provide a drag on the returns for the overall plan.
In the end, it sounds like RSIC stood it’s ground and avoided something that wasn’t in the best interest of the pensioners. Now if they could only get rid of timber investment….sigh….
“You can’t eat,” or pay benefits, with the returns of many of the alternative investments. They are projections which may or may not become fact as distant as 10 years from now.
They are valuations placed on them by the same managers that are paid to purchase, manage and sell the assets.
My family lost a considerable sum of money in investments such as those. They are not all bad, but until you cash the check it is not real money.
I’m sorry to hear your family lost money in these types of
investments. I hope you will be able to recoup your capital over time and that it “comes back to you” in another way. My very best to you! :-)
Generally speaking, you are correct. But you’ve touched on
some real issues that are currently changing in the industry. For example, in Real Estate, many investors are insisting that underlying properties are valued by a third party appraiser, not by the investment manager. In Private Equity, many of the managers know not to overstate the value of the underlying companies in the portfolio because selling them for a value less than where they are marked is a good way to lose clients over the long term (over promise and under deliver). Investors anticipate an increase on the value when the investment is liquidated, knowing that conservative values need to be applied to the portfolio investments. Some of the better investment firms understand these issues and have made significant strides to remedy the issues you described. But to your point, the investments are illiquid, they are locked up over an extended period of time, and you can’t liquidate or use the gains generated from those investments like you would with a stock or a bond.
My experience is 5 years old or maybe even a little longer.
I hope they are getting better but it takes years to turn those ships around. My brother-in-law…the reason we were in those investments to start with…has left the industry after making a fortune. Our small family office is a hell of a lot smaller but that suck-up is doing very well for himself.