RI’s Consultant on 38 Studios Has Big Democratic Ties
Monday, May 19, 2014
A consultant hired by the state of Rhode Island to determine whether or not to pay back the debt on the failed 38 Studios bonds has given thousands of dollars to top statewide Democratic candidates in Massachusetts, a GoLocal investigation has revealed.
SJ Advisors' Linda Port, who testified earlier in May that defaulting the bonds on the bankrupt 38 Studios would reduce Rhode Island's bond rating to junk status, has given over $2,500 in contributions to prominent Democratic candidates in the Commonwealth including Governor Deval Patrick and Attorney General Martha Coakley while serving as an attorney with Mintz Levin and Greenberg Traurig, according to contribution records.
The debate as to whether to pay back the bonds -- or not -- has top Democrats Governor Lincoln Chafee and gubernatorial candidates Clay Pell, Gina Raimondo, Angel Taveras lined up on the side of paying them, and GOP candidates for Governor Allan Fung and Ken Block among those strongly opposed.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"The Democrats are in power, and they were in power for the 38 Studios deal," said veteran political pollster Victor Profughi. "And the opposition party will jump on any issue they can. It's politics -- and I'm not using that in the negative sense, it's just what it is."
State's Choice of Advisors
SJ Advisors was chosen out of a field of three proposals, after a prior request for proposal yielded no bidders.
"The Department analyzed all three substantive proposals received. In addition to the proposal review, Department of Administration staff conducted several phone interviews with all those who submitted substantive proposals," said Alison Rogers with the Department of Administration. "SJ Advisors was identified as having the best qualifications and experience to conduct the work among those who submitted substantive proposals. In addition, SJ Advisors had recently served as a financial advisor for Bryant University."
SJ Advisors' Port noted that that since joining SJ Advisors this year, besides the RI 38 studios analysis she has had a "college client," and had not met Governor Chafee or Department of Administration Director Richard Licht prior to working on 38 Studios.
Profughi thought that the role of politics, and the ultimate impact of the dissent between parties on paying back -- or not paying back the bonds -- would be negligible.
"Clearly, the Republicans are trying to make this a political issue -- and again, I don't us that term negatively. It's an issue that ought to be of concern, but does that translate to actually being of concern -- remember that voters will have to remember long enough to November," said Profughi. "I don't know a lot about who the bidders were to make a determination on SJ Advisors and their advice. If they were familiar with Rhode Island, that can cut both ways."
Port noted that the two advisors were of different political parties. "The Principal and Senior Vice President of SJ Advisors, who prepared this report, are of different political parties and political considerations do not influence their professional activities," said Port.
Port's bio includes having previously been partner at Mintz Levin, where Licht's former Chief of Staff as Lieutenant Governor, David Lieter, is the head of ML Strategies, Mintz Levin's consulting subsidiary.
Looking Forward
While Governor Chafee and a number of elected officials as well as candidates have weighed in on whether or not to pay back the bonds, the Speaker of the House has yet to take a position.
"Speaker Mattiello is in the process of gathering information that will help him, as well as all of the House members, to formulate a fact-based decision on the bond repayment," said Larry Berman, spokesperson for Speaker Mattiello. "He is reviewing the report submitted by SJ Advisors and the testimony that has been submitted to both the House Finance and Oversight committees."
Berman continued, "Since the bond repayment is included in Governor Chafee's budget proposal, the vote would be taken as part of the budget that will be considered by the House in the coming weeks. In the meantime, the House Finance and Oversight committees are still conducting their work on this issue. The major factor [Mattiello] is considering is the potential impact on future state and local bond proposals."
Former SEC lawyer and Forbes contributor Edward Siedle, who conducted an investigation last fall into General Treasurer Gina Raimondo's management of the state's pension fund, had expressed interest in conducting the 38 studios analysis, but the Department of Administration's Rogers said Siedle's proposal "failed to address the Workplan and Approach/Methodology sections.
Siedle said he questioned the motivation for paying back the bonds.
"Pay fraudulent debts to Wall Street and let Wall Street to manage the pension in secrecy. Who's running RI? The people or Wall Street?" asked Siedle.
Related Slideshow: Who Wants to Pay and Who Wants to Default on the 38 Studios’ Bonds
GoLocalProv showcases which Rhode Island politicians and organizations want to pay or default on the 38 Studios' Bonds.
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