Cornyn backs open records

But office twice ruled for UTIMCO secrecy

Houston Chronicle Austin Bureau
September 25, 2002, Wednesday

AUSTIN - Attorney General John Cornyn, the Republican nominee for U.S. Senate, said returns for high-risk, higher education trust fund investments should be public, but his office twice this year has ruled that those records should be kept secret.

"As far as I'm concerned, it's an open record," Cornyn said Tuesday. "I believe that UTIMCO or any public entity should not enter into confidentiality agreements that would grant confidentiality to third parties or somehow exclude them from the operation of the Public Information Act."

But Cornyn's office on April 29 and Aug. 19 upheld requests from University Texas Investment Management Company to keep the records secret when they were sought by Texas citizens Kay McCord of Dallas and Lucius Lomax of Austin.

Cornyn was asked about the investment returns because the Houston Chronicle reported last week that Permanent University Fund trustees had withheld the information despite a 1999 promise to make it public.

The UTIMCO board of directors last week voted to make the rates of return public for its private equities managers. Some of the managers have indicated that they may fight the release of the information because the disclosure would put them at a competitive disadvantage.

Cornyn's office also cited the competitive harm that disclosure might cause fund managers when it ruled in April that the records could be kept secret.

"You . . . state that UTIMCO risks losing investment opportunities if the rate of return information is released because UTIMCO's partners would then not allow UTIMCO to participate in the subject partnerships," Ronald J. Bounds, Cornyn's assistant attorney general, wrote in the April opinion. "Accordingly, we conclude UTIMCO may withhold the information."

The April decision was made after Cornyn received a lengthy and impassioned plea from McCord that he should make the records public.

"Should a public institution be allowed to set aside its long tradition of public disclosure because unnamed partners with whom the institution chooses to invest 'do not want their rates of return to be public?' In my opinion, certainly not," McCord said in her letter to Cornyn.

"The Permanent University Fund is a state endowment fund contributing to the support of 18 institutions and six agencies of The University of Texas System and The Texas A&M University System," she wrote. "The public has a right, even an obligation, to know with whom UTIMCO chooses to invest public funds and to measure investment performance over time."

McCord cited an official UTIMCO document that said UTIMCO had voted to make the records public on March 29, 1999. The UTIMCO board took that vote after the Houston Chronicle reported that almost $500 million had been invested with managers who had personal or political connections to the University of Texas Board of Regents or then-Gov. George W. Bush.

The UTIMCO board reversed that decision in a vote taken in October 2001. UTIMCO did another reversal last Wednesday, voting again to make the records public. The University of Texas Board of Regents voted Saturday to support that decision.

UTIMCO President Bob Boldt said up to 30 percent of the fund managers may seek an opinion from Cornyn to block the records release. The Public Information Act allows firms that do business with the state to claim that their competitive position in the marketplace would be harmed by the public disclosure of information.

"I hope they go ahead and opt for openness," Cornyn told the Associated Press during an interview Tuesday. "I would hope that UTIMCO would make sure that it does not enter into any private agreements that would hide information that should be made available to the public."

He said he hopes to rule quickly on any request for secrecy from a fund manager.

Cornyn spokesman David Beckwith, contacted by the Houston Chronicle, said Cornyn's public position is not inconsistent with his agency's rulings.

Beckwith said state law presumes that records should be kept secret if the agency requests the opinion and a compelling reason cannot be found to release them.

Beckwith said the April and August rulings are now moot because UTIMCO has waived its exemption. He said the burden now shifts to the individual fund managers to prove why their rates of returns should not be made public.

However, that is not what Cornyn told the Houston Chronicle on Sept. 17. Even with both rulings still in effect, Cornyn told the newspaper he thought the records ought to be made public.

"Texas law says the public has a right to know," Cornyn said. "That's the presumption, and anyone who argues for anything less has the burden to come forward and point out in the law where the law specifically exempts or renders confidential that information or part of it."