Republican gubernatorial candidate Charlie Baker donated $10,000 in May 2011 to the state party committee of Governor Chris Christie of New Jersey. Only seven months later, a Christie-controlled pension fund committed $25 million to an investment firm that lists Baker as a partner.
Baker said Friday that he is exempt from the strict federal and New Jersey “pay-to-play” security regulations that bar financial executives from making donations over $250 to political figures who oversee pension funds or to committees controlled by those politicians.
“I’m not a registered investment professional,” said Baker, who joined General Catalyst Partners, a Cambridge-based venture capital firm, in March 2011, just months after losing the 2010 gubernatorial race to Governor Deval Patrick.
Baker’s contribution and his firm’s involvement with the New Jersey pension fund were first reported on Thursday by liberal journalist David Sirota on the technology website PandoDaily.
Baker said his role is to seek out startups and companies that his firm will invest in. He is referred to on the firm’s website as an “executive-in-residence/partner” and listed among the firm’s partners. He said his title makes a clear distinction between him and other partners at the firm.
“I am not an employee,” Baker said in an interview Friday. “I pay for my health care, I don’t get a W-2 tax form.”
“I have no idea who Catalyst solicits funds from,’’ he said. “My job was to find interesting companies to invest in and that is what I was focused on.”
Both state and federal rules extend investment restrictions to political contributors who are “associated” with the relevant firms.
Baker made the political contribution, which he called his largest ever, 2011 when he and his wife, Lauren, attended a fund-raiser that Christie held in Boston for the New Jersey Republican State Committee. Campaign finance documents show that Baker identified himself as a General Catalyst “partner.” On Friday, Baker said that was “an error.”
In December 2011, Christie’s State Investment Council approved the $25 million General Catalyst investment.
Baker said he attended Christie’s Boston event in 2011 out of loyalty to the New Jersey governor, who supported him in his race against Patrick.
“The guy was really helpful to me when I ran in ’10 and I think he’s a really good guy,’’ Baker said.
Baker said he never discussed the contribution to Christie’s fund with his fellow partners at Catalyst. He also said he was not contributing at the behest of others at the company who would more unequivocally be covered by federal and New Jersey state restrictions on campaign donations.
“I am not covered,’’ Baker said, when asked why he didn’t think there was a need to inform the firm. He added, “I was not a conduit.”
Bill Fitzgerald, Catalyst’s chief operating officer, backed up Baker’s claims that he is not involved in raising money from public pension funds for investments. He said Baker’s role is to help lead the companies in which the firm invests.
He also said Baker did not inform him or the firm of the Christie donation at the time it was given, but the firm found out about it when it was dealing with the state of New Jersey pension fund. He said he did not recall how it came to light. But it did prompt his company to check with its lawyers, who determined that a disclosure was not necessary.
“We verified Charlie’s positions and found that his role did not require any filings concerning the contribution,’’ Fitzgerald said. “What is clear is that Charlie had no role in working with the state of New Jersey on the pension funds. It is wrong to think in that context.”
Baker and Christie have collaborated in several campaign fund-raising activities. Earlier this year, both men attended a fund-raiser at a downtown Boston hotel for the Republican Governors Association, which Christie chairs.
Christie, once considered a frontrunner for the 2016 Republican presidential nomination, has been buffeted in recent months by fallout from a lane closure scandal near the George Washington Bridge. He has denied wrongdoing.
“I still think he is a good guy,’’ Baker said when asked about the bridge controversy. “He fired the people he needed to fire and held a two-hour press conference. He did the right thing and I take him at his word.’’
Voicemails left with Christie’s press office were not returned late Friday.
In a telephone interview on his way back from Texas, where he said he had been tending to General Catalyst health care investments, Baker shrugged off the notion that his campaign finance support for Christie conflicted in any way with his firm’s business with New Jersey.
“I can promise you that there will not be any kind of problem associated with the fact that I have made a contribution. It is not a pay-to-play issue,” Baker said.
Baker’s argument is based on the notion that, because he has no role in the firm’s solicitation of funds, he is not covered by the regulations.
New Jersey’s “pay-to-play” law, though, raises the concept of the appearance of impropriety, stating, “Although the right of individuals and businesses to make campaign contributions is unequivocal, that right may be limited, even abrogated, when such contributions promote the actuality or appearance of public corruption.”
The law also says “it is a compelling interest of this State to prohibit awarding government contracts to business entities which are also contributors to candidates, political parties and the holders of public office.”
Under New Jersey Division of Treasury restrictions, the state’s investment division “shall not engage an investment management firm to provide investment management services for the benefit of the State or its pension funds and shall terminate the contract of any investment management firm if, within the two years prior to such engagement or during the term of such engagement, any political contribution or payment to a political party covered by this policy has been made or paid by . . . any investment management professional associated with such investment management firm.”
While Baker insists that he is not such an investment management professional, Melanie Sloan, executive director for the Center for Responsibility and Ethics in Washington, said she believed General Catalyst had violated both SEC and New Jersey rules.
Sloan rejected Baker’s argument that his work in a targeted area of the firm exempted him from the state and federal prohibitions.
“That’s not the way the rules operate, that doesn’t matter,” Sloan said. “The rules are pretty clear that you can’t have a contract with a pension fund within two years of somebody making contributions.”