Perry’s comment about the TRS internal investigation involving charges in the whistleblower memo by Michael Green was, “That has been fully investigated by an outside group and by the TRS and it was forwarded on to the appropriate audit committee and there is no ‘there’ there.” Perry is right: There is no “there” there. The reason why there is no “there” there is that the investigator’s report is pablum. To describe it as a “report” is a generous description. It makes no effort to deal with the details of Green’s memo, which lays out specific instances of questionable management decisions and conduct. Whatever went on at TRS is dealt with only in generalities by the investigator. For example, Michael Green alleges in his memo that Mr. [Britt] Harris, TRS’s CIO [chief investment officer], pressured the investment staff and adviser to change their recommendation to decline investments with EnCap Energy Capital Fund. The staff’s initial recommendation was to decline the investment. The advisor, a company by the name of Hamilton Lane, likewise recommended that the investment be declined. But the revised recommendation was that the staff approved the recommendation and the advisor made a “limited prudent investor” recommendation. The investigator wrote that CIO Harris, in his interview with the investigator, provided reasonable explanations for the investment decisions questioned by TRS employees. “In many instances, for example, the CIO explained his decisions by pointing out that as senior investment officer, it was his ultimate decision and that he had the experience and knowledge of the investment world that subordinates did not….In sum, the investigation uncovered no definitive evidence that any Trustee improperly influenced the CIO with respect to any investment decisions.” In other words, the boss is the boss and gets to call the shots. No one would disagree with that. The question is whether the decisions had political overtones. The AP story about the TRS investment flap mentioned two potential instances that Mr. Green included in his memo: * The chief investment officer at the retirement system, Britt Harris, “pressured TRS’ staff and adviser to change their recommendations to decline investments with” at least two EnCap funds, according to the memo. EnCap is led by senior managing partner Gary Petersen, who has given Perry more than $300,000, according to electronically available records at the Texas Ethics Commission. * Another firm that was initially turned down but later approved by the retirement system include HM Capital Partners, formerly known as Hicks, Muse, Tate & Furst, the memo said. Executives associated with the firm also have given large sums to Perry, including Tom Hicks, a billionaire and former chairman of the University of Texas Investment Management Company. * * * * My concern goes beyond the specifics of the Green memo to the ultimate question of whether Governor Perry and his appointees are good stewards of $100+ billion in trust funds. In particular, I worry that Perry’s ultimate goal is to dip deeply into TRS and its sister fund, ERS, to build toll roads. Remember this story from 2009? Governor Perry is removing Linus Wright, a former Dallas school superintendent, as chair of the board that oversees the $88 billion Teacher Retirement System and will replace him with a current board member who is also a member of Perry’s campaign finance team, Dallas real estate investor R. David Kelly. (Wright succeeded Jim Lee, who was one of three co-chairs of the Perry fundraising apparatus; Lee had resigned in the wake of news reports that he had run up gambling debts in Las Vegas.) The removal of Wright occurred just a few days after Perry had announced the death of the Trans-Texas Corridor. The juxtaposition of events reminds me of the old Mark Twain line: “Reports of my death were greatly exaggerated.” The concern is that the governor’s office has installed a crony as chairman who will urge the board to invest retirement system funds in toll roads as a means to pump money into funding-starved TxDOT. Perry appointees who don’t go along –as we have learned in the case of boards of regents and the Forensic Science Commission — are likely to find themselves replaced. I’m not just being an alarmist here. Remember, in the summer of 2008, Perry, Dewhurst, and Craddick signed a letter agreeing to work together to find a way to pay for new roads. An earlier Statesman story about the agreement said: One prong of the plan would create a Transportation Finance Corporation to allow state investment funds — including the state employee and teacher retirement systems, among others — to directly invest in state transportation projects. Combined, the two state systems manage $135 billion in assets. But TRS and ERS officials “took a cautious view of investing in state projects in testimony this year before the Senate Finance Committee, saying a mandate to invest in Texas infrastructure could conflict with their duty to find the best return on investment for retirees.” Toll roads are highly questionable investments. Their success depends on the accuracy of traffic forecasts, which can be influenced by consultants who tell roadbuilders (and pension funds) what they want to hear. Their success also depends upon population growth and a healthy homebuilding climate, which we do not currently have. Toll roads are high-risk investments, the last kind of activity that pension funds should be invested in.