A Canadian firm that is being sued by Missouri’s largest public pension system for allegedly mishandling investments has hired a lobbyist who tried to influence legislators and put pressure on the pension outside of court proceedings, a pension official said in court testimony.
The private equity firm Catalyst Capital Group hired a lobbyist after the Missouri State Employees’ Retirement System filed its lawsuit in October. Pension system executive director Ronda Stegmann testified in a court hearing last week that lobbyist Richard McIntosh tried to set up a meeting with Stegmann, two legislators and Catalyst executives, The Kansas City Star reported.
Companies routinely hire lobbyists to influence lawmakers on legislation but it’s less common for a lobbyist to be involved with ongoing litigation. Typically, parties involved in litigation do not speak with one another outside of court proceedings, except through their attorneys.
The pension system sued Catalyst for steering investments into a troubled lending business. The $8 billion pension pays benefits to more than 51,000 retirees from Missouri state government.
Stegmann testified that House Speaker Pro Tem Rep. John Wiemann, a member of the pension’s board of trustees, called her in late October and said McIntosh had asked him about the lawsuit. The next day, McIntosh called to invite Wiemann to a meeting in early November in the office of Sen. Bob Onder, the chairman of the Senate Health and Pensions Committee, and executives of Catalyst Capital Group.
Stegmann testified that she, too, received a call from Onder’s office, asking her to attend the meeting.
Stegmann and Wiemann both declined to attend the meeting, citing the existence of the lawsuit.
The meeting didn’t occur, but in December Onder wrote a letter to Stegmann asking about the pension system’s legal strategy and asking to see the itemized legal invoices going to the law firm representing the pension. Onder said Catalyst had also offered to let him review a sealed document filed in the lawsuit that represented the private equity firm’s account of the issues in the case, and requested the pension fund’s permission to see it.
Stegmann testified that she was not eager to let Onder see the legal bills because someone could get a sense of the pension fund’s legal strategy. She told Onder that she would agree to Catalyst’s offer to let him view the sealed document only if the pension fund could also brief Onder on its side of the case.
Stegmann said the lobbying put her in an “impossible position.” She said she would ordinarily meet with Onder, whose pension committee post gives him influence. Typically the pension tries to maintain close ties with lawmakers but the lawsuit prevented that. The pension relies on funding from lawmakers to fully fund the system.
Onder, a Lake St. Louis Republican, told The Associated Press that he didn’t know the details of the lawsuit or have an opinion about whether Catalyst or the pension fund was in the right.
But he said he thought McIntosh’s request that he try to facilitate a meeting was reasonable, even if it’s unusual for a lobbyist to be hired in a situation involving litigation. A conversation between the parties, including their lawyers because there is a pending lawsuit, is preferable to a drawn out and expensive legal process, Onder said.
Rocco DiPucchio, Catalyst’s managing director, testified in the court hearing that the pension fund last year considered not meeting a capital call, which is when an investment firm can demand funding that an investor had previously committed to making. Missing a capital call can result in a default, which could have hurt the pension fund’s credit rating and reputation in private equity markets.
Onder told the AP that the possibility of the pension fund missing a capital call was the important issue, and that the pension fund focusing on Catalyst’s hiring of a lobbyist was petty.
McIntosh did not immediately respond to an email from The Star with questions about his lobbying activities or a phone call from the AP.