Ex-aide to governor working for Chapman

Company manages state pension funds

February 06, 2002|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

Major F. Riddick Jr., Gov. Parris N. Glendening's former chief of staff, has quietly gone on the payroll of a Baltimore investment firm that has enjoyed a close relationship with the governor's administration.

Riddick, 51, who resigned from his last state post in October to run for county executive in Prince George's County, is an executive with the Chapman Cos., the investment firm headed by Nathan A. Chapman Jr.

Disclosure of Riddick's job occurs as one of Chapman's companies is facing a critical vote by the investment board of the state pension system on whether to continue to allow it to manage nearly $160 million in state retirement funds.

Riddick served as Glendening's chief of staff for six years ending in May, when he said he was stepping down to avoid any appearance of a conflict of interest in his bid for county executive. He remained on the state payroll until mid-October, serving as the state's chief technology officer.

Reached by phone yesterday at his Chapman Cos. office, Riddick said he had gone to work for the investment firm "late last fall" after his resignation from state government. He said his duties at the investment firm involved "just technology issues."

He declined to disclose his salary and said he has had no involvement with Chapman's efforts to retain its management contract with the state retirement system.

"No! No! No! I'm not involved in it and I didn't do pensions with the state," said Riddick, adding that he was confident that taking the Chapman job did not pose any conflicts. "I always talk with legal counsel."

Under state ethics law, former state officials are barred from representing clients with the state in matters that they formerly participated in as state officials.

The former gubernatorial aide said the Chapman job will not deter him from his efforts to win the job as Prince George's county executive. He is one of seven Democrats seeking the post.

County Executive Wayne K. Curry, who is completing his second term, is barred from seeking re-election.

Riddick first teamed with the governor in Prince George's when he served as then-County Executive Glendening's budget director and then his chief of staff.

Chapman, 43, a longtime contributor to and supporter of Glendening, is founder, chairman and majority stockholder of the nation's first publicly traded investment firm headed by an African-American. He was appointed by the governor to the University System of Maryland's Board of Regents, and the governor backed his elevation to board chairman in 1999. He did not return a phone message yesterday.

One of the Chapman companies, eChapman.com Inc., continues to invest in stocks for the State Retirement and Pension System, although the firm's investment returns have not met standards set by system trustees in most of the years it has invested for the state.

The latest available figures issued last fall show the firm was managing about $157 million in state retirement funds. Pension trustees review the performance of the system's money managers each January. Under board policy, those failing to beat their performance benchmarks for a three-year period usually are dismissed.

The board's investment committee is scheduled to vote Friday on whether to end its five-year relationship with Chapman. Peter Vaughn, the board's executive director, said that the panel reviews the contracts of all investment firms that failed to meet the board's performance standards.

State records show that for the fiscal year ending June 30, eChapman's piece of the state pension portfolio recorded a loss of 21.6 percent, among the worst of all the portfolio's money managers for the year. Over the past three fiscal years, the company received a total of $5.05 million in management and other fees from the state.

Two years ago, then-state Treasurer Richard M. Dixon, who was on the board of the system, succeeded in getting the board to cut the allotment of pension funds to be invested by Chapman's firm by $100 million, roughly half of the total the company was investing for the state at the time.

But two months later, the board voted - over Dixon's objections - to restore Chapman's funds. A former investment adviser on the board's investment committee, Howard P. Colhoun, has said he believes that reversal came after Chapman enlisted the support of Glendening administration officials. The governor's spokesman, who did not respond to requests for comment yesterday, has denied involvement.

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