Audit Says Massachusetts Governor Didn't Violate Pay-To-Play Laws

A New Jersey treasury audit has found Massachusetts Gov. Charlie Baker did not break pay-to-play rules when he donated to Republicans here in 2011.

The report, which suggests both Baker and the firm he worked with resisted the notion of any wrongdoing, was shared with reporters Thursday after a meeting of the state panel that oversees the investments of the state's $80 billion public pension system.

New Jersey's regulations bar the state from investing with a firm whose managers made political contributions within a two-year window. The audit says while Baker was an investment professional, he did not provide the kinds of services the policy prohibits

"The Governor is pleased that this matter is now resolved," said Baker spokesman Tim Buckley.

Baker won the Massachusetts gubernatorial election last fall with the help of New Jersey Gov. Chris Christie, who chaired the Republican Governors Association.

The RGA spent at least $10.5 million to support Baker through the Commonwealth Future super PAC, and Christie, who is considering a 2016 bid for the White House, endorsed Baker's unsuccessful 2010 gubernatorial bid.

The audit centered on Baker's $10,000 donation in 2011 to the New Jersey Republican committee. Seven months later, the state invested $25 million with General Catalyst Partners where Baker served as an "executive in residence." The state reduced its investment to $15 million before selling its stake in September 2014.

The audit says the state sold its investment in General Catalyst for a profit, but did not say for how much.

The audit also suggests Baker and General Catalyst forcefully resisted the possibility of any wrongdoing.

For example the firm wrote to the auditor in May 2014 that "Mr. Baker has never been an executive officer, owner or other control person of GC and has never solicited investors when GC raised funds."

Baker himself hired the law firm Covington & Burling, which expressed a similar view, the audit said.

While the report recommends the state should consider strengthening its due-diligence procedures, the audit said the State Investment Council, the body that sets investment policy, reported it met those standards.

The report comes as Christie and the state's three largest pension funds feud in court over the state's contribution to the system. The governor and lawmakers agreed in 2011 to fund the system, but the state's tax receipts came in below expectations last spring, and Christie used the pension fund contributions to plug holes in the budget.

The move angered Democrats and resulted in the pension funds' lawsuit. Christie's spokesman has said the state needs further reforms and the governor has devoted more to the funds than any of his predecessors.

Associated Press writer Steve LeBlanc in Boston contributed to this report.