Republican Dean Martin says he decided not to seek re-election to his influential seat in the Senate early this year to run for treasurer and get rid of fellow Republican David Petersen.
Mr. Petersen at the time was suspected of improprieties as a public official, but intended to run for re-election. When Mr. Martin announced his candidacy, he fully expected to be in a primary battle with the incumbent, but an attorney general investigation into Mr. Petersen’s conduct threw cold water on the treasurer’s future plans and he decided not to seek re-election to a second term.
After it was announced that Mr. Petersen was being investigated for fraud, theft and conflict of interest in connection with his outside dealings with non-profit organizations, Democrat Rano Singh announced her candidacy. She says she was urged to run by the Governor’s Office.
Candidates differ on approaches
Both candidates vow to clean things up in the Treasurer’s Office, but with different approaches.
“The office is a mess and needs to be cleaned up,” said Mr. Martin, a privately funded candidate, at a recent Clean Elections debate in Bullhead City. He said the office has seen a 130 percent employee turnover under Mr. Petersen, and the state’s investment portfolio is not performing as well as it should, including state trust land endowment funds.
“Taxpayers have been shortchanged,” he said.
Mr. Martin, 32, is chairman of the Senate Finance Committee and a member of the Appropriations Committee. He is considered the Senate’s tax expert and wrote the 2006 tax package that served as the basis for the largest tax relief measure in Arizona history.
Owner of a printing company and a software development company, he calls for software technology to better track the state’s cash flow and for opening up treasurer records to the public.
Mr. Martin said “a secret decoder ring” is needed to figure out what’s being done with the state’s money, $10 billion of which is invested.
Ms. Singh agreed, calling for “transparency” in the operation of the office and more timely deposits of state money.
“Right now, it’s like an armored car going around collecting the state’s money,” she said.
Ms. Singh, part owner of a family-owned biotech company, said at the debate that partisan politics — officials using the Treasurer’s Office as a political “stepping stone” — have created the current “crisis” in the office. She ran for the Legislature in 2004 and considered a run for secretary of state this year.
Ms. Singh said there is little oversight of the Treasurer’s Office, and the results are abuse, conflicts of interest and “collusion by employees.”
“And nobody can do anything about it,” Ms. Singh said.
Mr. Martin countered that all state agencies are monitored by the governor’s accounting and budget offices, the Joint Legislative Budget Committee, and the Board of Investment watches over the state’s portfolio. He did say, however, the Legislature needs to take a look at a $1.9 million payment Mr. Petersen approved to the Attorney General’s Office for its legal work in the settlement of an investment fraud case that cost the state and local governments more than $130 million.
“That was highly inappropriate,” Mr. Martin said. “That smells on both the treasurer and the attorney general. The Legislature will review this.”
The relationship between the AG’s Office and the Treasurer’s Office is a sticky one because Mr. Petersen is being investigated for alleged felonies committed as a public official. For that reason, he recused himself from negotiations over the payment, but authorized it based on verbal advice from the solicitor general, an independent arm of the AG’s office.
Board of Investment member Felecia Rotellini, superintendent of the Department of Financial Institutions, said the board should get an outside independent review of the transaction and how the solicitor general applied the law to the fraud settlement.
Two hundred local Arizona governmental entities and many governments in other states invested in National Century Financial Enterprises (NCFE), which made loans to inner-city Medicare hospitals, until it collapsed in 2002 in a fraud scandal involving $3 billion in losses to all investors, including the $131 million in Arizona.
Republican Carol Springer was state treasurer at the time.
The state lost $14.3 million. So far, $52 million has been recovered for Arizona governments.
With the exception of the NCFE case, Ms. Singh said the state’s investments are “not doing too badly.” Both candidates said it might be worth considering hiring an outside investment firm, something that Mr. Petersen wants the Board of Investment to approve.
Candidate: Sunshine needed
At the debate, the candidates were asked whether the treasurer should be an appointed position.
“Bring appointed does not stop corruption,” Mr. Martin said. “Sunshine does.” He said the allegations against Mr. Petersen “deeply disturbed me.”
Ms. Singh said she would work toward making the office an appointive one “if it was in the best interests of Arizona,” but added that the treasurer’s position on certain state councils and boards that deal with economic development could be lost were the treasurer appointed.
“This is one of those offices that isn’t very sexy,” Mr. Martin quipped.
The AG’s investigation was prompted and assisted by former and current employees who went to legislative leadership with complaints about Mr. Petersen’s activities. Would the candidates retain anyone currently working for Mr. Petersen?
Ms. Singh says she has spent some time with Mr. Petersen and a few employees. She complimented the employees.
“These are honorable people willing to share what’s wrong,” she said.
Mr. Martin, on the other hand, said he has chosen to stay away from the Treasurer’s Office, although after the debate he received an invitation to tour the office.
“I am not out picking out curtains, let alone staff,” he said.
Mr. Martin said at the debate he was told Mr. Petersen threatened employees with firing if they talked to him.
Ms. Singh denied she will encourage state investments in biotech industries.