It’s so hard to keep secrets any more. Thanks to an open-records request earlier this year from a Chronicle reporter, the Texas Growth Fund and the Teacher Retirement System of Texas are suing Attorney General Greg Abbott, and local venture capital heavy-hitter Austin Ventures is threatening to dump the UT Investment Management Co. should UTIMCO decline to do likewise.
In an Aug. 11 letter to UTIMCO and TRS, Austin Ventures general partner Joseph Aragona wrote that AV “insists” both agencies join the lawsuit against the AG, or else the venture capital firm would consider them in breach of their contractual obligations and ban them from further investments in Austin Ventures funds. The TRS got the message and joined the suit Aug. 30, but at press time UTIMCO had not yet acted on the demand.
At issue is a series of open-records requests filed by Chronicle staff writer Lucius Lomax in the course of researching his Dec. 19, 2003, article, “Mutual Interests,” about TGF investments in the defense contractor Veridian Inc., as well as his Jan. 30, 2004, article, “No Growth at the Growth Fund.” Lomax (currently on leave) received some of the information he requested from TRS, but when some was withheld concerning Veridian and other companies (with AG approval issued in February), he filed additional requests for information that appeared to lie outside the bounds of the AG’s confidentiality ruling.
In a subsequent opinion issued July 26, the attorney general ruled that TRS could not lawfully withhold the requested information – and the big legal guns from TGF, Austin Ventures, and TRS swung into action. The Growth Fund’s brief argues that releasing the information “presents a specific threat of actual or potential harm to the marketplace interests of TGF.” In the meantime, the Austin American-Statesman and the Institutional Investor News have followed the Chronicle‘s lead and requested similar info, motivating Aragona to issue his letter hyperbolically declaring that any such release will cause “substantial competitive harm” to Austin Ventures.
There’s a great deal of legal wailing and gnashing of teeth in the documents, although it’s not entirely clear if the objections are to such information disclosures in general or to disclosures about such potentially politicized companies as the heavily connected “information warfare” hotshot Veridian (since gobbled up by General Dynamics). Joseph Larsen of the Freedom of Information Foundation of Texas told the Statesman‘s Bob Elder last week that disclosure is necessary because the investments are “public money. … If a fund goes bad, it’s the citizens of Texas who take the hit. It’s clear that oversight is absolutely essential.”
But TGF director Jim Kozlowski told Lomax last year that the fund already has sufficient state oversight, adding, “We live in a glass fishbowl.” Judging from its response to the attorney general’s ruling, TGF apparently prefers to swim in rather murky waters.
This article appears in September 10 • 2004.
