Grimaldi's comments rile up investment company
A company that has provided investment services to New Castle County is demanding that Chief Administrative Officer David Grimaldi correct mischaracterizations about its work, claiming he misrepresented investment work performed and misstated how much the company received for its services.
West Capital Management is demanding that Grimaldi "correct the public record," according to an Aug. 4 letter sent by John Huh, a lawyer for DLA Piper law firm, which represents the investment services company.
"Your recent misconduct includes, but is not limited to, making false and disparaging statements regarding the professional competence of West Capital," Huh wrote.
Huh's letter references public statements Grimaldi made in response to the county auditor's investigation of the transfer of $92 million in reserve accounts shortly after Gordon took office in November 2012. Grimaldi has argued that he transferred the money to accounts at United Bank of Switzerland and terminated the earlier investment services because the county has paid too much and he questioned the quality of past investment services, including those provided by West Capital.
Grimaldi could not be reached for comment. County Executive Tom Gordon said he has assigned Chief of Staff James McDonald to get to the bottom of the issue. McDonald said he will begin sorting everything out Monday.
Huh's letter raises questions about the quality of information offered to explain decisions made by Gordon and his staff, County Councilman George Smiley said.
"I am not at all surprised," Smiley said. "Unfortunately, things like this place us all in a position to question whether anything presented to us is factual. I would think something of this nature would make the county executive question his personnel choices."
At issue is Grimaldi's contention that West Capital was paid $194,000 in 2011 and nearly $203,000 in 2012 for its work with the county.
Huh said in his letter to Grimaldi that West Capital received about $46,000 in 2011 and $46,800 in 2012 for managing a portfolio of county reserves, as well as a $35,000 annual fee in each of those years for advising the county on other investments – one managed by Sit Investment Advisors and the other by Wilmington Trust.
Ed Milowicki, county accounting and fiscal manager, confirmed last week that West Capital earned a total of approximately $162,000 in 2011 and 2012, as Huh contends, not the $397,000 stated by Grimaldi.
Grimaldi has suggested that West Capital and Sit Investment Advisors were terminated because their investments were too risky for money in reserve accounts and might have violated the county's investment policy.
Sit also was terminated by the county early in 2013. Wilmington Trust was retained. The portfolios managed by West and Sit totaled $92 million. Fidelity Investments was the custodian of the West and Sit portfolios. They were terminated by the county in early 2013, as well.
"At no point did West Capital violate either of the county's policies and specifically, West Capital never managed or oversaw either of the investment portfolios in a manner that was contrary to the county's policy," Huh wrote. "Nor did West Capital invest directly in any bond or derivative that can be characterized as 'junk.' "
Sit President Mike Brilley also has said the company did not invest the county's money in junk bonds, as Grimaldi and Assistant County Attorney Judith Hildick Mitchell have suggested.
In his letter, Huh said he thought Grimaldi didn't understand West Capital's dual roles with the county as a manager of one portfolio and an adviser for others.
"Part of the problem with your comments is that you fail to recognize the two distinct relationships that West Capital maintained with the county," Huh wrote.
New Castle County Auditor Bob Wasserbach is investigating Grimaldi's transfer of $92 million of the government's reserve funds to UBS.
Councilwoman Janet Kilpatrick said Huh's letter re-affirms the need for a board to oversee the county's investments. She has drafted an ordinance to create such an oversight board that she says she will introduce at the council's next meeting, on Aug. 26.
"I have no confidence in the executive office and I don't think anything like this should be done unilaterally," she said. "This is the public's money we're dealing with here. Things like this build no confidence in county government. It's ridiculous that we're even having these conversations."
Wasserbach said his audit is continuing and he is waiting for more documents from the executive branch before it can proceed.
Contact Adam Taylor at 324-2787 or ataylor@delawareonline.com.