After Gerald Parsky ended his term as the head regent, Richard Blum took over this powerful position, and this change was important for many reasons. First of all, Blum was a major investor and owner of real estate, and he had major stakes in companies that handled defense projects and infrastructure building for the U.S. Military. Blum is also married to Senator Diane Feinstein, who sat on the defense appropriations committee, while her husband was submitting bids for defense contracts. According to Feinstein, she never knew which contracts belonged to her husband’s interest because the contracts were listed without the names of the bidder. However, an investigative reporter, Peter Byrne, asked Blum’s lawyer about this potential conflict of interest, and the lawyer responded that they gave Feinstein a list of all of Blum’s bids, so she would know to remove herself when they were discussing her husband’s contracts. Congressional records show that she never did remove herself.
Since Blum, as head regent, was involved in the process of choosing the money mangers and investment strategies for the UC system, it seems highly likely that he was able to steer UC money into his own interests. In fact, we know that Blum was a major stakeholder in the construction company URS and that in May 2001, UC announced that it would pay URS $150 million to manage the reconstruction of Santa Monica Hospital. In other words, just as his wife approved her husband’s bids for defense contracts, Blum himself got the regents to accept his own company’s construction bids.
But the story gets much worse; Byrne has reported that, “URS, which designs and sells advanced weaponry, also held a $125 million design and construction contract at UC's Los Alamos nuclear weapons lab. So URS had substantial interests in UC capital projects when Blum, its principal owner, became a "decider" on construction planning and awarding contracts.” Blum was then not only married to a powerful senator who was the member of the defense appropriation committee, but as a regent, he helped steer the university into contracts with companies in which he held a major stake.
Perhaps the most destructive role Blum has played as a regent is his constant push to get the UC to invest more in real estate and high-risk derivatives. Even as the stock market was falling and real estate was crashing, Blum is on record telling the finance committee that they should increase investments into what we now call toxic assets. The UC now holds billions of dollars of assets and investments that cannot be priced, and this loss of money goes along with a loss of $23 billion in its investment and pension funds (see the assets links below).
The case of Richard Blum should leave no doubt that the regents need to be democratized and that we should all gather together at UCLA on November 18-19 to fight for a fundamental change concerning how the regents are chosen and how priorities are made in the UC system.
How to Find UC Assets:
For latest report, click here, and go to Page 3:
UCRP is the pension fund
GEP is the collective endowment fund
STIP is the short-term investment fund
TRIP is a new investment fund
High point for total assets (over $74.6 billion) is 9/30/07, click here.
Recent low point: 3/30/09 ($51 billion, click here.
New link to short alternative budget video, click here.