Christie counsel behind controversial settlement had stake in ExxonMobil

By Ted Sherman | NJ Advance Media for NJ.com
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on March 05, 2015

Christopher Porrino, left, the governor's chief counsel, who was involved in negotiating the controversial settlement with ExxonMobil

 

TRENTON — The governor's chief counsel, who played a lead role in the settlement of an $8.9 billion environmental contamination lawsuit against ExxonMobil Corp. for pennies on the dollar, held an investment interest in the oil giant, records show.

According to the most recent financial disclosure forms filed with the State Ethics Commission, and reviewed by NJ Advance Media, Christopher Porrino — appointed by Gov. Chris Christie as his top legal adviser in December 2013 — owned shares of a mutual fund valued at more than $100,000.

ExxonMobil was the largest holding of the fund, representing nearly 5 percent of its assets.

A spokesman for the governor's office, who gave the first public acknowledgement of Porrino's significant involvement in settling the lawsuit, said there was no conflict.

"Any suggestion that Mr. Porrino's publicly disclosed ownership of a mutual fund that holds a small amount of ExxonMobil stock within its diverse portfolio of investments is somehow a conflict of interest is flatly wrong," said Kevin Roberts. "Mr. Porrino has no direct stake in ExxonMobil and his interest in the mutual fund is an entirely passive, indirect investment over which he has no control."

Roberts said the guidelines governing the annual financial disclosure required of state officials specifically state that ownership of a small amount of stock in a mutual fund need not be disclosed.

"There is, and was, absolutely no conflict of interest in this matter," he said.

The state's Uniform Ethics Code says only that no state officer or employee "should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity, which is in substantial conflict with the proper discharge of his/her duties in the public interest."

The administration has so far kept a low public profile in the ExxonMobil case, in the wake of published reports earlier this week that New Jersey was planning to settle the nearly $9 billion lawsuit for far less.

The state Department of Environmental Protection only today finally confirmed it agreed to a $225 million settlement with the company. Acting state Attorney General John Hoffman said the settlement payout by ExxonMobil was on top of the company's separate obligation to clean up the contaminated refinery sites at the company's sole expense.

The closed-door settlement talks came at the end of decade-long fight between ExxonMobil and the DEP, which brought the suit in 2004 alleging that damage wrought by petroleum processing and chemical production at the company's Bayonne and Bayway refineries had spoiled thousands of acres of vital wetland habitat. In court papers, the state had assessed the costs of remediation in the billions.

Porrino's alleged involvement in the controversial settlement was first called into question by former state DEP Commissioner Bradley Campbell—who originally green-lighted the state's lawsuit against ExxonMobil when he was still with the state. In an op-ed today in The New York Times, Campbell, an appointee of former Democratic Gov. James E. McGreevey, charged that Porrino spearheaded a backroom push to settle at the expense of the state.

"Former colleagues of mine in state government...have told me that Mr. Christie's chief counsel inserted himself into the case, elbowed aside the attorney general and career employees who had developed and prosecuted the litigation, and cut the deal favorable to Exxon," wrote Campbell.

Environmental advocates have raised concerns that a settlement was pushed through as a quick fix to this year's budget. Language entered into the state's budget last year diverts any money collected from environmental lawsuits in excess of $50 million into the state's general fund, which they say allowed the administration to take most of a $190 million settlement with the Occidental Chemical Co. last year to balance the budget.

Even before today's announcement, state Senate President Steve Sweeney (D-Gloucester) and state Sen. Raymond Lesniak (D-Union) said they planned to go to court to block the settlement, which they say was letting the company off the hook for a fraction of the cost to clean up the sites.

"How do you turn a $8.9 billion damage claim, with liability already admitted, 11 years of litigation and $100 million of expert fees, into a $250 million settlement?" Lesniak asked. "Apparently, this administration took it out of the hands of the career attorneys handling toxic contamination cases for the Attorney General and the Department of Environmental Protection and had the Governor's Office engineer a depleted settlement."

Sweeney, in a conference call to reporters, said there needed to be an investigation.

"If what we read is true, then we have a major problem and I think we have to talk to the U.S. Attorney and we'll go from there," the senate president said.

Roberts did not deny Porrino played a major role in the settlement negotiations.

"These settlement negotiations have spanned years and multiple administrations," he said. "In his role as director of the Division of Law at the Office of the Attorney General prior to joining the governor's office, chief counsel Porrino had significant involvement in trying to force ExxonMobil into meaningful settlement talks."

Roberts said those efforts included direct communications with the company, which he said sought to bring resolution to a decade-old case and "provided relief to the state above and beyond the costs of environmental cleanup and remediation, and that avoided the endless delay and expense accompanying more years of litigation, appeals, and uncertainty."

In response to Campbell, he called the former commissioner a "known partisan" making "baseless allegations" that he called "irresponsible, disingenuous, and baldly political."

FINANCIAL STAKE REVEALED

A one-time white-collar crime trial lawyer with Roseland-based Lowenstein Sandler, one of the state's largest law firms (which is still paying him deferred compensation, according to his financial disclosure report), Porrino was first hired by the state Attorney General's office in 2012. He was named director of the Division of Law, which provides legal representation and counsel to departments, boards, offices, commissions and other entities of state government.

The 47-year-old Teaneck native, who graduated from Seton Hall University School of Law, lives in Summit with his wife and two children. He became the governor's chief counsel in January 2014.

Over the past year, Porrino has become part of Christie's trusted inner circle, traveling with him to the Republican Governors Association's annual meeting in Florida last November. Records show ExxonMobil contributed more than $500,000 to the association last year during Christie's tenure, and $200,000 in 2013, shortly before he took over as chairman.

An examination of Porrino's most recent financial disclosure filing detailing his net worth revealed his stake in ExxonMobil through one of his mutual funds. The 2014 disclosure report showed that in addition to his home and other real estate investments, he owned share of more than 20 stock and bond funds, including the Schwab Fundamental U.S. Company Index Fund. The Schwab portfolio lists its biggest holding as ExxonMobil Corp., representing 4.6 percent of its assets.

Financial advisers often question whether people even look at the prospectus reports mutual funds put out, and say investors are often not event aware what stocks their funds hold.

Stuart Yoak, executive director of the Association for Practical and Professional Ethics at Indiana University, said there is some merit to that, noting it is not at all unusual for a company like ExxonMobil to be in a lot of mutual funds.

"It would be different if he was a direct shareholder. That would be a clear case where he would have a direct awareness of a financial gain," he explained.

But at the same time, Yoak said public officials are expected to conduct their business "in a way that is above a shadow of any doubt" that they don't have any conduct.

"In the best of all possible worlds, people bend over backwards to make sure they don't have a conflict," he said.

Although state disclosure reports do not offer specifics, Porrino gave an estimated value of the fund at a range between $100,000 and $250,000.

Porrino is no stranger to environmental litigation. In 2013, as head of the law division, he argued the state's case before the Supreme Court involving a bitter fight over efforts to build barriers to protect the Jersey Shore from future storms, with the court throwing out a $375,000 award to a Harvey Cedars couple over a 22-foot-high sand dune that blocked their ocean view.

"The Supreme Court has changed the law significantly—and appropriately," he said at the time. "So that windfalls at the public's expense may be avoided."

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