The Midas Touch
Methyl iodide finds friends in unusual places.
Thursday, December 9, 2010
Private equity investment – the placement of funds into a company not publicly traded on a stock exchange – is nothing new in agri-business. Examples abound all over the Salinas Valley, from HM Capital Partners of Dallas investing in Earthbound Farm in 2009, to Silicon Valley venture capitalists pumping dollar into the development of new vegetable hybrids. If the stars align for investors and companies alike, it can be a fast and efficient way to grow.
Nor is highly diversified investing unusual for the state’s pension funds. A mix of fixed income, equities and even real estate is the norm for most funds, which also place a percentage of members’ dollars into so-called “alternative investments,” namely private equity partnerships.
But parsing out who invests where can be a pain, because the pension funds frankly don’t always want to talk about it and God knows the equity guys aren’t exactly chatty. But a little bit of customized web research by a computer geek friend revealed that the California State Teachers’ Retirement System has committed nearly $1 billion to an investment vehicle called Permira IV – the fund behind the company that’s bringing the highly controversial fumigant methyl iodide to California’s agriculture market.
Trademarked under the name “Midas” by Arysta LifeScience, methyl iodide was registered by the California Department of Pesticide Control on Dec. 1. It means that barring a potential ban from governor-elect Jerry Brown when he takes office in January, Arysta will begin marketing and selling Midas in California within a matter of months.
Arysta, which has its U.S. headquarters in North Carolina, is owned by IEIL (Industrial Equity Investments Ltd.) Japan. IEIL Japan is a wholly owned subsidiary of IEIL, which is based in the Republic of Ireland. According to documents found on an official website of the European Union, IEIL Japan is a special purpose vehicle created solely for the purchase of Arysta by Permira’s “Permira IV” fund.
Connecting the dots: As of March 2010, CalSTRS has committed $968 million in capital to Permira IV. The California Public Employees’ Retirement System, meanwhile, has a book value of $208.2 million with Permira IV.
According to CalSTRS’ own disclosure policy, the system has adopted a policy regarding its private equity partnerships that tries to balance the public’s right to know, subject under California’s Public Records Act, with “not disclosing when the release clearly would outweigh the public interest served by such disclosure.”
In other words, the CalSTRS 848,000 members might not know where all of their money is going. “It’s not a situation where we put out a press release on every investment we do,” says CalSTRS spokesman Ricardo Duran. He then recommended I ask CalSTRS members if they know about this specific investment.
So I’m asking them. Hey, uh, retired teachers, do you know about this one?
Assemblyman Bill Monning doubts it. Given that “the vocal nature of teachers” was responsible for creating the buffer zones that restrict fumigation and spraying around schools, he finds the whole thing troubling.
“It’s something I think warrants serious study and investigation,” says Monning, who received the investment information the same day as The Weekly. Monning said he believes the PERS and STRS members will be asking their boards a lot of questions about this particular investment, and adds, “I expect the teachers who have expressed the greatest concern on the impact of fumigation on students will be asking.”
According to Arysta’s Jeff Tweedy, the company’s head of business development and regulatory affairs, there is a lot of misinformation being circulated about methyl iodide, in particular the now infamous “54 scientists” letter, written by a group of 54 scientists, including five Nobel laureates, who vociferously opposed methyl iodide’s federal approval by the Bush administration in 2007. Arysta, says Tweedy, is the world’s second largest producer of methyl iodide.
The largest producer, at 1 trillion pounds per year, is the ocean, he says.
“If you read what’s being said, it’s, ‘There’s no acceptable level and anyone who comes into contact with it will die’ and that’s just not true,” Tweedy says. “The folks who want to create fear can say what they want and not be held accountable and not put up data to support it.”
Maybe Tweedy is right. We do have to have faith in the science, and the government institutions assigned to regulate it. But big money is driving this equation.
The strawberry industry is vital to our county’s economy. And so, too, is the health and welfare of our people, our workers. Despite the approval, questions remain.