New Jersey State Sen. Raymond J. Lesniak said he was cutting ties to Goldman, Sachs & Co. to avoid any conflict of interest with the investment firm, which is a prime adviser and investor in toll-road leases.
Lesniak (D., Union) is the sponsor of a bill introduced this month to permit the leasing of the New Jersey Turnpike and the Garden State Parkway. His law firm has represented Goldman Sachs in a real estate development in Jersey City, N.J.
After inquiries from The Inquirer, Lesniak said Friday, "I'm terminating the relationship."
He added that leasing toll roads "is too important an issue for a perceived conflict of interest to get in the way. If I believe enough in this issue, I have to relieve myself of the client."
Lesniak said an open, transparent process between the state and potential investors should help allay concerns about possible conflicts.
"You can't have restrictions so tight that you can't do anything," he said. "If the process is transparent, I don't see a problem."
Lesniak's move highlighted the prominent, controversial role that Goldman Sachs plays in the new and lucrative business of leasing public roads to private companies.
Goldman Sachs has been the biggest promoter of such leases; the firm has served as adviser to governments that make the deals, and it has put together a $6.5 billion infrastructure fund for investors.
The firm earned a $9 million fee for advising Chicago in the lease of the Chicago Skyway and a $20 million fee from Indiana for the lease of the Indiana Toll Road. It also helped refinance the debt in the Chicago deal.
Critics have accused Goldman Sachs of having conflicting interests in promoting leases, advising governments and arranging financing.
"Obviously, they're in a position where they can play both sides," said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, a truckers group that opposes the leasing of toll roads. "Whether a deal is good, bad or indifferent is irrelevant to them, because they make their money up front."
The giant firm has ties to many in government. Gov. Corzine was the chief executive officer of Goldman Sachs. His economic adviser, Gary Rose, and the state treasurer, Bradley Abelow, came from the Wall Street firm. U.S. Treasury Secretary Henry Paulson was formerly CEO of Goldman Sachs. Others, like Lesniak, had smaller connections.
Michael Duvally, a spokesman for Goldman Sachs, said the firm's advisory and investment branches were "separate businesses, with walls between the two." He said the company had no comment on any potential conflict for state officials with present or past dealings with the firm.