When St. Louis Mayor Lyda Krewson adopted the airport privatization effort as her own in 2017, she made a promise:
“This process needs to be open and transparent,” Krewson said. “Any consultant or adviser working for the city on this project will not be allowed to participate with any group bidding on this project.”
A version of that statement was attached to every consultant contract with the more than dozen companies making money off the process to decide whether the city will sell the right to operate St. Louis Lambert International Airport to the highest bidder.
“No donor, principal, partner, affiliate or director of Grow, McKenna or any other Service Provider shall respond to either the RFQ or RFP …,” the contract said.
The Board of Aldermen also got in the game:
“Whereas, a further condition imposed upon the consulting team prohibits any individual or firm included on the team from simultaneously or subsequently participating as a team member, advisor or investor with any firm or group wishing to manage and operate … the Airport,” Resolution No. 220 said.
All of this sounds nice on paper, but the rules, apparently, don’t apply to the most important player in the game, the one paying all the bills.
The St. Louis billionaire is spending more than $800,000 a month on the bevy of consultants operating under the direction of his top lobbyist and political operative, Travis Brown. He’s been pushing airport privatization long before Krewson became mayor. He’s the reason the city is where it is today, apparently on the verge of issuing the request for qualifications that has been created entirely by Sinquefield’s team.
But Sinquefield is playing on both sides of the aisle.
The billionaire made his money as a founder of Dimensional Fund Advisers, an investment firm that pioneered the concept of stock indexing. According to Sinquefield’s bio on his web page, he and his wife both retired from the company in 2005.
But in various court and financial records, including the Securities and Exchange Commission and the National Futures Association, Sinquefield is still listed as an owner of the company who controls it along with his co-founder, David Booth, the chairman of the board.
Dimensional Fund Advisers, it turns out, owns shares in both the key financial adviser to the airport privatization process, and one of the companies that has been lined up to bid on managing the airport.
According to the financial markets monitoring site Fintel, Dimensional Fund Advisors owns about 1.5% of Moelis, with a market value of about $35 million. The company also owns almost 4% of Macquarie with a market value of more than $135 million. The investment company has significantly increased its ownership share in both companies in the last six months.
Dimensional started buying shares of Moelis in 2015. That was around the time that Mayor Francis Slay and his former chief of staff, Jeff Rainford, first started discussing airport privatization. In 2016, after he left the mayor’s office and started a private consulting business, Rainford led a delegation on a trip to Denver to discuss airport privatization and learn about some of the public private partnerships taking place at that airport. Slay was on the trip. So was a lobbyist who would later be hired by Macquarie.
Around that time, Dimensionial started investing in Macquarie shares.
Now Slay and Rainford are both signed up as lobbyists with companies seeking to bid on the potentially lucrative airport privatization contract. Slay lobbies for Spanish company Ferrovial; Rainford lobbies for Los Angeles-based Oaktree Capital.
In an emailed statement issued to the Post-Dispatch after a version of this column appeared online, Krewson suggested that Dimensional’s ownership of companies on both sides of the airport privatization process was insignificant because it was only a “trace” of what Sinquefield’s investment firm owned.
“Dimensional, Moelis, and Macquarie are all publicly traded companies. Anyone can buy stock in them,” she said. “Jeff Rainford and Francis Slay’s representation does not influence me one iota.”
Critics of the airport privatization process see things differently.
“Cities need to understand that the only way to ensure they really represent the people who live there is to make sure there is no actual nor perceived conflict of interest in projects or how the city is run,” says Donald Cohen, executive director of Los Angeles-based nonprofit In the Public Interest. Cohen’s organization is generally a critic of privatization efforts and he’s been watching the St. Louis efforts from the beginning. “This arrangement seems a clear violation of the public trust, weakens democracy and is sure to benefit the powerful over the few.”
Told of the Dimensional Fund investments, city Comptroller Darlene Green, who has voted against the privatization process run by Sinquefield, also expressed dismay.
“I wish I could say I’m surprised; but a conflict of interest was bound to happen when the city went forward allowing a private entity to use its money to exert influence and control over the privatization process,” Green said. “This is a grave and serious matter. Consultants working on the city’s behalf must make the interests of the people their number one priority and not be beholden to other interests.”
The irony of Sinquefield’s conflict is that on Wednesday, it was diminished just a bit. On that day, Macquarie, which was the first company to show its cards on the privatization effort, dropped all of its lobbyists. A Macquarie official declined to comment.
So the game is down to Rainford and Slay, and the billionaire whose interests the city seeks to serve.
Editor's note: After publication of this column, Dimensional Fund Advisors spokeswoman Darcy Keller asked us to include a statement from the company explaining how its funds work. She also said that Krewson was mistaken to refer to the company as publicly traded. It is not. Here is her statement:
“Dimensional Fund Advisors is a registered investment advisor that manages mutual funds and other portfolios on behalf of its advisory clients. The securities in a Dimensional mutual fund portfolio are owned by the shareholders of the fund, not by Dimensional Fund Advisors or its shareholders.
Dimensional Fund Advisors applies a systematic, quantitatively-based investment approach. Decisions on which securities to buy and trade for any account Dimensional Fund Advisors manages are made according to strict investment guidelines. All investment decisions are made by Dimensional’s investment team who follow an established protocol, overseen by the Investment Committee.”