Department of Law Department of Law
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New York, NY 10271 Albany, NY 12224

News from Attorney General Andrew Cuomo

FOR IMMEDIATE RELEASE
Albany Press Office / 518-473-5525
New York City Press Office / 212-416-8060

CUOMO SECURES AGREEMENT WITH PRIVATE EQUITY FIRM RIVERSTONE TO SIGN
CODE OF CONDUCT AND ELIMINATE PAY-TO-PLAY IN PENSION FUNDS NATIONWIDE

Riverstone Adopts Cuomo’s Reform Code of Conduct Which Ends Campaign
Contributions and the Use of Intermediaries For Public Pension Fund
Investments

Riverstone Will Pay $30 Million as Restitution to New York State Common
Retirement Fund

NEW YORK, NY (June 11, 2009) - Attorney General Andrew M. Cuomo today
announced an agreement with private equity firm Riverstone Holdings LLC
(“Riverstone”) to reform the public pension fund investment system
and to resolve Riverstone’s role in Cuomo’s investigation of
corruption involving the New York State Common Retirement Fund (“the
CRF”). Under the terms of today’s agreement, Riverstone will adopt
Cuomo’s Public Pension Fund Code of Conduct and pay $30 million in
restitution to the CRF.

"Riverstone is the second to adopt our Code of Conduct which reforms
the public pension fund system by ending pay-to-play campaign
contributions and the use of intermediaries to sell access to public
money,” said Attorney General Cuomo. "My Office has also secured an
agreement with them to return $30 million to the state pension fund,
which has recently been hit by these tough economic times and suffered a
significant decline in value. I commend Riverstone for proactively
embracing our reform efforts and encourage other companies nationwide to
follow suit.”

Attorney General Cuomo’s code of conduct bans investment firms from
hiring, utilizing, or compensating placement agents, lobbyists, or other
third-party intermediaries to communicate or interact with public
pension funds to obtain investments. To avoid pay-to-play schemes, the
Code prohibits investment firms (and their principals, agents, employees
and family members) from doing business with a public pension fund for
two years after the firm makes a campaign contribution to an elected or
appointed official who can influence the fund's investment decisions.
This provision would also bar all firms currently doing business with
the pension fund from making such campaign contributions. Investment
firms must also disclose any conflicts of interest to public pension
fund officials or law enforcement authorities, to increase transparency
and avoid abuse of the fund for personal gain.

Riverstone is the second company to sign on to Cuomo’s Code of
Conduct and will pay $30 million in restitution to the CRF. This brings
to $50 million the total amount collected by Attorney General Cuomo on
the Carlyle/Riverstone investments. The Carlyle Group (“Carlyle”)
signed onto the code last month and paid $20 million to the State of New
York to resolve its role in the Attorney General’s ongoing
investigation.

Riverstone is an energy and power-focused private equity firm founded
in 2000. It has approximately $17 billion under management across six
investment funds. Riverstone conducts buyout and growth capital
investments in the midstream, exploration & production, oilfield
services, power and renewable sectors of the energy industry. With
offices in New York, London and Houston, the firm has committed more
than $11.5 billion to 59 investments in North America, Latin America,
Europe and Asia.

The Attorney General’s investigation revealed that beginning in 2003
Riverstone was a joint venture partner with the Carlyle Group
(“Carlyle”), on three investment deals with the CRF.
Carlyle/Riverstone retained Searle, a company associated with Henry
(“Hank”) Morris, the chief political aide to then Comptroller
Alan Hevesi, as a pl
acement agent to help obtain investments from the
CRF. Prior to retaining Searle, the companies had experienced limited
success in obtaining investments from CRF. However, after retaining
Searle, they obtained approximately $530,000,000 in total investment
commitments from CRF in Carlyle/Riverstone funds. In exchange, Carlyle
paid Searle over $10,600,000.

Searle then paid the lion’s share of placement fees received from
Carlyle to PB Placement, LLC, a shell company controlled by Morris.
Unbeknownst to Carlyle, Morris had allegedly entered into a
fee-splitting arrangement to pay Wissman half of all these fees. The
investment commitments made by CRF and the related fees paid to Searle
and others included:

- A $150,000,000 commitment to Carlyle/Riverstone Global Energy
& Power Fund II, L.P. made in November of 2003 for which Searle was paid
$3,000,000 in fees, $1,425,000 of which went to PB Placement and
$1,500,000 of which went to Wissman;

- A $350,000,000 commitment to Carlyle/Riverstone Global Energy
& Power Fund III, L.P. made in October of 2005 for which Searle was paid
$7,000,000 in fees, $3,325,000 of which went to PB Placement and
$3,500,000 of which went to Wissman; and

- A $30,000,000 commitment to Carlyle/Riverstone Renewable
Energy Infrastructure Fund I, L.P. through CRF’s fund-of-fund, The
Hudson River Fund II, L.P. made in December of 2005 for which Searle
received $600,000 in fees, $285,000 of which went to PB Placement and
$300,000 of which went to Wissman.

In addition, soon after the CRF’s $150,000,000 investment in
Carlyle/Riverstone Global Energy & Power Fund II, a principal of
Riverstone made an “investment” of $100,000 in Chooch, a film
produced by the brother of then Chief Investment Officer to Comptroller
Hevesi, David Loglisci. Carlyle was unaware of that investment and the
investment was not disclosed to the CRF. Riverstone employees also made
approximately $40,000 in campaign contributions to Comptroller
Hevesi’s campaign in 2004.

These investments are alleged as the basis for Martin Act and other
charges in the 123-count indictment returned by the grand jury and filed
by Cuomo’s office in March against Morris and Loglisci.

The founders of Riverstone stated: “Riverstone strongly supports the
efforts by the Attorney General to implement reforms in the public
pension fund investment system. To this end, we are the second firm to
adopt the Attorney General's new Public Pension Fund Code of Conduct,
which we believe provides for greater transparency and accountability in
the solicitation of private equity commitments from the public pension
fund community. For the past two years, Riverstone has cooperated fully
and voluntarily with the Attorney General and his staff in their
investigation and today, in resolution of this matter, Riverstone has
agreed to make a $30 million payment for the benefit of the New York
State Common Retirement Fund.”

Riverstone has also agreed to sign on to the Attorney General’s
Public Pension Fund Reform Code of Conduct, which:

- Bans Placement Agents: Investment firms are prohibited from
using Placement Agents, Lobbyists, or any other third-party intermediary
to communicate or interact with Public Pension Funds for any purpose.
The prohibition does not apply to the use of consultants and investment
banks to otherwise directly assist investment firms by, for example,
preparing marketing materials or performing due diligence;

- Bans "Pay to Play": Prohibits investment firms (and their
principals, agents, employees and family members) from doing business
with a public pension fund for two years after the firm makes a campaign
contribution to any elected or appointed official who can influence a
public pension fund's investment decisions. The prohibition also applies
to candidates for such positions, but does not apply to contributions of
$300.00 or less to elected officials or candidates for whom the person
making the contribution can vote;

- Increases Transparency:
Requires rigorous, ongoing disclosure
of information relating to campaign contributions, the identities,
responsibilities and qualifications of investment fund personnel and any
payments by investment firms to third-parties in connection with public
pension fund matters. Also requires investment firms to promptly publish
such information on their websites;

- Imposes Higher Standard of Conduct: Holds investment firms to
a higher, standard of conduct that avoids even the appearance of
impropriety. The Code prohibits (1) improper relationships between
pension fund officials and an investment firm's personnel or agents, (2)
“revolving door” employment by investment firms of former public
pension fund officials and employees, and (3) improper gifts by
investment firms to public pension fund employees and officials;

- Enhances Conflicts of Interest Policies: Investment firms are
required to promptly disclose and cure any actual, potential and
apparent conflicts of interest to public pension fund officials or law
enforcement authorities where appropriate.

- Ensures Ongoing Compliance: Investment firms must certify
annually to the Office of the Attorney General (and any public pension
fund that asks) that they are in compliance with the Code of Conduct.
Violations of the Code constitute grounds for either termination of an
existing investment, disqualification from doing further business with
the public pension fund for up to ten years, or both.

Attorney General Cuomo’s investigation into corruption at the CRF has
led to a number of criminal charges to date, including charges against
Morris and Loglisci, former Liberal Party Chair Ray Harding, and
investment advisor Saul Meyer. In addition, Julio Ramirez, an unlicensed
placement agent associated with Wetherly Capital, and Wissman have both
pled guilty to Martin Act securities fraud charges for conduct related
to the pension fund. Morris, Loglisci, Meyer, and Harding are presumed
innocent until they are proven guilty in court.

Cuomo also issued subpoenas last month to over 100 investment firms and
their agents after his investigation found that 40 to 50 percent of
agents obtaining investments from New York pension funds were
unregistered.

Today’s announcement arises from a two-year, ongoing investigation
into corruption involving the New York State Comptroller’s Office and
the Fund. The charges to date allege a complex criminal scheme involving
numerous individuals operating at the highest political and governmental
levels under former Comptroller Alan Hevesi, in which the New York state
pension fund was used as a piggy bank for the Comptroller’s chief
political aide and a favor bank for political allies and other friends.

The investigation is being conducted by Stacy Aronowitz, Deputy Chief
of the Public Integrity Bureau, and Assistant Attorneys General Emily
Bradford, Rachel Doft, Noah Falk, and Amy Tully, under the supervision
of Ellen Nachtigall Biben, Special Deputy Attorney General for Public
Integrity, and Linda A. Lacewell, Special Counsel, and with the
assistance of Richard Jackson, Assistant Solicitor General.

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