The transfer of $92 million in cash reserves is being investigated by the New Castle County auditor, with the chief administrative officer saying that the move was needed to avoid possible losses.
The transfer was made by David Grimaldi, the county’s chief administrative officer, shortly after New Castle County Executive Tom Gordon took office in 2012, the News Journal reported.
Grimaldi, who has a background in corporate finance, said the transfer saved $400,000. The money was transferred from a small money management firm to UBS, the massive Swiss-based banking and financial services firm.
At issue is whether the transfer should have been authorized by the County Council. Grimaldi said the move received the blessing of the county legal department, the News Journal reported.
“I had to move quickly,” Grimaldi said in a brief interview with DelawareBusinessDaily. Grimaldi added that he had discovered a portion of the investments were in “junk bonds.” Junk bonds are issued issued by debt-laden companies and carry a higher default risk.
The reserves are emergency funds that are normally necessary in keeping a top credit rating.
Grimaldi emphasized that UBS is an interim manager and a request for proposals for a permanent manager is nearly complete.
Asked whether the council should have voted on transfer, Grimaldi siad it appeared that the body had never voted on such matters and had instead delegated the matter.
The questions about the transfer popped up a the county again retained a top credit rating.
Fitch, a ratings service, affirmed its AAA credit rating for New Castle County Government’s $402.7 million in general obligation bonds.
“Strong financial management and prudent budgeting practices have led to the maintenance of ample reserves, providing the county with a high degree of financial flexibility,” Fitch said in a press release.
Prior to coming to Delaware, Grimaldi served as as head of the Real Estate Investment Group in the United States of Minmentals, a metals trading company owned by the government of China. Prior to that time, he was an investment advisor at Morgan Stranley.
Grimaldi went on to serve as campaign manager for the successful campaign of Gordon, who returned to serve as county executive, after two previous terms at the post.
He became chief aide and chief administrative officer after Gordon took office.
