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The N.C. retirement system, one of the largest in the country, manages its own bond holdings, but pays 88 outside firms to invest in stocks, hedge funds, private equity funds and real estate for the state.

In return, these firms receive fees -- about $156 million in fiscal 2006, according to information obtained through a state records request. Overall, the system's fees are in line with other public pension funds.

Moore, a former federal prosecutor and state crime control secretary, said he has created a professional system for choosing managers that has resulted in a stable of "world-class" firms investing the fund's money.

Asked if he solicits contributions from the firms, he said: "To my knowledge, there is no organized effort in my campaign to say, 'This person does business with the pension fund. We ought to solicit them.' "

Still, investment managers continue to fill his campaign coffers.

According to the Observer's analysis, 42 of 88 firms that managed state pension money as of June 30, 2006, have employed people who have given to Moore's campaigns.

Contributions connected to the 42 firms total $736,200 since 1999, when Moore first ran for treasurer. The money came from firm employees, their immediate family members and the companies' political committees. The amount equals about 13 percent of the $5.5 million Moore has raised.

These companies received $101.8 million in fees for investing the state's money in the year ending June 30, 2006. That equals about two-thirds of the fees paid by the state that year.

Five of the six hedge funds that work with the state employ people who have given. Those five have given an average of $38,500. Hedge funds are loosely regulated investments for the wealthy and institutions.

In 2001, Moore successfully lobbied the General Assembly for permission to invest up to 5 percent of the pension fund in so-called alternative investments, including hedge funds and buyout funds. These investments, increasingly popular with pension funds, are riskier but can bring bigger returns.

These funds provided a 14.1 percent return in the last fiscal year, about double the pension fund's overall return. But they also reaped a disproportionate chunk of fees -- a quarter of them when they manage only 2 percent of assets.

Crow's firm is the investment arm of the Trammell Crow family, known for the development company of the same name. It managed $8.3 million in real estate investments for the pension fund at the end of the fiscal year, but the state didn't have performance data because it's so new.

Firm members did not return calls seeking comment. Moore spokeswoman Sara Lang said Crow is a well-respected firm with a good track record.

States with this setup

Connecticut, Michigan and New York are the only other statewide pension systems with one official responsible for investments, according to the National Association of State Retirement Administrators. The treasurer in Michigan is appointed, not elected.

This system has led to problems in the past. In 1999, Connecticut Treasurer Paul Silvester pleaded guilty to federal charges he received kickbacks in exchange for sending state investment money to certain funds.

"It's awful," Dana Cope, executive director of the State Employees Association of North Carolina, says of North Carolina's system. "Why would you ever do that, especially vesting that power and authority in one elected official?"

Experts say pension systems typically have a board that includes politicians and members of the retirement system. A system with one official in charge offers more efficient decision-making but loses checks and balances, they said.

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