CommentsEASTSIDER-When we last left CalPERS they had just hired a sleazebag Florida lawyer named Robert Klausner as their outside fiduciary counsel in an exceedingly tawdry process orchestrated by their CEO, Anne Stausboll. As near as I can tell, he’s still in that position, which raises some ongoing questions about the smarts of their officers and governing board.
Well, just when I was hoping that matters would get better after John Chiang’s initiative to reign the role of CalPERS in buying Private Equity Investments, along comes another stunner, this time involving the Board’s internal politics. As reported by Calpensions at the February meeting, after a bizarre set of tie votes both in Committee and at the General Board meeting, CalPERS President Rob Feckner cast a tie-breaking vote to defeat a term limits proposal for president and committee chairs, thus allowing himself to run for and win another term as President.
There is a part of me that would argue that in an ethical parliamentary world, a person would need to recuse himself (or herself) on a tie-breaking vote involving personal interest. Of course this is CalPERS, where clearly, normality does not reign. Evidently, their rules allow for this type of tie-breaker.
The conundrum here is that this whole voting exercise is a dance of the insiders, with Rob Feckner, (who’s been around since 1999) vs. Henry Jones (who’s only been around 2008) and is obviously tired of waiting to assume the mantle of President.
As a retired state employee, I find this disquieting, particularly the conduct of Mr. Jones who was elected by the Retiree members of the plan. As head of the Investment Committee, it seems he has never met a Private Equity deal he doesn’t like; he cozies up to the CalPERS staff and criticizes other Board members who don’t “go along to get along.” I guess He’s a charter member of Team Stausboll with nary a question. Other than that, I’m sure Jones is a very nice guy. Heck, to my shame I probably even voted for him before I really began looking into CalPERS after their spate of staff and Board member indictments.
Subsequent to waking up to this, the fact that Jones’ resume showed him retiring as Chief Financial Officer of LAUSD in 1998 should have been a clue. We all remember the Jackie Goldberg/Belmont High debacle -- the world’s most expensive school ever built. Just sayin’.
The Calpensions article considers this dispute over term limits as a battle of elected vs. appointed Board members -- or union vs. government -- since six out of the thirteen Board members are elected by active and retired plan participants, while 7 are appointed by virtue of their State office or thru direct governmental appointment by the governor or legislature. Calpensions’ theory is that the forces of good and fiscally prudent governance of the Fund are but one vote away if only the Board had a responsible (non-elected) President.
But given the current political makeup of California, that dog won’t hunt -- unless you believe that the California Legislature is going to be fiscally responsible. Any takers?
On the other hand, the underlying premise that the current Board majority is doing what they want without due consideration of their fiduciary duty to or sustainability of the plan itself, is a point well taken.
I personally believe that the overwhelming majority of the current Board is all in on Team Stausboll, no matter how they got there, and she has announced her retirement at the end of this fiscal year on June 30. BurOIt is clear that Team Stausboll is alive and well, with feckless Klausner as fiduciary counsel, the rest of her management team hand-picked, not to mention that she has filled in the team with the Chief Compliance appointment of bankster Marlene Timberlake D’Adamo from PNC Bank, Philadelphia.
Even as the search for her replacement starts. According to a January 21 announcement, the firm of Hedrick & Struggles (no, I did not make that name up) will be handling the executive search out of their New York office. As I recall, Hedrick & Struggles handled the search for Los Angeles County Employees Retirement System (LACERA) in hiring a principle investment officer for Equities. I also seem to recall that that firm had a management shake-up back around 2010.
What is not contained in the announcement is exactly how this employment process will work, how paring down the number of finalists will be handled, to what extent the outgoing CEO will be involved, and how open and transparent the process will be.
Given our experience the last time CalPERS hired a high level position -- their outside fiduciary counsel feckless Klausner -- these are legitimate questions. And with all the open issues surrounding CalPERS Investments with Private Equity, questions as to how honest their staff has been with the Board, a very quiet and placid Board, are very pertinent. In addition, Committee Chair Jones’ disinclination to ask probing questions as he pursues electoral fame and glory, is disturbing.
Stay tuned.
(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Edited for CityWatch by Linda Abrams.
