CalPERS tightened disclosure rules for so-called “placement agents,” but stopped short this week of requiring the agents to register as lobbyists – a proposal offered by the board’s own chairman and the state’s ranking elected fiscal officials.
But directors of the California Public Employees’ Retirement System left the door open for further changes, including the lobbyist-style registrations, a ban on contact between staffers and investors, limits on gifts and campaign contributions and increased financial penalties. George Diehr, chairman of CalPERS’ Investment Committee, suggested that the staff develop a policy with those proposals included for a future vote.
The board’s action tweaks a policy CalPERS adopted in May. Since then, the $200 billion pension fund has been at the center of public controversy because of the enormous fees paid to placement agents, who serve as go-betweens between companies wanting investment capital and the pension fund. The fees are paid by the companies. One agent, former CalPERS board member Alfred Villalobos, received more than $70 million in fees. CalPERS has launched an internal investigation of the practice.
The policy and the board’s action Monday are an attempt to provide greater transparency to CalPERS’ decision-making and its outside contacts, officials say. The policy requires disclosure in writing of the placement agents’ role, written copies of any agreements between the agent and the staff, the disclosure of current or former CalPERS board members or staff who suggested hiring the agent, and the immediate reimbursement of fees in the event of violations, among other items.
Last week, state Controller John Chiang, Treasurer Bill Lockyer and CalPERS’ board chairman Rob Feckner urged CalPERS to require placement agents to be registered with the state Fair Political Practices Commission in the same fashion as lobbyists, who are required to disclose their payments, their clients, and the bills or agencies they are lobbying. They also are required to register regularly and attend periodic ethics training.