An investigation is under way at the California Public Employees’ Retirement System, the nation’s largest public pension fund, into whether dozens of employees received gifts but didn’t report them as required by the state’s disclosure rules.
The gifts went to state pension officials from private equity fund managers.
The state’s Fair Political Practices Commission, which enforces campaign finance rules, found that some 49 CalPERS employees received gifts, officials said.
“The commission is looking at whether they either failed to report gifts received and/or received gifts over the gift limit,” said Roman Porter, the FPPC’s executive director.
A pension fund spokesman said CalPERS earlier hired an independent law firm to probe CalPERS and the question of gifts is part of the larger review.
“CalPERS hired an independent law firm, Steptoe & Johnson, to conduct a special review related to placement agent activity in our investment portfolio after charges were filed against placement agents in New York,” said Brad Pacheco chief of public affairs at CalPERS.
“The purpose of the review was to ensure the fund was not victimized in any way through improper payments or undue influence. During the course of the review, apparent misconduct surfaced involving former CalPERS officials and Board members, including gifts, travel, etc.”
“At that time our CEO asked all staff that have to file Form 700s (financial disclosure forms) to go back in their records to make sure they were in compliance with the law – and if found not to be – to become compliant,” said Pacheco. “Thirty-five staff members filed amended Form 700s that ranged from under reporting the value of meals to failure to report items.”
The gifts reportedly included gourmet meals, private jet travel, wine and other items that emerged the investigation of the role of so-called placement agents in CalPERS’ investment operations.
Chief Executive Officer of CalPERS Anne Stausboll issued the following statement on the CalPERS website regarding the investigation on May 23.
“We have strengthened our policies to ensure full reporting and compliance in the future, including a complete ban on gifts to our staff. We are supporting legislation introduced by State Controller John Chiang that would reduce gift limits. We have, and will continue, to provide additional training to all staff that are required to file, to ensure full understanding of the law and we annually notify our vendors and contractors about our gift ban policy.”
Stausboll also said that the organization has made a commitment to value and respect and are doing everything they can to fix these issues and focus on the retirement and health security of CalPERS members according to calpers.ca.gov.
CalPERS serves 1.6 million active and retired public employees and holds about $200 billion in investments. The fund lost more than a quarter of its value during 2008, but has steadily recouped.
The review, meanwhile, will continue.
“Our staff and officials have due process rights. These are matters between the FPPC and individuals,” said Pacheco. “CalPERS is fully cooperating to ensure the FPPC makes its decisions based on accurate data and information. We are focused on addressing these issues and getting back to the business of retirement and health security for our members.”
*Ed’s note: Corrects headline to delete reference to CalPERS investigating, deletes CalPERS reference in Porter quote, 4th graf; trims throughout.