CalPERS was in the news negatively again. The Fair Political Practices Commission is investigating more than four dozen CalPERS board members and employees over allegations they failed to accurately report gifts. Coincidently, I had a recent discussion with one of the board members under investigation before these allegations surfaced about current legislation.
It turns out, even though I was a state ethics officer for many years, I hadn’t kept up with recent changes in the law. It used to be that if you provided something of value at a conference, like giving a speech, you didn’t have to report the free meal provided to you as a gift. Apparently, that exemption went away after I retired. The board member gave me an education.
As an ethics officer, I would sometimes have to spend hours going through hundreds of pages of laws and regulations to answer a question for someone in my department. Often, the gift was for something very small, like a stainless steel drinking bottle or a sandwich. If they were asking in advance, and I didn’t know the answer off the top of my head, I would tell them the time it would take to research would be worth more than the item they were thinking of accepting.
That white bread cellophane wrapped sandwich that you could buy for $2.50 at the local quick stop might be valued at $70 at a meeting, once all “costs” were factored in. Hopefully, this investigation will turn out to be less than it appears on the surface and many of the mistakes discovered will be shown to have been unintentional errors. Rob Feckner, CalPERS President, recently settled with the FPPC. “I have now signed the stipulation order and submitted payment for my $400 fine for two dinners in five years.”
CalPERS staff and officers need to be scrupulous about following the law, but I suspect that in the case of this investigation, a mountain is probably being made out of a small hill. CalSTRS’ entire investment staff sent a letter to their CalPERS counterparts, dated June 1. It said the fallout of the placement agent scandal has been
deeply sadden[ing]. As competitors in this challenging investment industry, we know full well that the CalPERS investment officers are dedicated, hard-working and, most of all, ethical employees… The CalSTRS investment staff stands by and supports you. If there is anything we can do to help, just ask.
It is hard to defend a pension system that is too frequently seen as corrupt. Public employees didn’t cause the fiscal crisis but if our trustees can’t be trusted, the system is harder to defend. While the thorough investigation of all the ethics issues seems to be putting CalPERS in the news frequently in a negative light, in the long run the cleansing process should pay off. We all look forward to the day when CalPERS is again synonymous with the highest fiduciary ethical standards.
For a related story, see CalPERS has been automatically deleting emails after 60 days (LATimes, 6/11/2011).
Under a new policy, the nation’s largest public pension fund ordered its 2,300 workers to save only those emails with “administrative, legal or archival requirements” — but left it up to them to decide exactly what documents to ditch. Any emails older than 60 days would be deleted automatically.