A Message from CalPERS CEO Anne Stausboll
Dear CalPERS Members, Employers and Stakeholders,
CalPERS recently took bold action and made public a report that chronicles in sobering detail the alleged wrongdoings of its former Chief Executive Officer and several former Board Members.
It is not possible to explain or excuse the chronicled actions of these former officials and we will make no attempt to do so. I am truly sorry that our members and the taxpayers who support the incredibly important work of every public servant have been placed in a position where they might question the integrity of this organization.
Still, I believe, as does our Board, that the public airing of this sorry episode is an integral part of moving forward and I commit that CalPERS will continue to face these issues and squarely take meaningful action to ensure that they do not happen again.
CalPERS commissioned the Special Review of placement agent activity to find out what went wrong. The investigation was conducted by some of the country’s most noted experts who were given complete freedom to follow the facts wherever they might lead.
The resulting report provides an unvarnished description of what happened in the past and a clear roadmap to needed reforms. It is important to note that the CalPERS Board was not required to publicly release this report, but did so based on a fundamental belief in transparency and honesty. From a narrow, bureaucratic point of view, it would have been much easier for the organization had we not released the report – but the right path is not always the easy one.
While the review is now behind us, we know that we still have challenges to address. The Fair Political Practices Commission (FPPC) is still conducting its investigation into whether gifts that may have been given to our staff from business partners in the past were properly reported. We are fully cooperating with the FPPC and expect that review to be concluded in the coming months.
Our focus remains on the future and protecting our members, employers and stakeholders. We have already implemented many of the recommended reforms in the special review report and are hard at work at carrying out the others. Along with the State Treasurer and Controller, CalPERS advanced legislation to curb the influence of placement agents so that now they must register as lobbyists and cannot be paid outlandish fees on a contingency basis. This is a major step forward in removing potential undue influence in our investment programs.
We have recouped over $300 million from investment managers who used placement agents. This is real savings to the taxpayers of California. Additionally, these managers have agreed not to use placement agents on our business. We have implemented additional disclosures for all future contracts so we have better insights into the financial relationships of our potential contractors. We established a robust ethics helpline to ensure that staff and the public have appropriate means to notify us of potential fraud, waste, and abuse. We are setting up processes to improve timeliness and responsiveness to Public Records Act requests. We are putting our leaders’ financial disclosure documents and travel expense reports online, and the CalPERS Board has endorsed legislation to restrict gifts and prevent conflicts.
The CalPERS Board and leadership team are committed to remedying the issues that caused Californians to doubt the integrity of this institution. I am confident that together we have and will continue to demonstrate that we are worthy of the trust that all Californians have placed in us.
As we move forward as responsible stewards of the nation’s largest public pension fund, we commit ourselves to the highest standards of accountability, integrity, and openness. We will not forget what has happened. The story of the Special Review will be regularly retold and remembered. It will serve as a reminder that ethics and core values are mere words unless translated into consistent ethical conduct as we go about our important work.
Chief Executive Officer