The board of the California Public Employees’ Retirement System said it will take steps to prevent investment decisions from being corrupted by middlemen seeking to do business with the largest public pension in the U.S.
The board stopped short of taking formal action a day after an 18-month review documented a placement agent’s attempts to win contracts with the $228.2 billion fund through personal trips and use of his Lake Tahoe home,
“Let this episode in our history never be forgotten,” board President Rob Feckner said at a meeting yesterday. “We are committed to making sure this system stays transparent. We are going to continue to make sure that we earn the trust of the taxpayers and the members of this system.”
The 56-page review, produced by a law firm and a consultant at the request of Calpers, said Alfred Villalobos, a former board member who became a placement agent, attempted to trade personal favors to the then-chief executive officer of Calpers for business for his clients.
Villalobos also hosted Calpers board members at his home, and helped pay for their travel, according to the report. He gave one chips to use at a casino, the review showed.
Some of the board members named called the allegations overblown; others didn’t return calls for comment. All have left Calpers. Villalobos, a former deputy mayor of Los Angeles, hasn’t responded to phone calls requesting comment.
Philip S. Khinda, a partner in the Washington office of Steptoe & Johnson LLP who was the report’s lead author, told the Calpers board that some changes he recommended in December had already been carried out.
Calpers backed a 2010 law requiring placement agents to register as lobbyists. The law also barred placement agents from receiving fees based on their success in placing state pension money with investment firms.
The retirement plan now prohibits employees from accepting gifts from people seeking to do business with Calpers, according to a statement. It also instituted compliance audits on Calpers regulations and opened a hotline for employees and others to report possible corruption.
Khinda recommended adding a deadline for Calpers committees to consider an ethics policy. He also called for training on open-meetings laws and “policies to address risks associated with board member personal financial hardships.”
The Calpers board didn’t set a deadline for adopting the measures.
“It’s simple,” Anne Stausboll, Calpers’s chief executive officer, said at the meeting. “The people we serve expect us to be accountable.”