Dual Duty: North Carolina Pension Head Joins Insurer’s Board

  • Outgoing treasurer Cowell runs $90 billion in public money
  • Ethics board signs off; critics cite appearance of conflict

North Carolina’s treasurer is getting an early jump on her re-entry into the private sector, with the blessing of her state’s ethics commission.

Janet Cowell.
Janet Cowell.
Photographer: Katy Warner/North Carolina Department of State Treasurer via AP

The treasurer, Janet Cowell, was elected to the board of James River Group Holdings, a Bermuda-based insurance company, after a vote by its shareholders on Tuesday. In late February, Cowell was voted onto the board of ChannelAdvisor Corp., an e-commerce company headquartered in Morrisville, N.C.

Cowell, a former Lehman Brothers banker, was first elected treasurer in 2008 and has eight months left on her term. She is the sole overseer of North Carolina’s $90 billion pension fund. She also administers the State Health Plan for public employees and chairs the State Banking Commission. The state fund doesn’t hold investments in James River Group Holdings or ChannelAdvisor, according to a State Ethics Commission review.

“She brings a wealth of experience as an investment banker and as an investor,” said J. Adam Abram, James River’s chairman and chief executive officer.

Cowell’s dual public-private roles are an example of the potential conflicts of interest among state officials who collectively oversee trillions of dollars in public pensions. Watchdog groups have raised persistent questions about the independence of those making investment decisions for these funds.

Through a spokesman, Cowell declined to comment.

Ethics Review

Prior to joining the two corporate boards, Cowell received permission to do so from the State Ethics Commission. The eight-member panel noted that public servants aren’t restricted from taking private positions, as long as they avoid using their official positions for “financial benefit.” In a letter to the commission, Cowell also detailed her plans to disqualify herself from any matters that “could reasonably be viewed as directly or indirectly related to my corporate board service.”

Perry Newson, the panel’s executive director, defended its decision. “Our job is not to determine what the best policy might be. It’s to take the facts and apply the law,” Newson said. 

In becoming a corporate director, Cowell will have plenty of company among public officials who simultaneously hold private jobs at for-profit companies. For example, lawmakers in 40 states receive only part-time wages. Those lawmakers typically have private-sector jobs. 

Cowell’s job as treasurer is full time. She has drawn criticism from labor groups and ethics experts who say that an official who oversees such a sweeping financial operation cannot easily avoid conflicts.

“You have the appearance of serving two masters when you have a duty to serve the public first,” said Hana Callaghan, director of the government ethics program at the Markula Center for Applied Ethics at Santa Clara University, speaking generally about the issue of taking a private sector job while still in office.

Ardis Watkins, director of government relations for the State Employees Association of North Carolina, a labor group, noted that the state pension fund holds large investments through Wellington Management Group, which in turn is a large shareholder in James River Group Holdings, one of the two companies whose boards Cowell is joining.

Bank Connection

Cowell will serve on James Rivers’s board with Abram, the company’s chairman and chief executive officer, who is also a director of Yadkin Financial Corp., the holding company for a state-chartered bank that is overseen by the state banking commission that Cowell chairs.

Abram called the connection between his interests and Cowell’s role as a bank regulator “coincidental.”

Still, those ties could create a conflict that would be difficult for Cowell to mitigate, Watkins said, even though Cowell has indicated that she would delegate to her department’s chief investment officer any decisions that would clash with her private roles.

“It’s disingenuous for the treasurer to say she’ll recuse herself and leave the decision to a person who reports to her and no one else,” Watkins said.

A similar controversy surfaced two years ago when it was disclosed that as North Carolina’s governor, Pat McCrory had received a six-figure payout for earlier service on a corporate board. McCrory denied any wrongdoing through a spokesman.

The two directorships are a financial boon to Cowell, a 47-year-old Wharton Business School graduate. In total, they will pay Cowell $125,000 annually plus $175,000 in restricted stock, according to filings with the Securities and Exchange Commission. That compares to the $124,676 she receives as treasurer, a job she will hold until January.

The employees association has publicly endorsed Dale Folwell in the race to succeed Cowell. Folwell, a Republican, has said he would devote himself full-time to his public duties if he’s elected.

Folwell’s opponent, Dan Blue III, a Democrat whom Cowell has endorsed, vowed Wednesday to steer clear of corporate boards if elected. “The incoming treasurer will have many responsibilities, including sitting on internal boards and commissions that ensure sound investment of the pension and the state health plan,” Blue said in a written statement.

See related stories:
Erskine Bowles Violated Pay-to-Play Rule, Workers Group Says
Secrecy in Pensions Triggers Legislative Brawl in North Carolina
North Carolina Pension Disclosure Bill Fails to Satisfy Critics

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