Lingering questions over its former investment chief’s private equity investments have led a stakeholder organization for California Public Employees’ Retirement System to call for board president Henry Jones’ resignation.
The letter, signed by Rosemary Knox, the president of the Retired Public Employees’ Association of California, whose leaders have been known to criticize CalPERS in the past, said the call for Jones to step down came “with a heavy heart but a firm conviction.”
“Our demand is precipitated by your poor judgement and inappropriately secretive manner in the handling of the apparent Political Reform Act violations by Ben Meng while he was the CalPERS chief investment officer,” the letter said. “We view your actions in this instance as a continuation of your long-standing posture of openly opposing transparency and accountability on the part of the CalPERS board and staff.”
During his tenure as CIO, staff made a $1 billion commitment to a Blackstone fund, according to the CalPERS website.
A California regulatory body is investigating Meng’s investments and his actions as CIO. So far, there has been no public evidence that he broke the law.
After Meng resigned, Jones released a statement saying “CalPERS has known about questions regarding Ben’s Fair Political Practices disclosure filings. These are private personnel matters and have already been addressed according to our internal compliance protocols.”
“You have participated in an apparent cover-up of unlawful behavior, and we fear that this cover-up is ongoing,” the letter said referencing Jones.
Jones, board members respond
In a statement to Buyouts, Jones strongly pushed back.
“The allegations are false and are part of a desperate political stunt orchestrated by the failed candidate and a current office holder of RPEA that I defeated in our board election last fall. These are intimidation tactics and there was no lack of transparency,” Jones said by email.
Jones defeated former CalPERS board member and investment officer J.J. Jelincic in an acrimonious race last year, as Buyouts reported. Jelincic is a member of the RPEA board and sits on its CalPERS Experts Committee.
Jelincic denied Jones’ allegation. “I knew that that was going to be Henry’s reaction, so I deliberately was not involved in the drafting of the letter,” he told Buyouts.
Jones said chief executive officer Marcie Frost was ultimately responsible for any disciplinary actions, but any termination of a CIO would have to involve the board before a decision is made.
“In cases where a personnel matter requires review, the CEO conducts that investigation and reports the findings to the board where the board may take action,” Jones said. “A board meeting was scheduled for September. Mr. Meng, however, resigned in August.”
The other 12 members of the CalPERS board were all sent copies of the letter.
Theresa Taylor, the board vice president and investment committee chair, said Jones acted appropriately. She cited her own experiences as a union shop steward.
“I have participated in many investigatory, administrative hearings on behalf of our members. Confidentiality is paramount in those investigations. It is no different for Mr. Meng, who is considered a civil servant,” she said in an email.
“I support the thoughtful and prudent approach that Henry took to address this serious matter. His approach was deliberate and considered the gravity of the issue as well as CalPERS responsibility to respect the civil service and privacy rights owed to a state worker,” said board member David Miller. “I am disappointed that respected stakeholders have chosen to level unfounded ‘cover-up’ accusations that reflect both ignorance of the facts and a cavalier disregard for the impact of their behavior on CalPERS and does nothing to advance the work we do every day to provide retirement security and health care to millions of Californians.”
Board members Margaret Brown and Fiona Ma declined to comment. No other board members responded to requests for comment.
David Soares, a retired prosecutor and chairman of RPEA’s CalPERS Experts Committee, told Buyouts the organization “stands behind each and every” allegation.
On its website, RPEA describes itself as a “liaison between retirees and CalPERS” and a “mutual protective organization for all beneficiaries of CalPERS.” It has more than 24,000 members with 75 active chapters in California, Arizona, Nevada, New Mexico and Oregon.
Recently, the organization opposed AB 2473, a bill CalPERS sponsored to waive public disclosure laws for its private lending program, as Buyouts reported.
Action Item: read the RPEA letter to Henry Jones here.