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Tensions mount as CalPERS board members clash over censure, PE transcripts

  • Brown censured for allowing friend to use board scanner for political docs
  • Board President Mathur temporarily bars Brown from CalPERS office
  • Brown: punishment politically motivated, tied to scrutiny of proposed PE restructuring

The misuse of an office scanner by a retired school administrator triggered open warfare between California Public Employees’ Retirement System Board of Administration President Priya Mathur and newly elected board member Margaret Brown.

In March, Mathur formally reprimanded Brown for letting her friend, former Dixon Unified School District Chief Business Official Cecile Nunley, use a scanner in the CalPERS board chambers to email silent auction forms from a Women Democrats of Sacramento County fundraiser.

As punishment, Mathur limited Brown’s use of her office, also located in the board’s chambers, until May.

Since then, Brown has publicly retaliated by arguing that Mathur’s reprimand and punishment were politically motivated and designed to keep her in the dark on a proposed restructuring of CalPERS’s $26.8 billion private equity program.

Brown’s campaign for a CalPERS board seat leaned heavily on her bona fides as an outsider and watchdog for the $356.7 billion pension system’s beneficiaries.

As a candidate, Brown was a vocal critic of the proposed restructuring, which could involve CalPERS outsourcing the management of its future commitments to new PE funds to an outside firm.

Mathur had backed Brown’s opponent, the heavily favored incumbent Michael Bilbrey, in the 2017 election for one of the Board of Administration’s at-large seats.

“I think it’s really personalities,” said one source with knowledge of the board’s dynamics, describing the clash. “I think [Margaret]’s got a chip on her shoulder, and Priya and them are upset Michael got beat.”

On April 13, a Washington attorney, James Moody, sent a letter to Mathur on Brown’s behalf, accusing the board president of misusing her authority to harass Brown. The letter was published April 16 on the blog Naked Capitalism.

“That’s an absurd allegation, honestly,” Mathur said in an interview. “I did not force her to bring someone [Nunley] into CalPERS board chambers.”

Wanting more on PE

In a March letter to Mathur, Brown alleged that the CalPERS board president and staff had actively sought to prevent her from doing research on the proposed restructuring of the PE program.

CalPERS began laying groundwork for the PE program restructuring in 2017, prior to Brown’s election, largely in discussions held during non-public sessions of the board’s monthly meetings.

After taking her seat on the board, Brown requested complete transcripts of the board’s 2017 closed session meetings to educate herself on the status of the private equity proposals.

Mathur asked Brown to be more specific in her request, citing confidentiality concerns and a need to avoid the unnecessary use of staff resources, according to emails obtained by Buyouts.

Rather than receiving electronic copies of the transcripts, Brown was given three hours to review physical copies in the office of CalPERS staffer Karen Perkins on March 5.

To her dismay, the documents made available to Brown included redactions, which several CalPERS officials — including Mathur — later characterized as a mistake.

The decision to limit Brown’s access to closed session transcripts was part of an ongoing effort to secure the handling of confidential material, according to Mathur.

Under Mathur’s new policies, board members can view closed-session transcripts only at CalPERS’s office, with no copies or photographs permitted. Mathur also restricted use of the board’s chambers to board members and affiliated staff.

In the past, board members were able to obtain requested closed-session materials electronically, upon request, two sources told Buyouts. They were also able to use their offices for meetings with individuals or small groups, according to staff emails released to Buyouts.

CalPERS’s governance policy grants Mathur the authority, along with Chief Executive Officer Marcie Frost, to manage the flow of information to board members. Brown, along with other members of the board, have questioned the efficacy of limiting online access to confidential transcripts or materials.

“When I came in as board president, one of the first things I did was to review existing practices and to ensure they best protected CalPERS and its members,” Mathur told Buyouts, adding that she believed electronic distribution of closed session materials could lead to the release of confidential information.

“[Margaret]’s the only one who’s been asking for some of these things, so it might seem unfair to her, but I’m trying to execute my role as effectively and prudently as I can.”

“I think that is a very reasonable policy,” Mathur added. “Nonetheless, I’m going to bring it in front of the board governance [committee] next month to see if maybe we can get more concrete policy language.”

Cecile Nunley

On March 5, the same day Brown was scheduled to review private equity-related closed session transcripts, Brown brought Nunley into CalPERS’s board chambers following lunch.

Brown asked Nunley to copy some receipts for her while she used the restroom, according to an email released to Buyouts. Nunley took the opportunity to use the office’s scanner to email herself bid sheets from a recent silent auction benefiting Women Democrats of Sacramento County. A CalPERS staff member spotted Nunley using the scanner, prompting a short investigation.

“[Nunley] shouldn’t have done it. She feels terrible about it. But she’s not the devil, either,” Brown told Buyouts.

Brown was asked to forward any documents scanned by Nunley to Mathur. Brown’s email didn’t include a second attachment Nunley had scanned to her address, according to emails CalPERS provided to Buyouts. Brown says the second scan was blank — there was nothing to send.

At that point, taking the political nature of Nunley’s documents into consideration, Mathur told Brown over email that she would be privately censured and her office privileges would be revoked in March and April.

Three days later, Brown publicized the letter tying the censure and punishment to her request to review the private equity-related closed-session transcripts.

“Given this history, it is difficult not to see a nexus between my demand to read the closed session transcripts, your attempts to thwart me, and your ultimate revocation of my right to read them via these Trumped [sic] up charges against me,” she wrote.

Ongoing conflict

The conflict between Brown, Mathur and the CalPERS staff shows no signs of slowing down.

Brown claims she was temporarily locked out of the board’s closed session at its April meeting — her passcard no longer worked.

She’s also expressed concerns that mail sent to her office at CalPERS has been tampered with and that access to CalPERS’s newspaper and magazine subscriptions has been restricted.

Mathur’s made efforts to contact Brown since the latter’s censure and reprimand, according to emails released to Buyouts.

Brown, in turn, said Mathur had not provided any indication as to why her access to closed session-transcripts was restricted, or that the redaction of those transcripts was a mistake.

“I left that in a voicemail to her,” Mathur said. “I have reached out to her by phone and by email and she has not gotten back to me.”

Mathur’s tenure on the CalPERS board hasn’t been free of controversy. In 2014, the board reprimanded Mathur and stripped her of the vice presidency for failing to file campaign finance reports on a timely basis. At the time, the state’s Fair Political Practices Commission fined Mathur $4,000 as a repeat violator of the state’s political reform laws.