The Los Angeles Times’ Michael Hiltzik published a hard-hitting column on Friday, criticizing the campaign by two CalPERS board members to strip board member JJ Jelincic of his authority by denying his participation in board “closed session” meetings, where they discuss confidential matters.
Hiltzik picked up on a story we broke, namely, how the two CalPERS board members, Bill Slaton and his apparent fellow traveller, board president Rob Feckner, moved forward with the aforementioned plan that other board members depicted as a trial of Jelincic. Were that the proposed process was that fair. Even though Jelincic was far-sighted enough to ask that the board meeting at which board members review each other’s performance be held in an “open” session, it was held in an offsite in Monterey, where public attendance was guaranteed to be thin. And the session was not taped by CalPERS, nor was an official transcript made. But we obtained and published a bootleg video and a transcript. And as we and Hiltzik stressed, Jelincic has been accused of serious yet unspecified violations, and as of this date has yet to be told exactly what his accusers think he did wrong. In other words, his opponents are smearing him by stating conclusions while not giving Jelincic the opportunity to rebut them.
As we’ve discussed regularly, Jelincic is the one CalPERS board member who regularly challenges staff, with the result that he has repeatedly and unintentionally caught them out making obvious false statements and appearing to be seriously out of their depth. That appears to be the real foundation of the ire against him.
It would have been nice if Hiltzik had given credit for relying on the video and transcript we published. He did at least quote us in the article, but that was on an earlier story that we had also broken. [Update, 6:00 PM EST: Mike Hiltzik sent a very gracious note as of 10:00 AM to tell us he had edited the story to credit Naked Capitalism, so thanks for his speedy action.]
But perhaps more important for the long haul, Hiltzik independently confirmed our reading, that CalPERS’ is out to quash independent views and badly-needed inquiries because they are seen as socially uncomfortable. That is a lousy excuse for punting on the staff’s and board’s fiduciary duties to CalPERS beneficiaries and California taxpayers who ultimately backstop the giant fund. CalPERS lives in a bubble and routinely denies well-warranted criticism. Hopefully the Hiltzik article will serve as a wake-up call.
Workers and retirees dependent on CalPERS benefits, as well as public officials whose agency and municipal budgets hinge on the success of CalPERS investments, should be mightily concerned about an attack on the board’s most outspoken and inquisitive member. Jelincic’s real offense is that his determined questioning has uncovered flaws in the CalPERS staff’s abilities to manage a $300-billion investment portfolio and in the board’s ability to understand its investment choices…
“If you’re going to clean up CalPERS,” [University of Missouri-Kansas City law professor Bill] Black told me, “you need very forceful directors. California should appoint more people like Jelincic.”
Jelincic has roiled the placid waters of board meetings, and some board members don’t care for that. “The board members virtually never oppose the staff or board consensus,” says Michael Flaherman, a former board member who is now a visiting scholar in public policy at UC Berkeley. By attacking Jelincic, he says, “they’re venting their pique” at a member whose dissent has sometimes gained him national press…
The real danger of the campaign against Jelincic is that it might silence not only his voice, but that of others. “My fear is that it’s going to have a chilling effect on people on the board, but also on the staff,” says Andrew Silton, a former chief investment advisor to the state treasurer of North Carolina. “If you’re going to pay a price for raising questions, that’s not a good prescription for running a large investment organization. Disagreement is good for the investment process.”
Another fierce criticism of the attack on Jelincic came from former state official Tony Butka in his most recent column at LA City Watch, Urgent Memo to the Governor: Stop the Witch Hunts at CalPERS, which I also urge you to read in full. It offers some important observations on the politics, such as:
If somebody tried this stuff in the legislature, they’d be laughed out of the building….Trying to muzzle an elected Board member whose only crime lies in openness and transparency, just gives the fund’s opponents ammunition. The Board needs reminding that theirs is not a private club that can hold secret meetings and do as they will.
If you haven’t had a chance to do so yet, please give the state officials who can and should rein in this fiasco a piece of your mind. Please write or call. It never hurts to crib from press reports.
Please also circulate the Los Angeles Times column as well as this post to your friends and colleagues in California. Stress to them that contacting state officials, ideally in writing, is effective. Recall that our readers’ 2015 efforts led State Treasurer John Chiang to sponsor path-breaking private equity transparency legislation.
Bill Slaton was appointed by the Governor. Please write or call Governor Jerry Brown’s office and tell him that governance at CalPERS has become a travesty, with his appointee Slaton as a prime example. Describe how Slaton is trying to implement a legally impermissible sanction against an effective trustee voted in twice by members. Tell him that he needs to ask Slaton to resign. Be sure to cc Slaton.
Governor Jerry Brown
c/o State Capitol, Suite 1173
Sacramento, CA 95814
Phone: (916) 445-2841
Fax: (916) 558-3160
E-mail contact form: https://govnews.gov.ca.gov/gov39mail/mail.php
Send a cc to:
Mr. Bill Slaton
Board of Administration
Lincoln Plaza North
400 Q Street
Sacramento, CA 95811
Please also contact the two elected officials on CalPERS’ board, John Chiang and Betty Yee. Betty Yee was present at the board session that Slaton led and did not object. Her silence implies consent.
Mr. John Chiang
California State Treasurer
Post Office Box 942809
Sacramento, CA 94209-0001
Ms. Betty Yee
California State Controller
P.O. Box 942850
Sacramento, California 94250-5872
In addition, if you are a California citizen, please alert your state Assemblyman and Senator, and demand that they look into this serious lapse of governance. You can find your Senate and Assembly representatives here.
Thanks again for your help.
YES!!! Good news & great work Yves. Gotta run but very good to see this happening. Keep it up!
For once, I was on top of it, and I wrote to everyon. As CA taxpayer and also an alum of the UC.
So the PE financiers are displeased … they creep around, they brood … they waggle a finger and exercise their power to chill and intimidate someone for asking uncomfortable questions. PE going after Jelincic for the crime of doing his job is reminiscent to me of Peter Thiel going after Valleywag/Gawker for doing their jobs and asking questions about the stupid unicorns and a new lawsuit every other day. When basic disinterested journalism or fiduciary questions can upset your fragile ego or pop the bubble of your ability to convince others that you’re like a shaman or a market-clairvoyant, what do you do then? Lash out??
John Chiang has higher political aspirations. His feet need to be held to the fire over this.
Oh, good grief! The once-august L.A. Times is cribbing the reporting here at Naked Capitalism without due credit — this is practically plagiarism!
However, I’m grateful to hear the Mighty Wurlitzer cranking up on this issue. It troubles me that Hilzik fails to discuss that the ex-CEO of CalPERS who is currently doing hard time in the federal pen committed his crimes on the watch of several of the top staff and board members now clutching their pearls about Mr. Jelincic’s demands for greater rigor and transparency. The rot appears to run very deep in top management there, but they are successfully bullying the political hacks on the board who seem more interested in bloviating than in protecting the taxpayers and beneficiaries who will be left with the dreck that CalPERS had to be bribed to buy.
Those are great points. I hope those sending letters mention them.
Also contact the Assembly staffers and write to them about adding NC to their regular reading. Our local district guy Dabeneh seems to be receptive to the message and the need to reform CalPERS and CalSTRS.
I’m surprised that Dabeneh is open to it, but good to hear. It seemed like he was more the corporate type based on that scorecard that went around a few years ago (certainly his mentor Sherman is). I guess that it’s worth contacting him as well.
Someone seems to have let them though, since they specifically edited it to include some credit to Yves and Naked Capitalism.
What became of the recent members’ survey sent out by CalPERS? Great reporting, and thank you. CalPERS retiree in upstate New York.
Great to read LATimes’ story and Tony Butka’s LACityWatch column. The CalPERS story is getting a wider audience. The LATimes is read nationally. Other state pension boards are also affected by this reporting, if only indirectly.
Thanks for your continued reporting on CalPERS and PE.
The L.A. times is turning out to be a pretty decent MSM paper,
except for their Hispano-pandering, but that’s just their advertising demographic.