Los Angeles Times Slams CalPERS for Vetting Failures That Led to Exit of CFO Asubonten for Resume Misrepresentations, Doubts Whether CEO Marcie Frost Has Made Needed Changes

Pulitzer Prize winning reporter Mike Hilzik returned to the sorry affair of CalPERS’ hiring of Charles Asubonten, an unqualified Chief Financial Officer candidate, in an article titled CalPERS says its ex-CFO misrepresented his background — but how did he get hired in the first place?

We published a series exposing the numerous fabrications on his resume. Yet despite the obvious danger of having a senior executive who appeared to have committed perjury by making false sworn statements during his application process and after his hire, CalPERS doubled down and kept defending Asubonten even though Hiltzik had started investigating.

Only after Hiltzik published a critical article did CalPERS do what it should have done in the first place, which is examine Asubonten’s claims. Asubtonten’s appeal to the State Personnel Board appeal of his “rejection during probation,” which we published earlier this week, made clear his story fell apart as soon as CalPERS started asking serious questions.

As he has consistently, Hiltzik gave us prominent credit for breaking this story and for our later reporting.

Hiltzik spoke to CalPERS CEO Marcie Frost about CalPERS settlement with Asubonten, in which he received no monetary damages and CalPERS agreed to say that Asubonten resigned. He was not impressed with what he heard. Key points from his story, which I urge you to read in full:

CalPERS has now reported that its former chief financial officer, Charles Asubonten, misrepresented his work history and earnings before he was hired in October 2017…the giant pension fund plainly desires to close the book on this disastrously botched appointment of a top-level official…

CalPERS made a big noise last September when it hired Asubonten…The [news] release said that “most recently, he was the managing director in a private equity firm.”

As we reported, the “private equity firm” mentioned in the release was nothing of the kind, at least not as that term is commonly understood….

Once Webber started blowing the whistle on Asubonten’s background, CalPERS closed ranks behind him. He had dismissed her questions as “character assassination,” an assertion later repeated to me by a CalPERS spokesman. In a phone conversation, with Asubonten on the line, Frost gave him an unqualified endorsement. “We thought Charles would be an excellent candidate,” she said, “and over the last five months that has proven to be exactly true.”

But she also initiated an investigation into his work history. CalPERS investigators interviewed Asubonten on April 20 and 23. According to their account, his story appears to have come apart almost instantly.

Hiltzik hits the high points of Asubonten’s fabrications, such as presenting W-2s from unrelated activities and arguing they should be attributed to his apparently non-existant consulting business, his presenting a sole proprietorship as a partnership, his claim that “I am Transmax and RSA” when CalPERS got no hits when it put “Transmax” plus “Charles Asubonten” in a web search.

Back to Hiltzik’s article:

Asubonten also cited Frost’s unqualified expression of support in their April conversation with me. That’s embarrassing for her, at least, but also brings us back to what kind of hiring process was in place when he was recruited. Webber calls this a “due diligence failure,” and she’s right.

“There was vetting,” Frost told me this week. But what kind of vetting? She said Asubonten was interviewed and his references checked, and was found to be “technically qualified for the job” of CFO.

Hiltzik didn’t contest these claims, but our earlier posts show they are bogus. We wrote an entire post on why Asubonten was not qualified for the job; it’s a mystery how he could be deemed to be “technically qualified” unless she is merely referring to his professional credentials (MBA, CPA, CFA).

But how can Frost possibly claim that what CalPERS did rose to the level of vetting when the fund apparently didn’t do basic searches, which among other things would have uncovered the suit he lost contesting the lapsing of his contract with Rio Tinto-Palabora Mining Company? Reading that alone would have revealed numerous falsehoods on his resume, like claims of exemplary performance when he’d gotten poor reviews for the last two years of his three and a half year tenure, as well as him not being a man of his word (he signed a separation agreement waiving all rights to pursue claims, yet he broke that via his legal action).

CalPERS didn’t even have the nous to check if Asubonten’s references were legit. As we wrote:

Through JJ Jelincic, Marcie Frost offered to have the CEO of Palabora contact me and reassure me about Asubonten after my posts ran….

But even more bizarre was that the idea of speaking to the Palabora CEO was nonsensical. Asubonten left Palabora at the end of 2009. Palabora now has a Chinese CEO who worked previously in the steel busines. Most important, the South African court decision in Asubonten’s dispute with Palabora made clear that Asubonten’s personnel records were at Rio Tinto, not Palabora. So current Palabora management could not possibly have any information about Asubonten beyond what was in past company annual reports that were already available online.

I called a contact who had taken interest in this situation to sputter about it. He too had been encouraged to speak to a Palabora CEO…and he was not Chinese. He sent me the references CalPERS provided for Asubonten by e-mail:

Dennis Brazier
CEO
Palabora Mining Co.
+27 83 634 0758 Australia

Peter Daniel
Sr. VP & Corp. Controller
Ford Motor Co.
313-729-6656

Gunter Dufey
Prof. Emeritus, Finance & International Business
Univ. of Michigan
+65 9654 7505 Singapore

The “Australia” bit is puzzling, particularly since Palabora never had operations in Australia and the number provided for Brazier is in South Africa (country code +27), not Australia (country code +61).

But the far more important part is that Dennis Brazier was never CEO, Managing Director, or even a board member of Palabora. Marcie Frost can only have gotten this information from Asubonten, and it is flagrantly false. Worse, the fact that she would try to fob off a bogus reference on me and an independent party shows she continues to rely blindly on information Asubonten has provided even after his honesty has come into question by virtue of anextensively-documented series of posts.

Dennis Brazier was only “general manager – Copper Processing” from August 2004 through all of 2007 as Palabora’s 2007 and 2008 annual reports show. The 2008 annual report does not list Brazier as part of the management of Palabora but does describe Bill Scheding as having been “appointed General Manager – Copper Processing and Magnetite business in October 2008.” This is consistent with Dennis Brazier’s LinkedIn profile, which show him joining Palabora in January 2001 and rising through the ranks to his promotion to General Manager of Copper Processing in August 2004, a position he held though June 2008, when he left for Union Copper. LinkedIn also shows Brazier as back in South Africa, and the phone number for him is from South Africa…

Consider what this means. Asubonten and Brazier together are misrepresenting to CalPERS that Brazier was the CEO of Palabora…

Bear in mind that if Asubonten listed Brazier on his employment application as his supervisor, that is perjury, a felony in California.

It is also worth noting that CalPERS’ due diligence is so wanting that the phone number it gave for Peter Daniel at Ford is out of service.

That means Hiltzik’s skepticism is fully warranted:

It’s certainly encouraging that CalPERS has “has taken a serious look” at its procedures in the wake of the Asubonten botch, as Frost says. “We have found areas where we can strengthen the process,” she told me, though she wasn’t very specific.

Maybe the CalPERS board can get a more complete answer, but to do so it will have to start asking questions and devoting serious time to figuring out what due diligence is performed on high-level CalPERS applicants. Or doesn’t it think that the way CalPERS fills some of its top jobs is important?

Sadly, I’m not holding my breath that CalPERS will change its ways until it has more changes in key players, particularly on its board.