The Sacramento Bee published a story by Adam Ashton today, CalPERS has $360 billion to invest, but it can’t figure out what to do with this blogger. Google indicates the original headline was Naked Capitalism’s Susan Webber keeps CalPERS on its heels.
Given that Ashton is close to CalPERS and his stories often hew to CalPERS’ spin, this story was relatively evenhanded, given that he had sent me a list of questions that my lawyer, who is pretty understated, called “prosecutorial”. Even so, Ashton provides inaccurate or misleadingly incomplete information several times, which not surprisingly is also negative, but those misconstructions come later in the piece.
In other words, Ashton still makes a concerted go at questioning why we should want to expose public corruption and incompetence.
The opening section, which is where the author frames the story for the reader, presents both CalPERS’ and our viewpoints. The second paragraph is where Ashton sets up the themes he uses to try to question our interest in CalPERS:
But its leaders time and again find themselves distracted by an entirely different kind of problem – an opinionated financial blogger on the other side of the country who has her hooks in the fund and a couple of key sources on the inside.
Even though we make no bones about having a strong point of view, characterizing our work as “opinionated” obscures the fact that our posts are based on extensive documentation and analysis of CalPERS’ and independent information, such as our highlighting discussions at board open sessions or working through presentations or other public records. The reason that CalPERS finds us vexatious isn’t that we are getting privileged information from CalPERS sources (well, until very recently, since more employees are contacting us); it’s that, having been in finance my entire career and spending a large chunk of that consulting to large financial institutions, it does not take much in the way of looking to see beneficiary-damaging behavior on a regular basis.
To put it another way: if we weren’t exposing genuine issues, CalPERS would be able to ignore us.
Similarly, CalPERS likes to relish its status as the biggest, highest profile public pension fund, but when it gets bad press, its stance is that it’s a parochial organization and why isn’t it left alone? Ashton is no doubt accurately presenting CalPERS attitudes here. They strongly echo those of local officials in the South in the Jim Crow era who depicted civil rights activists as outside agitators.
Ashton did counter the CalPERS’ view that they are being unfairly singled out:
Webber, a New York-based corporate management consultant, says she’s out to hold the nation’s largest pension fund accountable for governance lapses that could threaten defined benefit retirement plans around the country.
“CalPERS seeks national and international media coverage. Then, when the press takes interest in their problems, CalPERS shoots the messenger. I am strong supporter of defined benefits plans who recognizes that CalPERS’ governance and operational failings give grist to critics of public pension plans,” she wrote in a message to The Sacramento Bee.
The specific beefs, per Ashton, are that the board and top executives are not happy with the fact that we generally support the efforts of anyone who is trying to reform CalPERS, and sadly, right now, the only people with any influence in recent years who are like that are former board member JJ Jelincic and current board member Margaret Brown.
It’s perverse to see the Sacramento Bee take the position that reporters working with whistleblowers, activists, and reformers (at least until the era of access journalism) suspicious, when it is about as controversial as seeing the sun rise in the east.
What may upset CalPERS is that by virtue of spending years reviewing CalPERS board meetings, presentations, and Public Records Act request results, we are considerably down the curve on how the fund operates.1
Now to the errors and misrepresentations.
Ashton insinuates repeatedly, taking up the line of CalPERS board members who aren’t used to being held acountable, that I must be operating in a stealthy political capacity.2 If they think I am being rough on them, they should look at the many pieces I’ve written savaging government officials, such as Memo to Shaun Donovan: Your Nose is Getting So Long You Need to Get a Hacksaw. This part is just bizarre:
Now, when CalPERS leaders like Feckner suggest that Webber is actively involved in political campaigns, they’re alleging that she’s working with Jelincic to oust Jelincic’s adversaries.
Huh? Jelincic is not on the board and isn’t running for a board seat. He is on the CalPERS payroll, running out his accumulated vacation, as Ashton himself reported. So who are these mythical adversaries?
This part is also misleading:
Last month, documents Brown requested from CalPERS board staff showed up on Webber’s blog in a piece that called attention to a practice that allowed board members to have employees stamp their signatures on expense forms.
Board member Theresa Taylor, a former vice president of state government’s largest union, said she felt Brown was disingenuous when Taylor asked why Brown wanted copies of their oaths of office. Brown didn’t answer the question, Taylor said.
Brown made this comment at the end of the article:
I am dissapointed that Mr Ashton did not use any of my comments for his story:
You are misinformed about how I got a copy of everyone’s oaths of office, including my own.
I asked the staff and received from them the copies of the oath certifications. I never interacted with anyone on the board in making the request or receiving the documents.
It alarms me that you seem to think that I should have to offer a reason for seeing CalPERS records. Such a position is radically anti-transparency and something I would never expect from a reporter.
The California Public Records Act, for example, specifically does not require members of the public to state a purpose in requesting copies of public records, and the oaths of office certifications are most definitely public records.
It’s also puzzling to me that you seem to give credence to complaints about my pursuit of those documents, since my obtaining them through perfectly appropriate channels produced evidence of apparent wrong-doing.
There are other jibes that Ashton makes, but unless readers express particular interest them in comments, I’ll refrain from giving additional information in the interest of steering clear of “the lady doth protest too much” mode.
I’ll close the biggest fallacy of the board’s and Ashton’s argument, and it comes relatively early on:
Yet her style of advocacy leads some CalPERS leaders to close ranks against her reporting. They view her as too closely aligned with camps that want to oust Frost and unseat elected representatives on the CalPERS board.
Having the good will of the board has not led to positive changes. For years, I have watched various groups that ought to have some clout with CalPERS make requests in public comments, and in many cases, these statements no doubt are similar to appeals made in private. I’ve only seen one case where that sort of thing made a difference. Several influential individuals objected to a proposed change (getting rid of transcriptions of board meetings) and we also threatened that we’d transcribe them ourselves and publish a full archive, including historical transcripts (which we could obtain via the Public Record Act). The combined effort led CalPERS not only to keep transcribing public board meetings, but also to publish the transcripts, something it had not done before.
In keeping, it’s odd to see Ashton take up the CalPERS’ line that I should have entertained a request from Marcie Frost to meet with her for an off the record meeting when she hadn’t said that was her requirement until late in the game. The article also depicts my saying clearly to Frost in an e-mail that my biggest bit of advice was she needed to get rid of General Counsel Matt Jacobs because he was damaging CalPERS. That message would not be a surprise to anyone who reads the site regularly.
By contrast, some of the changes we’ve successfully prodded CalPERS to make include:
– Capture and publish private equity carry fees, which one financial publication called a landmark
– Force CalPERS to end its massive copyright abuse.
– Pressure CalPERS on private equity fees and costs, which led Treasurer John Chiang to sponsor a pathbreaking private equity transparency bill. In a presentation earlier this year, Dr Ashby Monk said that the discussions in CalPERS board meetings of private equity fees and costs, typically instigated by Jelincic, which we discussed at length on our site, using the videos from board meetings, led to widespread changes across private equity investors. They started to come to grips with how much they were paying and began to take more concerted measures to reduce them
– Roll back the worst of its indefensible changes to its election procedures. Among other things, CalPERS last year implemented paper ballots which both had an individual bar code identifier and a signature on the ballot. This year, CalPERS restored voter privacy in its mail-in ballots, with voters signing only the envelope, which is separated from the ballots before they are counted.
– Force the departure of Charles Asubonten over resume and employment application misrepresentation
So the record shows that CalPERS makes changes only very reluctantly, when the hot lights get too uncomfortable. And we’d be happy to support other board members who were willing to perform their fiduciary duty and supervise CalPERS diligently, rather than treat their positions as sinecures. But I’m not holding my breath.
1 Although I cannot prove it, because Jelincic and Brown have routinely been opposed to the dominant faction on the board, there is a tendency to scapegoat them. Thus, when the board isn’t sure how I figured something out, they appear to default to seeing one or both of them as responsible regardless of whether that has any foundation (for instance, the fact that I might later see if they would provide a quote does not mean they were the instigators of a post).
2 Aside from the fact that I have no interest in working on or being involved in political campaigns, I also have no experience. So Feckner’s idea that I could provide useful campaign input, particularly in a state in which I have never lived, is paranoid.