CalPERS CEO Marcie Frost Misrepresentations Scandal Not Going Away: Former Board Member and Board Designee Continue to Press for Investigation

We thought it was extremely odd that on November 13, two months after the last board meeting, that toadying over-eager CalPERS staffers orchestrated a show of support for CEO Marcie Frost. In case you missed it:

This was not a smart move. Even if it was organic, which we and our big-organization-savvy readers doubted, it sent all the wrong messages. A competent CEO would have squashed this scheme immediately for its resemblance to a Trumpian loyalty oath, as well as potentially being a HR violation (no one would dare not wear a ribbon for fear of alienating Frost and their boss despite the claim participation was voluntary).

The timing seemed peculiar because the CalPERS board had apparently decided to defend Frost despite Los Angeles Times reporter Mike Hiltzik publishing a lengthy article about Frost’s misrepresentations. His piece followed stories in the Financial Times, Bloomberg, and other outlets. Treasurer John Chiang would not have called for an independent investigation after the board meeting if one had already been authorized. Nevertheless, press attention had turned from the matter by November. So why the orchestrated ribbon show, timed to start the first day of the November board meetings?

It turns out influential stakeholders are not happy about the failure to investigate Frost’s background and how she conducted herself during the seletion process. As we pointed out, the California State University Emeritus and Retired Faculty and Staff’s council demanded an investigation into Frost’s hiring in its November newsletter.

But the trigger for l’affaire ribbons appears to have been a letter by former CalPERS board member George Diehr and the former designee of the State Controller Terry McGuire to the Governor and other key state officials making a detailed case for an independent investigation. We’ve embedded the letter below.

Note the timing: it was dated November 11 and sent either then or November 12, which was immediately before the November board meetings. The board members were cc’d.

Thus the ribbons display looks every bit as astroturfed as we surmised. And it says that either Frost herself or at least some of her direct reports see her as so insecure in her job that she needs to rally her staff behind her. Not a good look.

I hope you’ll circulate this letter.

Letter RE Frost 11-12-18
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  1. The Rev Kev

    “Forlorn hope”
    phrase of forlorn

    a persistent or desperate hope that is unlikely to be fulfilled.
    e.g. “They urged her to stay in the forlorn hope of riding it out”

    1. vlade

      Or a party of soldiers set up to defend the undefendable (it was also used for assault parties, but the defending is more appropriate here) and expected to be wiped out in the process. Or, in the unlikely cause of sucess, make it big (it included criminals sentenced to death who in case of sucess had their execution commuted).

      A junior officer leading a forlorn hope was, assuming survival, guaranteed extra fast promotion.

      1. JacobiteInTraining

        Sometimes there is a transition phase between ‘forlorn hope’ and ‘great success’ for those who actually have the skills to achieve it: the ‘Dismal Nitch’:

        Something tells me Frost is going to eventually find herself there….without much hope in the subsequent ‘great success’ department. (inshallah)

  2. divadab

    Unbelievable how slowly this train wreck is proceeding. A slow drip drip and we know how it will end but institutional inertia and the tendency for organizations with diffuse stakeholders to become management clubs act as a brake to competent action.

    When will the tipping point be reached? We shall see but the problem is more than just the CEO.

  3. Pat

    Do we know who will be replacing Mathur as Board President? Not that the letter should not be enough to strike fear in those who benefit from Frost being in her position, but her loss to someone who is not part of the club removes another backstop.

    There appears to be an increasing level of desperation on this and on the plan to outsource Private Equity looting of the fund. Thanks, Yves!

  4. William Wilson

    I think that the lack of responsiveness to fraud by the political leadership in CA is understandable in light of the example described by Peter Byrne:

    I was somewhat surprised that the powerful CA Democrat leaders would tolerate ripoffs of Native Americans in such a mean fashion; upon reflection, that’s just the way they operate.

  5. EoH

    In my experience, HR staff of large corporations work tirelessly to make their senior executives look good. Part of that is to hide their faults, and to lie about the purposes and import of their actions.

    “No, we didn’t hire that VP and force the resignation of his predecessor to downsize and make dysfunctional the department that most restrains our wants,” is usually confirmation that’s exactly what the new VP was hired to do.

    Same with elaborate, must attend and contribute to the gift birthday parties for a top local manager. Or a wear your ribbon and cheer pity party.

    Top managers worth their salt do not permit such morale lowering stunts. The dysfunction and rumors they generate are a blow to productivity. When people are told to keep their boss happy rather than to work effectively, they know the problem is big, but that their effort will do nothing for it.

    Like Gosford Park’s good servant, good HR staff know their CEO’s foibles and respond to her needs before the CEO knows she has them.

  6. David in Santa Cruz

    I suspect that the Frost social-promotion story will elicit the sympathy of Governor-elect Gavin Newsom, who is severely dyslexic and by his own admission can barely read or write. He has spent his entire life being subsidized — and bailed-out — by his patrons the Getty family. Gavin’s father still manages the Getty trust and famously delivered Paul Getty’s ransom to his Italian kidnappers.

    Gavin will likely have more empathy for a fellow plucky faker such as Frost than he will for the pensioners who will be bankrupted by her charade.

  7. bob

    What pull does Frost have? How did a community college drop out end up as CEO of Calpers?

    Yes, she lied. But I’ve no doubt many others would and could lie to get that job. They’d probably come up with better lies. Who is she related to? Who’s her daddy?

    This question seems relevant. Forgive me if I’ve missed an answer to that in other posts.

    1. jrs

      Yes how do you get that job with “I’m working on a degree” even 100% true. It’s the kind of job where a bachelors PLUS many years of directly relevant and applicable experience would be the minimum qualification with the experience being frankly the MORE important of the two and with the education often being more likely to be a masters than a bachelors.

      “I’m working on a degree” is more like a plus for that accounting clerk job or something … (or they might require a bachelors but that is because of qualification inflation. But CEO of Calpers is an entirely different level of job).

      “Yes, she lied. But I’ve no doubt many others would and could lie to get that job. They’d probably come up with better lies.”

      The majority of people lie on their resume, but if you are going to shoot straight for the top, you better at least be close.

      1. bob

        The Evergreen State College

        Not the top.

        I’ll go ahead and give her every part of her made up resume. Still, how does she get the job?

        Why can’t you ever find a credentialist when you need one?

        There must be something else.

    2. Yves Smith Post author

      She never went to community college.

      She took 2 writing course as a “special student,” meaning she was not working on a degree, so she cannot be called a dropout. And the college in question, The Evergreen State College, is a regular college, not a community college.

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