CalPERS Star Hire Elisabeth Bourqui Resigns Suddenly After Only Eight Months, an Indictment of CEO Marcie Frost; Insiders Speculate Private Equity Was the Cause

It’s becoming harder and harder for CalPERS to hide its dirty laundry.

Last May, Elisabeth Bourqui joined CalPERS as its Chief Operating Investment Officer. Bourqui had an extremely impressive background and if anything was overqualified for the role,1 to the degree that some thought she might be a Chief Investment Officer in waiting.2

Bourqui departed suddenly on Monday, with interim replacements Dan Bienvenue and Eric Baggesen taking up her duties.

It is hard to convey adequately how badly this resignation reflects on CEO Marcie Frost. It confirms her inability to attract and retain competent professionals. Recall that Frost not only hired but doggedly defended resume fabulist Charles Asubonen, who was booted shortly after CalPERS did what it should have done when we presented Frost and the board with detailed documentation of his fabrications.

For such an accomplished professional as Bourqui to join CalPERS said that the institution still had enough cachet to attract top people. Her unceremonious exodus is sure to give pause to anyone capable that CalPERS tries to recruit for a senior position.

The fact that Bourqui left without any transition or advance warning means it is well nigh certain that she had a dispute with Marcie Frost. Recall that the departures of the head of private equity, Real Desrochers, the former Chief Operating Investment Officer Wylie Tollette, and Chief Investment Officer Ted Eloupoulos were all announced in advance.

Initial reports indicated that Bourqui was well liked and well respected by employees, so it seems inconceivable that her performance was sub-par. It seems pretty clear what the real issue was. As one said:

There is no way this is not about private equity.

And from another prominent stakeholder:

This is bad. She was honest.

It was part of Bourqui’s job to assess investment risks and operational implications. Just as her predecessor Wylie Tollette regularly discussed private equity fees and costs with the board in public session, and presumably in private too, cost and operational issues related to the new private equity scheme would have fallen to Bourqui.

CalPERS’ staff has been forced to ‘fess up, late in the game, to expectations that argue for ditching the private equity plan: that it will have higher expenses in the early years and will also earn less. Worse, General Counsel Matt Jacobs gave the apparent real reason for CalPERS’ determination to push through the program anyhow: that it will enable CalPERS to reduce disclosure.

So the giant pension is hell bent to get this program launched even though it has admitted it will hurt beneficiaries, just because staff wants to escape press and public scrutiny. The board, the senior staff, and the professional advisers on this scheme have just put a monster target on their backs. Expect a big ticket breach of fiduciary duty suit a few years down the road if the board is so foolish as to approve this scheme.

Bourqui previously headed Mercer’s National Funds Group in Montreal, meaning its public pensions group in Canada. She is certain to have first-hand knowledge of the Canadian public pension funds’ successful efforts to bring private equity in house. With the benefit of hindsight, it is noteworthy that CalPERS made non-PE expert John Cole the front for this initiative, and never let Bourqui present about it or take questions from the board in open session. If she was also kept away from the board in closed session, that would be a monster red flag.

As a former CalPERS senior officer wrote:

I was really impressed when CalPERS announced Elisabeth’s hiring just a few months ago. She appeared really well qualified and a real catch for them. So the fact that she is out after only a few months is a bad sign no matter how you cut it.

I think there are two possibilities, both troubling:

1) As a competent, sophisticated individual, Elisabeth raised concerns about the PE plan and Marcie couldn’t stand to be contradicted so essentially fired her; or

2) As a competent, sophisticated individual, Elizabeth looked around at what a joke CalPERS has become, which she didn’t expect based on its old reputation, and figured she needed to quit before she got caught up in the bad stuff.

The fact that her resignation was effective immediately is a terrible sign. It means that Marcie didn’t want her in the building, which probably is because Marcie didn’t want any board members to be able to talk to Elisabeth and ask her why she is leaving.

Axios focused on the fact that high turnover is a sign of institutional weakness at CalPERS, but if anything, the truth is likely to be worse. Given Marcie Frost’s fondness for shows of fealty in the form of burgundy attire and ribbons, it’s all too obvious that she values personal loyalty over professionalism and doing the right thing for beneficiaries and California taxpayers. Frost’s misrule is diminishing CalPERS’ competence and reputation. But as long as she is accountable to only a captured, cronyistic board, she may wind up crashing and burning the institution before anyone is willing to oust her.


1 From the CalPERS announcement:

Bourqui has more than two decades of experience with pension asset management, consulting, and investment banking. She currently is the head of pension assets and liabilities management at ABB Group. Prior to ABB Group, she was an investment consultant with Mercer specializing in public and private pension funds.

Bourqui holds bachelors and masters degrees in mathematics, and a PhD in mathematics and financial mathematics, from the Swiss Federal Institute of Technology, Zurich. She also is a member of the Swiss Society of Actuaries. She is fluent in French, English, German, and Japanese. In 2017, Bourqui was one of the winners of Chief Investment Officer Magazine’s Industry Innovation Award, and was recognized by IPE in its Pension Fund Achievement of the Year category at its annual awards ceremony.

2 Bourqui did apply for the CIO position. Since she did not have an investment background, the idea that she might have been led on during the hiring process and then resigned when the promotion did not come through seems far fetched, particularly since she had moved her family to Sacramento. It would be imprudent to have relocated if she planned to stay with CalPERS only if she won the CIO position after Ted Eliopoulos left.

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  1. Carey

    “..resignation was effective immediately” seems, um, unusual for a top-level hire.

    Wonder when CEO MarcieFrost will weigh in

    1. vlade

      That happens only for a few very specific reasons:
      – gross misconduct.
      – unable to be in the same room as the boss

      In other words, not a good departure in either case.

      Even for immediate and critical family reasons, the company usually grants gardening leave or something similar as a good-will gesture to the leaving person.

    1. Yves Smith Post author

      No, public agencies aren’t allowed to do that. I am told, CalPERS could have gagged Bouqui only via a settlement agreement which would have required paying Bourqui some consideration, and that would have had to have gotten board approval. Given the timing (the last board meeting was in December) this seems unlikely. Plus the staff could not bind Bourqui not to speak to its governing body.

      The board ought to give Bourqui an interview with staff not in the room. Even though the assumption among insiders and the stakeholders who have heard about this so far is that Bourqui was or was threatening to be too candid about private equity risks, she could have found some operational irregularities or improprieties in the investment operation and Frost got rid of her to shut that down.

      But this board is so captured by staff I don’t see that happening.

  2. Clive

    In the corporate world, c-level execs make managing their resumes a top priority.

    Leaving, unannounced and unplanned looks bad for Bourqui because operating at this level isn’t like quitting working at a coffee shop while you’re paying your way through college. When the headhunters come calling and try to line her up with a new position elsewhere, at the very minimum you have to come up with a convincing story or at least some not ridiculous talking points. Other competing candidates won’t have that kind of baggage to have to lug around. So Bourqui either leaving or being pushed out has to be mired in some sort of unpalatable squabble.

    As the post says, Bourqui could have been asked to sign up to some course of action or other which failed her smell test (and let’s be honest here, if you’re intent on playing the usual games which go on in the c-suite, you have a higher tolerance for malodorous airs than the rest of us, so whatever it was was pretty yucky) or else Marcie flounced around and fires her for some perceived slight or misdemeanour. Or simply because Bourqui was a threat.

    Those of us who have had to try to carry on and attempt to be vaguely functional in the face of this kind of dysfunctional environment know all too well how it is completely toxic from top to bottom and it touches everything that goes on. New projects and essential business-as-usual activity gets halted or stymied if it is deemed to be in the fiefdom of — and thus advantageous to — the “wrong” faction. Any new initiative isn’t evaluated on its merits, but instead whether it will benefit or hamper whatever favourmongering is in play. Backstabbing, turf warfare, deliberate putting of spanners in the works, bullying, retribution — these become quickly embedded norms.

    The culture at CalPERS will be rotting away right now, if it isn’t already completely rotten. A warning to the state government: remember the S&Ls, Enron, the scandals and frauds at To Big To Fail banks, the unfolding disaster that is PG&E? You’ve got and you had plausible deniability about your responsibility for these. CalPERS is your baby. It’s got your name on it. If you seriously think that there isn’t distinctly unpleasant blowback being fermented at CalPERS right now with your name on it, then you’ve spent too long in the California sunshine and it’s melted your brains.

  3. The Rev Kev

    There is no doubt that Elisabeth Bourqui is a highly intelligent, qualified person and at 44 years of age, has still got a long career ahead of her. And as Yves pointed out, you don’t move your family to a new job unless you are there for the long term. She must have known about CalPERS’s, uhhh, reputation so perhaps she had the idea of reforming the investment arm of CalPERS and put it on a sound financial footing. If she managed to turn CalPERS around here, that would be quite a feather in her cap and do heaps for her reputation. If this was the case, then things went seriously off the rails. You do wonder.

    CalPERS wants soon to get two $10 billion turds, put them into a brown, paper bags, stack them on the door of the financial world, set them on fire, ring the door bell and then run away. The only thing is they they would arrange to have the people who signed off on these burning turds still standing at the doorway. I suspect that the Chief Operating Investment Officer would be up front and center on this one.

    Perhaps there is reputational damage done to Bourqui but nothing like would be the case if she stuck around and had her name attached to CalPERS’s hare-brained scheme. Perhaps there was a donnybrook between her and Frost which led to her leaving CalPERS. In the long run though, this might be a blessing. If her job was more responsibility than authority, then that is just being the person set up to take the rap. If I was her, there would only be one response on my part if this was the situation-

    1. Clive

      Yes, this is a very salient point — Bourqui is bound to have run the numbers on leaving but incurring a reputational damage hit vs. staying and potentially getting hit with probably career-ending fallout when it (whatever “it” is) all went bad. She chose the former, so the latter must have been very bad stuff indeed.

      Unless of course Marcie simply fired her in a fit of pique. But any replacement for Bourqui who, unwisely you might think, was considering going for the job, would be sure to ask a lot of questions and sound out their own network before stepping into that kind of snakepit. Which limits the number of Greater Fools who might take a punt on joining the happy band of compadres at CalPERS and thereby embeds the lack of qualified and experienced people which CalPERS suffers from.

      1. vlade

        Well, from Marcie’s perspective, it’s a win-win. She gets rid of a competenet senior person, and discourages any potential future competent replacements, indicating that wearing burgundy to the interiview is good enough to get the job.

        What’s not to like there?

        1. Anon

          What’s not to like? Well, for CalPERS beneficiaries a future full of reduced pension benefits.

          CalPERS is unlikely to find investment returns to offset it’s current funding shortfall, and if this circus of hirings/firings continues the shortfall is likely to get worse.

      2. The Rev Kev

        Regarding “it”. Could “it” be that the long term plan for Frost and her controllers is to completely privatize CalPERS by having it flogged off on the open market? You are talking about a lot of money here – about $360 billion in assets – which would be a tempting idea to Californian politicians. And by having it completely privatized, it would no longer be subject to such annoyances as Californian laws. I am sure that Wall Street would consider it a great idea too. For those at the top at CalPERS, I am willing to bet that there would be a good payout as well in gratitude.

      3. PlutoniumKun

        In my limited experience of this type of thing, once one ‘good’ high profile person leaves a rotting ship, it provokes a rush to the exit door – partially it crystalises the situation for the others who are hanging on, hoping for an improvement – it also gives a certain resume cover for those worrying about getting another job. Once it becomes known in an industry or sector that Organisation X is rotten to the core, then it can be seen as a positve, not a negative point that someone has voluntarily exited before the ship goes down. You can portray yourself as someone who tried their best in a bad situation, but did the honorable thing once it was clear there was nothing any individual could do. Its those people who cling on who end up tainted.

        So I suspect that this could well be a signal for those within Calpers who have integrity and a good personal track record (I’m assuming there are some of them) – to bail out, even if they don’t have another job lined up.

        But as Vlad suggests, this could be exactly what some insiders want. They can fill those places with stooges.

        1. Clive

          Ordinarily, yes, us mere mortals would be talking to our lawyers. But keep in mind that, at the levels of the Bourqui’es of this world, you nev-ah ev-ah start slinging mud in public. I can’t think of a single instance where a c-level exec in the realms of the size of organisation we’re talking about here has dragged their former employer through the courts in an unseemly display of public rancour. It is a threat that you use to add leverage to any out-of-court settlement. But it’s a button you don’t go pushing, unless you don’t intend to work in a similar position elsewhere again.

          If this is down to Marcie acting in a egregious and capricious manner, which you would not rule out, it’s vaguely possible Bourqui might get lawyered up with a serious view to making a public case in the courts over this. But it’s a 1000-1 shot.

        2. Yves Smith Post author

          No, she’d been there less than a year and so was on probation. And Bourqui resigned as opposed to was (formally) fired (or as the term of art goes “rejected during probation”). Plus people at her level almost never sue.

          It is possible that Bourqui did resign of her own volition, but she would have given notice, and Frost instead pushing her out immediately says Frost wanted to cover something up.

        3. EoH

          For a C-level executive, suing a former employer, even when abundantly in the right, is a career-limiting move. The usual recourse is, instead, to negotiate a higher severance. Bourqui’s leverage is that no one wants to avoid washing this linen in public more than Marcie Frost.

          1. Jim A.

            Yes, she is too young to want to burn all bridges behind her. Better to get a reputation of being able to see a bad situation and GTFO but still keep mum.

  4. flora

    The wrong person resigned.
    Why is Frost still there?

    Thanks for your continued reporting on CalPERS, PE, and pensions.

    1. flora

      There could be a very interesting story here, for any CA newspaper reporter willing to ask questions. imo.

  5. EoH

    I could not agree more that Bourqui leaving immediately means that Marcie Frost demanded it.

    An immediate departure, often a theatrical (because of its low-key pretense) escort from the building, is often about institutional ass covering, an attempt to hide a corporate mistake or action that reflects badly on the institution. A quick exit will be witnessed by few, but when it is a higher up and about a matter of principle, the repercussions reverberate widely.

    An employee rarely, if ever, chooses that form of departure. It’s even rarer at the C-suite level, which I presume Bourqui would have been as the deputy head of investments.

    Frost could not allow Bourqui to talk to the troops or to the board. C Suite types typically closely guard their negative attitudes about corporate events, but Bourqui’s direct reports were probably well-informed about her position on and feelings about what was taking place. Many others would not. They will now.

    Board members, however, would have been remiss – again – in not inquiring why they were not hearing Bourqui’s views or seeing her involved in such a large project that directly implicated her responsibilities. This stupid personnel action reinforces how unqualified Marcie Frost is to lead CalPERS.

    California desperately needs to revise the oversight structure for its large pension fund. Its government needs the authority to step in under exceptional circumstances in order to hold the board and ceo accountable for things they are about to do as well as those they have done. Otherwise, the legislature, taxpayers and pensioners will pick up the tab. The knock-on effects of having to do that after the fact will be multiples of the direct cost of fixing the screw ups of this board and ceo.

    1. Yves Smith Post author

      This is a public agency, not a public company. You are drawing the wrong analogy regarded being escorted from the building. They didn’t do that and wouldn’t do that. Making it clear she was to be out pronto and not come back is shocking enough for someone at her level.

      As indicated in the post, senior people who resign are normally given a long lead time between the announcement of their departure and when they are out the door. What happened here is so unusual as to raise huge red flags in addition to the ones your infer from the large company context.

      1. EoH

        We agree and that was the point of my comment. This is unusual and self-destructive of CalPERS.

        The long lead times ordinarily made available to senior officers prior to their leaving, even were there cause for their departure (none is evident here), serve many purposes. One is to dissociate in the minds of the public and institutional observers the real reasons for it. Here, Ms. Frost has deftly achieved the opposite effect.

        Dr. Meng, the new CIO to whom Ms. Bourqui would have reported, seems too experienced to have been responsible for this dramatic departure, which leaves the wreath at Ms. Frost’s door.

  6. Tom Stone

    Marcie Frost is going to be asked about this departure both in public and more or less in private.
    Based on her handling of Chuckie’s inadvertent misstatements on his resume’ her responses could be quite amusing.
    The timing is important, the Newsome gang is taking over and there is always a lot of jockeying for influence and power when there is a succession.
    Prepare to be boggled!

    1. tegnost

      newsome should remember what happened to gray davis and slam the door on this $#@tshow.

      from wiki…
      Davis giving a speech on energy
      In a speech at UCLA on August 19, 2003, Davis apologized for being slow to act during the energy crisis, but then forcefully attacked the Houston-based energy suppliers: “I inherited the energy deregulation scheme which put us all at the mercy of the big energy producers. We got no help from the Federal government. In fact, when I was fighting Enron and the other energy companies, these same companies were sitting down with Vice President Cheney to draft a national energy strategy.”[51]

      When the Enron verdicts were rendered years later, convicting Enron and other companies of market manipulation, Davis responded with the following quote:

      “ Ken Lay and Jeffrey Skilling, more than anyone, are the reason I’m talking to you now from this law firm.[9]

      instead newsome will be saying
      Marcie Frost and Larry Shonsini more than anything are the reason I’m talking to you from…

      1. XXYY

        It’s a good point that Newsom has an opportunity to act here by virtue of being the “new guy”. Outgoing governor Brown either seemed or was uninterested in the problems at CalPERS, perhaps fearing he would be implicated or at least associated with whatever problems emerged.

        Being the new guy has its problems, but also its opportunities.

        1. flora

          Being in the same party as the outgoing gov, he’s unlikely to want to highlight problems in his own party’s management of CalPERS, imo.

      2. Paul P

        By now, I would think Calipers contributors would be FaceBooking and emailing these articles, contracting their public officials, and starting to

        Newsome could not only avoid being Gray Davised, he could look
        statesmanlike by doing something about this.

        How much does an ad cost to place Yves in a major CA newspaper?

        1. Fiery Hunt

          I know of several city employees of an East Bay city who are following the ongoing saga, re-shared stories I’ve sent from NC and who vote!

          So, yes, beneficiaries are starting to russle…

    1. flora

      Interesting para in that article about Eliopoulos being hired by Morgan Stanley as vice chairman :

      Eliopoulos left CalPERS in mid-November to move to New York, where his daughter is attending college. He subsequently joined Morgan Stanley as vice chairman of investment management and head of strategic partnerships, starting this month.

      1. Yves Smith Post author

        Vice chairman of a division.

        Vice chairman is usually a close to honorary post with little/no authority. At best, an over-the-top title for marketing purposes. The lone exception I can think of was the then Citibank in the early 1980s, where the vice chairman was responsible for deregulation.

          1. vlade

            Banks are up there on title-logy. There’s so many Vice-Presidents, Directors, Executive Directors etc.. you can pretty much ignore them all. Managing Directors can cover still quite a large responsibility differences, so even that has to be looked at carefuly.

            And don’t get me started on “Head of” titles..

      2. David in Santa Cruz

        Could it be that this “title” is merely in place so that Morgan Stanley can assist a strategic partner in laundering payola?


  7. shinola

    “This is bad. She was honest.”

    Although this quote is attributed to a “prominent stakeholder”, it could have very well been Ms. Frost’s thinking also.

  8. Susan the Other

    So admittedly, CalPERs is doing their own customized PE deal to “reduce disclosure” because there – theoretically – will be less risk to disclose because they will be the limited partner. Huge breach of public fiduciary duty. Especially since the prospectus on all this nonsense is fabulist as well. Why isn’t this being shut down? It’s unbelievable. Hello State of California, are you as stupid as Marcie or is she just your scapegoat?? So Marcie’s “captive general partner” scheme to bring PE in-house is more like a scheme to ferret CalPERs $360bn to an outhouse. But just how does this nonsense fly at all? And how did Bourqui, as smart and qualified as she is, get sucked in? More importantly then is how did Bourqui and her colleagues at Mercer successfully bring PE in-house? Did they also abdicate all fiduciary responsibility? What is the difference between Mercer’s and CalPERs in-house plan?

  9. David in Santa Cruz

    There can be no coincidence between the leak to Bloomberg and Dan Primack at Axios that the “fix” is in for Mister-Conflict-of-Interest Sonsini’s two Silver Lake pals, Roux and Grosser, to run the Black Box that is CalPERS Direct, and the sudden defenestration of the highly-qualified finance manager Elisabeth Borquez. This stinks of, “It’s them or it’s me.”

    I was an acquaintance of former-Governor Gray Davis during the period when he was forced out of office over the Enron/Duke shock-doctrine “crisis” that wasn’t of his making, but that blew-up on his watch. Governor Gavin Newsom had better understand that while his party has been the beneficiary of the piratical looting that has been going on over at CalPERS, the day of reckoning is likely to be on his watch. Davis never returned to politics.

    Follow the money…

  10. anonymous

    citing the link
    “Sources tell CIO that CalPERS new Chief Investment Officer Ben Meng announced Bourqui’s departure in a staff memo on Monday. Meng started last week at CalPERS.

    It is not clear if Meng requested Bourqui’s resignation, so he could place his own candidate in the spot, the No. 2 position in the investment office.”

    Bourqui “resigned” soon after Meng arrived. Does anyone have any color on Meng’s role in this?

    1. Mickey Hickey

      I expect the new broom sweeping clean guff was the straw that broke the camel’s back. Particularly since Bourqui is spectacularly well qualified for her job. The well rounded facility for languages and industry prizes received are indicative of a highly gifted individual. She will be picked up quickly by a Canadian company who will be lucky to have her.

    2. EoH

      Having spent three years immediately prior to this CalPERS appointment running one of the PRC’s most important financial agencies, and being a dual national, I assume that Mr. Meng will recuse himself from any investments by CalPERS in PRC owned or controlled vehicles.

    3. Yves Smith Post author

      A seasoned financial services industry pro confirmed my take, which is the only way a new exec ousts a #2 immediately upon joining is:

      1. If they had a personal history of being enemies

      2. If his boss told him to do so.

      So again, all roads lead to Marcie.

  11. Warren

    The CalPERS Board of Administration will do nothing. The Board is a cabal of employee union hacks and politicians bent on securing golden benefit plans at any and all risk. Only another catastrophe like the great recession will drive change from within.

  12. Anonymous

    Any updates on why the COIO resigned? Any further development if the board or execs will be investigated? Marcie?Governor Newsom needs to get ahold ASAP!

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