Why Is CalPERS Still So Afraid of Elisabeth Bourqui?

Those of you who follow the ever-lengthening chronicle of misconduct by CalPERS’ staff may recall l’affaire Bourqui. CalPERS is acting like it still has an awful lot to hide about her abrupt departure.

In early January, Chief Investment Officer Ben Meng, who had joined mere days before, sent an e-mail which quickly got to the press, that star hire Elisabeth Bourqui, who had joined as Chief Operating Investment Officer in May 2018, had resigned. CalPERS pointedly failed to resort to any of the normal face-saving devices when an executive is pushed out.

Since the defenestration can’t have originated with Meng (he was barely on board and could not have formed an impression of Bourqui), the only other possible instigator is CEO Marcie Frost. The manner of Bourqui’s departure reflects poorly on her maturity as a manager and as a person. Thuggish behavior by a second-tier financial player like CalPERS toward a star recruit will make other high caliber players think twice about joining CalPERS. So Frost did damage to CalPERS…to what end?

As we wrote in January:

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.

So Frost did damage to CalPERS…to what end?

The plot thickened later in January when Bouqui took the very unusual step of appearing at that month’s board meeting with a prominent employment lawyer in tow. Bourqui was seeking an audience with the board, which was obviously a non-starter.

Nevertheless, Bourqui’s bold move sent a clear public message that she thought there was something of significance that the board needed to hear, meaning staff was withholding important information.

As we wrote:

Recall that Bourqui’s sudden departure didn’t smell right….

Even though the Ben Meng e-mail of January 7 started, “Elisabeth Bourqui has submitted her resignation as CalPERS Chief Operating Investment Officer (COIO) effective today,” tellingly, CEO Marcie Frost was using a different formulation to stakeholders on Tuesday: “I didn’t fire her.”

Bourqui’s remarkable public appearance sends a strong message that she didn’t regard her departure as voluntary and intends to Do Something about that. And Frost’s statement is awfully convenient. It leaves open the question as to whether someone else fired Bourqui, or whether she technically wasn’t fired, but was “rejected on probation,” which the term of art for how California civil service employees who have not finished the one-year probationary period are terminated.

However, it does not appear that Bourqui followed up on her saber-rattling. Even though the bar for dismissing an California state employee on probation is very low, one grounds for contesting “rejection on probation” is retaliation.1 And given that the firing was carried out in a manner intended to harm Bourqui (and Frost has a reputation for vindictiveness going back to Washington), it would lend credence to a charge of retaliation.

But judges don’t like people showing up in court who have not exhausted other channels first. If Bourqui were going to go toe to toe with CalPERS, you’d have expected her first to appeal her rejection on probation to the State Personnel Board. The window for Bourqui to have appealed closed months ago.2

So why is what happened to Elisabeth Bourqui still of interest? CalPERS is going to way too extreme lengths to stymie Public Records Act requests about her.

We requested a copy of Bourqui’s resignation letter on January 8. CalPERS made a number of spurious claims for claiming the document didn’t have to be disclosed, when the First Amendment Coalition has explained why that is bogus. It provides case citations, discusses the relevant rulings, and concludes:

Based on the foregoing, Courts have found letters rescinding employment (i.e., termination) were subject to disclosure…

Additionally, California courts however have established a fairly liberal standard for disclosure of public records relating to complaints or investigations of misconduct by public employees.

So in other words, if Bourqui had been terminated and CalPERS had written a letter with derogatory information about her, that would still be disclosable, as in the personnel exemption would not apply. CalPERS’ refusal to produce Bourqui’s letter implies it was not of the “I quit Monday” sort, but had derogatory information about CalPERS, which CalPERS is not entitled to hide.

Although CalPERS is so clearly in the wrong that its refusal to provide the Bourqui letter sets up a comparatively easy Public Records Act suit, it didn’t seem worth the energy and outlay,3 particularly since all it might do is confirm that Bourqui was unhappy about the private equity investment scheme, which seems to be foundering under its own weight anyhow.

But CalPERS is acting guilty as sin regarding Bourqui, which in turn raised the possibility that her resignation letter had a damning bill of particulars about CalPERS leadership. Support for this view comes from the way CalPERS is refusing to cough up documents on a very simple Public Records Act request, which as you’ll see, we sent in on January 7. CalPERS said it would get the response to us on April 17, which already looked like slow-walking the response.

Contrast the three-months plus CalPERS allowed for the production of Bourqui-related documents to the actual response to this Public Records Act request on JJ Jelincic, e-mailed on June 7:

In a bit over two months, CalPERS found all the Jelincic documents, screened them, and sent the response over 11 e-mails, most of which contained 20 to 30 documents.

It is pretty sure that some of the documents were improperly withheld, since CalPERS has a policy of making less than complete Public Records Act request responses, and then coughing up more records when the requester gets ugly. Needless to say, this is not the behavior of a governmental body that believes in accountability and is conducting itself with the best interest of the public in mind.

One tell is the response letter’s invocation of the catchall, Government Code 6255, which “exempts records from disclosure when the public interest in nondisclosure clearly outweighs the public interest in disclosure.” Courts almost without exception reject withholding records based on this “balancing test”. Not only is it tantamount to an admission that the government body has no real basis for hiding those particular documents, but judges are wise to the fact that agencies like CalPERS treat hiding their dirty laundry as somehow being in the public’s interest, when the language is clear that the only thing that matters is the public’s interest, not the agency’s.

But CalPERS would nevertheless at least be taking the time to screen out all of its internal nattering about its efforts to pin the “leaks” tail on the Jelincic donkey via a sham investigation conducted by Lily Becker in the corporate-whistleblower-squasing section of law firm Orrick, in addition to looking for any embarrassing material and then coming up with thin excuses as to why they didn’t turn it over.

That is a long-winded way of saying that if CalPERS could process the Jelincic PRA in two months, there’s no reason for it taking three-plus for the Bourqui documents I requested.4

Except CalPERS isn’t taking three months. We’re now up to eight months plus.

On April 17, CalPERS sent a letter pushing back its delivery date to June 17.

On June 14, CalPERS blew off producing the documents again:

Now it may be that CalPERS has decided to retaliate for my submitting this request on June 3, even though public agencies are subject to the requirement to produce documents on a timely basis, and CalPERS was already not timely. The fact that both sets of records are now set for August 23 sure looks like CalPERS is playing cute:

This isn’t the first time that CalPERS has all too obviously withheld Public Records Act requests in an effort to feather its own nest.

Recall that last July, CalPERS tried to engage in election-rigging. It had set the delivery date for records that would have supported statements that Jason Perez made in his ballot statement in challenging Board President Priya Mathur’s seat for July 31, too late for him to use them to rebut her objection before an administrative law judge.

But the administrative law judge unexpectedly said she wanted to see Perez’s evidence and gave him till August 2. Without going through the gory details, here is the bottom line:

As you can see from the document embedded at the end of this post, the claim that the Public Records Act response was not ready was false. The cover letters are the very last thing to be prepared in the Public Records Act process. The cover letter was dated July 31, showing that the response was ready on July 31 and there was no legitimate reason for delaying its release until August 3. CalPERS is trying to damage control for Mathur’s misrule as Board President.

Mathur lost by a 16 point margin, so CalPERS’ efforts to put its finger on the dial proved futile. But look at the lengths to which they went.

But another way to look at this is that CalPERS’ desperate efforts to hide the Bourqui matter is merely an augury that whatever end they are trying to achieve will fail. As a wag put it, it’s not hard to notice that the rug under which CalPERS is trying to shove things is already awfully lumpy.


1 As we discussed in our earlier post:

But…you might be saying….what if Bourqui really did resign? It’s not so clear cut. California recognizes that there is such a thing as resigning under duress, which in California is called “constructive dismissal” and is categorized in the California Civil Jury instructions as a sub-set of the law on “wrongful termination”.

2 Perhaps Bourqui’s lawyer did such a good job of persuading CalPERS that they’d overplayed their hand with Bourqui and she had a strong case that CalPERS decided to make a financial settlement in return for a gag order. As we discuss soon, Bourqui’s resignation letter is disclosable under the Public Records Act, and on top of that, Bourqui would largely control the one area where CalPERS could argue for redactions, that of personnel privilege. But a cash for release deal should not take all that long to negotiate.

3 If I prevailed, I would have my legal fees and costs reimbursed, but suits also take time and energy, plus some judges are super deferential to state agencies.

4 Dear Matt Jacobs and Brad Pacheco, if you think the answer is to drag your feet on all my PRAs, I can easily establish that you are discriminating against the press in your response time by looking at other PRAs. And bear in mind that a deep-pockets news organization that has won FOIA fights against government bodies much bigger and better lawyered-up than CalPERS is mucho unhappy with your PRA responses and already looking for a point of entry. So it would not be wise to establish a track record that would aid them in litigation.

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  1. diptherio

    Not seeing any embedded docs.

    CalPERS is the institutional equivalent of a two year old vehemently denying that they raided grandma’s candy jar with their face covered in chocolate.

    1. Yves Smith Post author

      Apologies, was going to embed and decided to do screenshots instead. Seeing the CalPERS logo multiple times isn’t a lot of value added. I realized I needed to tweak the post and was about to do that, but you got there first!

  2. Matthew G. Saroff

    Aside from the only innocent explanation that I can think of, a immediate health crisis for Bourqui or her family, what the hell could be going on here?

    Sounds like the machinations of the Corlione family.

  3. The Rev Kev

    CalPERS must be breathing a sigh of relief that Yves is moving to Alabama and not Sacramento itself. That must have been a bullet dodge that. And somebody should be really checking the clocks that they use at CalPERS HQ. They seem to be keeping Brexit time. Every time they have an unpleasant deadline, they push the deadline itself several weeks down the road. Or should that be a cul de sac?
    I have no idea what might be in Elisabeth Bourqui’s letter but you can bet that it will be a beaut. If some incompetent totally derailed my career, I would be out for blood myself and would let them know in my resignation letter. I don’t know what excuse that CalPERS might further come up with the non-release of that resignation letter but at this stage I would designate that excuse as a Consignment of Geriatric Shoe Manufacturers – in other words, a load of old cobblers.

  4. EoH

    The Corleones were better, even discounting that horse’s head in the bed thing.

    Marcy Frost would appear once again to be hiding her dirty linen. As Yves suggests, she is probably hiding how specific Bourqui was in her “departure” letter about how bad for CalPERS – indeed how unlawful, painfully expensive, and uninsurable – Frost’s deeply flawed PE program would be.

  5. David in Santa Cruz

    Sadly, one must always assume that CalPERS management and their shrinking coterie of enablers on the Board of Administration are acting in bad faith and engaging in cover-ups.

    I disagree that a probationary employee needs to exhaust administrative remedies before filing a constructive termination lawsuit. However, it wouldn’t surprise me if CalPERS management were to waste member and beneficiary assets in order to buy Bourqui’s silence. This sort of petty corruption is a way of life in Sacramento.

    Follow the money…

  6. Barry

    In early January, Chief Investment Officer Ben Meng, who had joined mere days before, sent an e-mail which quickly got to the press, that star hire Elisabeth Bourqui, who had joined as Chief Operating Investment Officer in May 2018.

    I think this is an incomplete sentence

    1. Yves Smith Post author

      Aargh I thought I had corrected that but must have had a version control problem (two windows with the same post draft open). Fixed thanks!

  7. flora

    Hmmm, 2 months to answer a foia request for information on a board member – JJ – who had at least 1 year’s tenure; 8 months and counting to answer a foia request for a staff member there less than one year (a lot less than one year). Sure, that sounds reasonable – not.

    Wonder why Marcie Frost was so eager to defend fabulist hire and so quick to push out professionally qualified and honest hire.

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

  8. Clive

    My TBTF’s standard approach even to parliamentary questioning is prevarication, lawyerly manoeuvres and obfuscation. The more there is to hide, the more attempts there are to throw enquirers off the scent.

    CalPERS could end any accusations of “no smoke without fire” by simply being forthcoming in the PRA. To risk looking bad when there’s no underlying problem is just a dumb thing to do. You’d clear the matter up with a straightforward document release. But CalPERS is making out like Incey Wincey Spider fending off accusations from Little Miss Muffit of harassment by saying “talk to my attorney”.

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