State ethics officials launch investigation into luxury trips taken by CalPERS staff
State ethics officials launched an investigation Thursday into the private jet trips and other luxury travel that the embattled public pension fund allowed its top investment staff to accept, without public disclosure, from financial firms with whom they were doing business.
The travel, first reported by The Times on Wednesday, was revealed in testimony for pretrial proceedings related to a corruption probe at the California Public Employees’ Retirement System. A senior portfolio manager testified that for years, high-level investment officials jetted around the world on business trips at the expense of the financial firms.
The travel was never reported publicly. The state’s Fair Political Practices Commission, which enforces campaign finance and gift disclosure rules, is now investigating whether laws were broken.
“Based on the story in The Times detailing information about certain CalPERS employees, the FPPC has opened a proactive investigation looking at potential unreported gifts and potential violations of the gifts limits,” said Roman Porter, executive director of the agency.
CalPERS spokeswoman Pat Macht said the travel, which took place before a CalPERS policy change in 2008, did not need to be reported because it was part of the fund’s contracts with the investment firms. CalPERS has never allowed those contracts to be made public, arguing that they contain trade secrets.
Asked if the officials who benefited from the trips also negotiated the contracts, Macht said, “Without a review of each staffer and a contract-by-contract analysis, I am unable to say for certain.”
Experts say CalPERS had a legal and ethical responsibility to disclose the travel.
“The bottom line is: This should have been reported,” said Robert Stern, executive director of the nonprofit Center for Government Studies in Los Angeles.
On Thursday, Ann Stausboll, CalPERS’s chief executive officer, said in a statement that the fund now prohibits staff from receiving gifts of travel from financial firms and that she is directing all staff to review their records to make sure they properly reported all such gifts in the past.
“We will take all necessary steps to correct any improprieties,” the statement said.
Joncarlo Mark, a CalPERS senior portfolio manager, said in a deposition filed in Nevada bankruptcy court this week that it was common for large private equity firms to fly CalPERS investment staff around the world, sometimes for what were described as “one on one” strategic meetings.
He said that he had taken 10 or 12 private jet trips paid for by firms doing business with CalPERS to locations including Shanghai, Mumbai and New York. Financial firms paid for dozens more such trips for him on commercial airlines, he said, often in first or business class.
Mark reported none of the travel in disclosures that government officials must file with the state when they accept gifts valued at more than $50. He testified that he also received gifts of bottles of wine and champagne, chocolates, expensive meals and a toy for his child from CalPERS contractors. None of the gifts were reported on his disclosures.
evan.halper@latimes.com
