The California Public Employees' Retirement System has begun automatically deleting any emails older than 60 days, raising concerns among watchdog groups that the giant pension fund could be destroying evidence of misdeeds.
CalPERS has been under state and federal investigation over allegations that former executives and board members improperly influenced the fund's investment decisions and strong-armed a medical benefits vendor to retain a former board member as a consultant, according to an internal review ordered by the fund and released in April.
The email deletion policy was put in place last year but was disclosed only recently in response to a Public Records Act request from the Los Angeles Times.
Under the policy, the nation's largest public pension fund ordered its 2,300 workers to save only those emails with "administrative, legal or archival requirements" — but left it up to them to decide exactly what documents to ditch. Any emails older than 60 days would be deleted automatically.
CalPERS said its retention policy was aimed at "removing obsolete and/or extraneous records" from its email system. It is similar to a decade-old practice that the fund appears to have largely ignored and, for a time, not used.
Brad Pacheco, the fund's spokesman, said the reason for the policy was "a system capacity issue" — servers simply were jammed with old emails.
But Terry Francke, general counsel for Californians Aware in Sacramento, questioned why the policy was activated "in the midst of several investigations that would be otherwise combing through emails."
The fund's own internal review released two months ago cited emails going back at least seven years as evidence of misdeeds among CalPERS executives.
"I think that at the very least, it puts the burden on the agency to explain the timing," Francke said.
The fund's policy contrasts with one that Alaska instituted in 2009, a month after then-Gov. Sarah Palin resigned. That state keeps emails a minimum of 90 days and trains employees on the types of messages that should be saved.
On Friday, Alaska released 24,000 emails related to Palin's short-lived tenure — a 31-month period that generated "a tsunami of Freedom of Information requests," state archivist Dean Dawson said.
Email retention policies are commonplace at large corporations, although less common at government agencies where emails are considered public records.
Dealing with tremendous volumes of emails, the most ubiquitous form of workplace communication, has become a challenge for government agencies and businesses seeking to save money by easing demand for more servers and computer hard drives.
CalPERS' emails contain both sensitive and routine information about investments, personnel, individual retiree accounts and legal issues, among other matters. It has a $237-billion investment portfolio to cover benefits for 1.6 million retirees and healthcare for 1.3 million members.
But emails are playing a greater role in civil and criminal investigations since their importance was shown in several high-profile cases.
The old Arthur Andersen accounting firm was convicted in 2002 of obstruction of justice for destroying documents related to the scandal that brought down energy trading firm Enron Corp.
And investment banker Frank Quattrone was convicted a year later of interfering with a federal government probe in a case based mainly on emails. Both convictions were later overturned on appeal.
At CalPERS, emails have been a key to the fund's own internal review — as well as to investigations by the U.S. Justice Department, the Securities and Exchange Commission and the California attorney general's office — of alleged unethical or illegal activities involving board and staff members.
CalPERS' internal investigation of alleged pay-to-play corruption alleged that former board member Alfred J.R. Villalobos improperly influenced insiders to win contracts for private investment managers he represented, cashing in on more than $50 million in consulting fees.
The 17-month investigation also alleged that former CalPERS Chief Executive Federico Buenrostro Jr., along with two former board members, strong-armed a pharmaceutical benefits firm to pay more than $4 million in fees to Villalobos, who later hired Buenrostro.
"If this policy had been fully in effect during those years — and we presume that it was not — many important and relevant documents demonstrating the scope of the problem, and ultimately, the excessive payments and fees would never have surfaced," said Peter Scheer, executive director of the First Amendment Coalition in San Rafael, Calif.
Scheer's group has filed two lawsuits under the California Public Records Act that forced CalPERS to release information about billions of dollars in private equity investments and a failed $100-million real estate deal in East Palo Alto, Calif.
Government agencies, as well as private companies, could avoid much of the hassle over emails by putting in place comprehensive email retention programs, said Benjamin Wright, a Dallas lawyer who consults on data security and records retention policies.
But they must craft them carefully, Wright said, especially when it comes to determining time limits and employee involvement.
Judges are wary of institutions that "can't keep a whole lot of email longer than 60 days," he said. They "can come to the conclusion that the actual purpose of the 60 days is not a business purpose to save money but, rather, to position the enterprise to avoid litigation."
Karl Olson, a San Francisco lawyer specializing in Freedom of Information Act lawsuits, called the 60-day limit "fishy."
"For a public agency, it seems like a pretty aggressive deletion policy," said Olson, who represented The Times last year in a public records lawsuit that forced the pension fund to release about 2,000 documents dealing with private equity investments.
Training also is needed to make sure employees have clear ideas about which documents to save, said Sue Trombley, director of consulting for Iron Mountain Inc., a Boston information management services company.
"At the end of the day, if you are relying on employees to declare something a record and put it somewhere, you're kind of at the mercy of them knowing how to do that," she said.
Training at CalPERS was minimal, according to current and former employees.
"We've always had a records retention policy, but I don't think anybody paid any attention to it," said J.J. Jelincic, a veteran CalPERS investment officer who also is a board member. "I would venture to say that if you asked 50 people here, 48 couldn't tell you what that policy is."
California leaves retention policies up to each state agency and provides little or no direction or training. Alaska, on the other hand, has set up a statewide procedure and has trained employees.
Although Alaska's policy calls for automatically deleting routine, non-record emails after 90 days, the automated function has yet to be turned on, said Michael A. Barnhill, a lawyer with the state Department of Administration.
"We're being careful and prudent" about deleting messages, Barnhill said. "Here in Alaska, we've been in the center of some media attention the last few years, and prudence is where we want to be."