State Comptroller Thomas P. DiNapoli
Statement on Pension Fund Investigation
“I am outraged by the criminal acts that occurred during the Hevesi Administration. Anyone who has violated the law and the public trust must be held accountable.
“As the Attorney General’s investigation has revealed, I inherited a mess. But it is a mess that I have fixed. I have thoroughly and methodically evaluated and reformed the operations and investment policies of the Pension Fund.
“While some public officials have touted proposals of varying merit, I have ended the potential for the shameful corruption that had plagued the Pension Fund. I have banned placement agents and lobbyists and ended “pay to play” in the pension system. I continue to urge the SEC to implement a national ban on “pay to play."
“I have managed the Office of the State Comptroller and the New York State Common Retirement Fund with transparency and integrity from the start of my tenure. Any suggestion or innuendo to the contrary is baseless.
“The Attorney General was asked today whether I have been interviewed as part of this investigation. The answer is no.
“I have built my career in public service on honest and ethical behavior. My decisions and reforms protect the interests of the one million members of the New York State Common Retirement Fund and the taxpayers.”
Background Information: Reforms Implemented by DiNapoli Since Taking Office
Changed the Way the Fund Does Business:
- Banned pay-to-play practices by issuing in September 2009 an executive order that prohibits the Fund from doing business with any investment adviser who has made a political contribution to the State Comptroller or a candidate for State Comptroller. The ban, which closely parallels proposed Securities and Exchange Commission (SEC) regulations, will last for two years from the date of the contribution.
- Banned the involvement of placement agents, paid intermediaries and registered lobbyists in investments with the Fund. The ban was implemented in April 2009 and includes entities compensated on a flat fee, a contingent fee or any other basis;
- Created a Pension Fund Task Force to review the practices and policies of the Fund chaired by Shannon O’Brien, the former Massachusetts Treasurer;
- Expanded internal and external vetting, review and approval of all investment decisions
- Formed a special commission, headed by former NYC-Mayor Ed Koch and Wall Street guru Frank Zarb, to review operations of the Office of the State Comptroller (OSC);
- Created a mandatory ethics training program for all staff, including the Comptroller;
- Drafting legislation to codify the pension fund reforms to eliminate the potential for abuse in the future.
Strengthened Oversight of the Fund:
- Partnered with the State Insurance Department to develop new regulations governing the operations of the Fund;
- Hired an independent consulting firm to conduct a compliance review of every transaction approved by DiNapoli since he took office in February 2007;
- Hired an outside law firm and an independent investment consulting firm to review Fund investments with firms under investigation by the New York Attorney General and the SEC;
- Created Inspector General position as recommended by the Koch-Zarb Commission, to monitor and review investment transactions and the activities of the Comptroller and all OSC employees;
- Hired Special Counsel for Ethics to monitor and review investment transactions and to develop and implement a comprehensive ethics program.
Increased Transparency in Fund Transactions:
- Releases monthly reporting on investment transactions completed by the Fund since February 2007, including placement agent and intermediary information where applicable;
- Publicly announces pension fund performance quarterly instead of annually;
- Initiated a comprehensive review of all Fund external consultants and the development of a more comprehensive pool of external consultants.
Proposed Campaign Finance Reform:
- Comptroller DiNapoli also proposed Campaign Finance Reform legislation for the public funding of Comptroller campaign in 2010 to eliminate the opportunity for candidates to be influenced by wealthy donors and other interests. Even without changes in the law, DiNapoli has voluntarily limited the contributions to his campaign to less than one-half the legal limit.