Independent Pension Fund Task Force Releases Report
DiNapoli: Many Reforms Already Implemented; Reforms Will Continue
New York State Comptroller Thomas P. DiNapoli today accepted and released the report of the Pension Fund Task Force, an independent advisory panel created in December 2007 to review the practices and policies of the New York State Common Retirement Fund (CRF). DiNapoli also announced that Mercer Investment Consulting, Inc., an independent consulting firm, will conduct a compliance review of every transaction approved by DiNapoli since he took office in February 2007, including those covered under the new regulations and procedures instituted by DiNapoli and the State Insurance Department.
The creation of the Task Force was part of DiNapoli’s on-going reform efforts in the aftermath of the alleged corruption that took place during the former Comptroller’s administration.
“We didn’t wait for the Task Force to finish; we’ve already implemented a number of reforms designed to address the transgressions of the previous administration,” DiNapoli said. “We’re already providing as much and in many cases more public disclosure and transparency about our transactions as any other public pension fund in the nation.
“The Task Force report not only affirms the reforms we’ve already made, but also give us a road map toward guaranteeing the highest level of transparency and ethics in the management of the CRF. And this is not the end; we’ll continue to examine everything we do and we’ll make reforms where we need to.”
There are six members of the Task Force: Chair Shannon O’Brien (former Massachusetts Treasurer); Wale Adeosun (Chief Investment Officer, Rensselaer Polytechnic Institute); Peter Clapman (retired Senior Vice President, TIAA-CREF); Wayne Diesel (former New York State Budget Director); Alan Lubin (Exec. Vice President, New York State United Teachers); and Diana Taylor (Managing Director, Wolfensohn & Co.).
“The Task Force compared the CRF with public pension fund peers across the nation,” O’Brien said. “The CRF is already operating under best practice policies and is one of the most transparent public pensions in the nation. And Comptroller DiNapoli has committed to pushing forward with even more reforms. It’s rare that an elected official would so willingly open up his agency to the kind of scrutiny the Task Force pursued. But the Comptroller not only welcomed that scrutiny, he invited it. And he’s already agreed to implement the Task Force recommendations.”
In addition to making recommendations, the Task Force reviewed and endorsed the reforms DiNapoli had previously implemented. The Task Force recommendations include:
- Quarterly reporting of CRF’s investment results;
- Publication of CRF policies, procedures and guidelines on the Comptroller’s Web site;
- Make permanent DiNapoli’s placement agent and intermediary disclosure policy to ensure transparency in future administrations;
- Expand and strengthen external advisory committees to enhance external review of investment procedures and decisions;
- Appoint CRF compliance officer with independent reporting powers to ensure policies and procedures are followed; and
- Review and evaluate all existing consultant relationships.
Prior reforms implemented by DiNapoli include:
- The issuance of an Executive Order on Ethics to clearly define appropriate behavior by Comptroller staff;
- The creation of the position of Inspector General;
- The appointment of a Special Counsel for Ethics;
- Mandatory ethics training for all staff, including the Comptroller. Investment staff received specifically designed training;
- Implementation of a new placement agent review process to prevent conflicts of interest by placement agents and other paid intermediaries in investment transactions;
- Review of all investment transactions by the Inspector General and the Special Counsel for Ethics;
- Monthly reporting on investment transactions completed by the CRF since February 2007, including placement agent and intermediary information where applicable;
- Initiated a comprehensive review of all CRF external consultants and the development of a more comprehensive pool on external consultants; and
- Partnered with the State Insurance Department to develop new regulations governing the operation of the CRF.
DiNapoli also noted that he has introduced legislation to provide public campaign financing for the 2010 State Comptroller’s race and he has implemented self-imposed limits on his campaign fundraising, limiting contributions to less than one-half the legal limit.
DiNapoli, who took office in February of 2007, implemented a series of reforms almost immediately after taking office (see chart attached), and has continued to implement reforms while awaiting the Task Force report.
DiNapoli noted that in addition to his reforms, his office has been cooperating with the Office of the Attorney General’s ongoing investigation into the Hevesi administration. To date, DiNapoli’s staff has provided the Attorney General’s office 6,785 separate documents, totaling approximately 100,000 pages, along with approximately 80,000 e-mails. DiNapoli said his office’s cooperation for the retention of e-mails alone, has cost $200,000 to date.