With Charges of Bribery and Corruption, CalPERS to Increase Transparency

Middlemen got $125 million from private investment funds for arranging deals with CalPERS.

(January 14, 2010) — Middlemen reportedly earned $125 million in fees for helping funds get business with the California Public Employees’ Retirement System, according to documents released this morning, and the fund giant is expected to step up transparency. It aims to disclose details about the intermediaries who represent investment funds, the investments they promoted and the fees they were paid, the Los Angeles Times reported.


Worry about lack of transparency in the pension fund community exploded last year, when a pension-fund scandal in New York exposed the role of placement agents in bribery and corruption charges, wrote the LA Times. Also last year, news broke that Alfred J.R. Villalobos, a former CalPERS board member, was paid millions more than disclosed for helping private equity firms obtain CalPERS investment business.


The disclosure reveals how Wall Street firms bribed middlemen to gain access to CalPERS, the largest U.S. public pension with assets under management totaling more than $200 billion.


“Gathering information is not enough,” said Anne Stausboll, CalPERS chief executive officer, to the LA Times. “We remain firmly committed to pursuing a full and fair examination that the special review will provide, and to backing legislation that would remove contingent fee arrangements and require placement agents to comply with the same rules as lobbyists.”

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742