US - New York state comptroller Thomas DiNapoli will have some company as he leads the state's US$116bn pension fund if a new legislation calling for the abolition of the single-trustee model is passed.
New York state attorney general Andrew Cuomo yesterday introduced legislation to create a board of trustees to oversee the New York State Common Retirement Fund. DiNapoli currently serves as a single trustee.
The legislation comes as the comptroller and attorney general investigate wide-spread abuse at the state retirement fund surrounding pay-to-play schemes involving the previous comptroller Alan Hevesi.
Cuomo said: "For decades, the state pension fund has been weakened and corrupted by the sole trustee model."
He added: "The model has allowed pay-to-play to flourish in a system meant to protect the retirement accounts of thousands of hard-working public employees. To put it simply - the model doesn't work. It's about as sensible as having a single lock on Fort Knox."
The new board would consist of 13 members, with DiNapoli serving as chair. Another six members would be appointed by the governor, attorney general, temporary president of the senate, speaker of the assembly, the senate minority leader and the assembly minority leader.
DiNapoli said: "After the Hevesi administration violated the public trust, New Yorkers are rightly asking questions about the best way to ensure ethical, honest management of the fund. The viability of a board should be put on the table."
The other six members would be selected by the members of the scheme.
Other aspects of the legislation would further state laws to ban the use of placement agents, increase transparency and prohibits a "revolving door" of employment between the pension fund and investment managers, among other stipulations.
The CRF has been mired in controversy over the past year as finding after finding of pay-to-play has emerged.
Just this week, Liberal Party former chair Raymond Harding and Aldus Equity founding partner Saul Meyer pled guilty to felony securities fraud charges for their involvement in kickback schemes at the comptroller's office and the CRF. (Global Pensions; October 7, 2009)
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