At-Large candidate Gonzalez takes on Treasurer Cahill
When youâ€™re one candidate out of 15 running for the four City Councillor at-Large spots, sometimes youâ€™re going to aim high. That was the case this week with Tomas Gonzalez, former chief of staff to Bostonâ€™s Elderly Commission, who issued a press release taking aim at Treasurer Timothy Cahill, who is considering a run for higher office himself.
The Boston Globe has reported that in 2004 the state pension fund that Cahill and a board oversee handed an asset management contract to a financial firm, which had hired a political ally and fundraiser of Cahillâ€™s to press their case.
In a release titled â€œETHICS VIOLATIONS PUT PENSIONS OF BOSTON MUNICIPAL WORKERS AT RISK IN UNCERTAIN ECONOMIC TIMES,â€ Gonzalez said that the treasurerâ€™s office â€“ he didnâ€™t use Cahillâ€™s name â€“ should change its practices, arguing that there was a lack of transparency. He said the practices placed Bostonâ€™s municipal employees at risk of losing their retirement savings. "The Treasurer's office and others charged with managing the pension system must free themselves from lobbyist ties that give the appearance of a corrupt system of awarding pension management contracts and we must ensure that, in these tough times, no Boston worker's retirement is put in jeopardy for the sake of political expediency," Gonzalez said in a statement.
But the head of the state pension fund said there is an extensive selection process for investment firms, hitting Gonzalez for a â€œtotal lack of understanding of basic governance issues,â€ and noting that there arenâ€™t any Boston municipal employees covered by the fund.
In an e-mail, Michael Travaglini, the executive director of the Pension Reserves Investment Management (PRIM) board, said there was an extensive selection process for investment firms. The process includes a detailed request for proposals (RFPs) that are screened by a search committee made up of PRIM staffers and representatives from an outside investment consultant. The recommendations are then made to the PRIM boardâ€™s investment committee, which includes asset management experts, before itâ€™s brought to the nine-member PRIM board, consisting of not only the treasurer but the governor or his designee â€“ in this case, budget chief Leslie Kirwan, among other experts.
â€œMore importantly, every manager selection process PRIM undertakes is subject to an annual audit by an independent firm, currently KPMG,â€ Travaglini wrote. â€œWe have in our possession ten yearsâ€™ worth of independent audits which attest to the integrity of the manager selection process at PRIM.â€
Travaglini added: â€œOn a more practical level, there are no Boston municipal employees who are covered by the state pension fund. The City of Boston has its own defined benefit plan and Board of Retirement, which has nothing to do with PRIM. I know first-time candidates will say anything to get attention, but the statements of candidate Gonzalez evidence a total lack of understanding of basic governance issues.â€
The full release from the Gonzalez camp below:
ETHICS VIOLATIONS PUT PENSIONS OF BOSTON MUNICIPAL WORKERS AT RISK IN UNCERTAIN ECONOMIC TIMES
BOSTON - Tomas Gonzalez, who supports recent legislation on pension reform, calls upon the State Treasurer's office to reform its own internal practice of awarding lucrative contracts to campaign contributors - a practice that not only raises ethical concerns but that ultimately puts the City of Boston's employee pensions at risk when asset managers are not selected on the merits of their application but on the basis political ties to the Treasurer's office. Gonzalez calls for a second phase of reforms to address the broader ethical question about how officials in the Treasurer's office and their associates in the asset management field have abused their oversight of the pension system for personal gain.
Gonzalez noted that the complete lack of transparency in pension management and the awarding of lucative asset management contracts that places the City of Boston's municipal employees at risk of losing their retirement savings when asset managers are not awarded contracts on the merits of their expertise, but rather on the basis of their relationship with with the Treasurer's office and contibutions to his campaign fund. "The Treasurer's office and others charged with managing the pension system must free themselves from lobbyist ties that give the appearance of a corrupt system of awarding pension management contracts and we must ensure that, in these tough times, no Boston worker's retirement is put in jeopardy for the sake of political expediency," Gonzalez said.
In recent months questions have been raised in the press concerning improper management practices by asset managers as well as unethical conduct of officials in the State Treasurer's office in accepting money from out-of-state lobbyists not subject to current campaign finance laws applying to Massachusetts lobbyists in exchange for lucrative asset management contacts. "We cannot allow our pension system to be politicized to the benefit of the state official with the most influence over pension management decisions at the expense of taxpayers and employees of the city of Boston," Gonzalez said.
"The Treasurer's office needs to address the complete lack of transparency in pension management and contract awards," Gonzalez said. Legislation at the state level affects municipal employees since municipal pension provisions are governed by state law and many municipal retirement systems have opted into the Massachusetts Public Retirement Systems, which are governed by M.G.L. c. 32. "The current limits on campaign finance are not sufficient to curtail the type of influence inherent in the system of awarding these large pension management contracts," Gonzalez stated. Under current law, the Treasurers office with ties to out-of-state lobbyists and large asset management corporations who seek state contracts is not required to recuse itself from the selection process of asset management companies charged with investing pension funds. "This blatant conflict of interest leaves a gaping hole in pension reform that needs to be addressed to protect the retirement pensions of the City of Boston's municipal employees," Gonzalez stated. The law is unclear as to how much financial and personal contact lobbyists and firms from out of state are allowed to have during an individual's bid for a position that would ultimately place them in control of decision-making boards. "The process is simply not transparent and municipal employees in Boston are at risk because of the lack of oversight at the state level," Gonzalez said.
Gonzalez, while showing support for the reforms that were recently enacted, called upon the State Treasurer's office to take this important opportunity to rebuild trust by discontinuing the practice of accepting contributions from lobbyists for asset management firms doing business with his office. "I am calling upon the Legislature to address this issue of the improper influence of lobbyists in the awarding of asset management contracts in a second phase of reform. The Legislature should keep in mind that the State Treasurer chairs the Pensions Reserves Investment Management Board and has received more than $41,000 in contributions form the out-of-state lobbyist, Mr. Rust, his family members, and the asset management firm he represented," Gonzalez said. Mr. Rust's management firm was ultimately awarded a lucrative pension contract in 2004.
"These decisions need to be more transparent. The process needs to be clear to the public and regulators alike. These are the type of systemic problems with broad public policy implications that concern me the most; that is why I am calling for the Legislature to enact a second phase of reform to increase transparency to a greater degree than has been addressed thus far."