Legal News

On Pay-to-Play and Pension Funds: The Inquiry Spreads West

By Ashby Jones

For all those who were worried that allegations concerning pay-to-play and public-pension funds were strictly an east coast phenomenon, rest assured. Federal criminal investigators are looking into possible wrongdoing involving investment transactions of other public pension funds including Calpers, California’s public-pension fund. Click here for the story, from the WSJ’s John Emshwiller.

The public pension fund scandal has already nabbed quite a few in New York — six have pleaded guilty in that state’s long-running corruption probe.

The allegations in these cases seem fairly straightforward: illegal payments are given to people who control the purse strings — and how investments are made — at public pension funds. In return, the payees hope to a slice of the pension funds’ investments. As Emshwiller puts it: “At the heart of the matter is whether investment decisions regarding retirees’ money were guided by improper influence peddling rather than an eye toward the best results.”

According to Emshwiller, the Calpers-related inquiries are focused on a small number of individuals. While the investments under scrutiny totaled “many millions” of dollars, the person said, the amount is a fraction of Calpers’s overall assets of about $200 billion.

A Calpers spokeswoman said she isn’t aware of any federal criminal investigations looking at the fund’s investments.

Full post as published by Law Blog - WSJ.com on March 26, 2010 (boomark / email).