House Education and Labor Committee Chairman George Miller, D-Martinez, is opening a committee investigation into “very serious questions” of whether a Bush Administration pension agency chief got too cozy with the Wall Street contractors from which he was taking bids on lucrative contracts.
Pension Benefit Guaranty Corp. – a federal corporation created by the Employee Retirement Income Security Act of 1974, with the secretaries of Labor, Commerce and Treasury as its board of directors – protects the pensions of nearly 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. Charles E.F. Millard – earlier, a managing director at Lehman Brothers and Prudential Securities as well as a Republican New York City Councilman and a member of Mayor Rudy Giuliani’s administration – served as PBGC’s director from December 2007 through Jan. 20 of this year.
According to a PBGC Inspector General report issued earlier this week, PBGC executives in February 2008 gave the board a proposal to revise the corporation’s investment policy, moving billions of dollars out of fixed-income treasury securities and into marketable equities, real estate and private equity – basically, from investing in the government to investing in Wall Street.
The board unanimously approved the policy, and PBGC set about reinvesting its $48.4 billion portfolio, seeking bids from “strategic partners” on Wall Street who could manage parts of the fortune. Contracts awarded in October called for the purchase of nearly $2.5 billion in real estate and private equity; total fees for the three strategic partnership contracts, over a ten-year period, could top $100 million.
But Millard interposed himself in the bidding process, the report says:
“Phone records and emails show that the former Director was communicating directly with some bidders at the same time that he was actively evaluating their Strategic Partnership proposals, a clear violation of the prohibition of contact with potential offerors. Further, the former Director took an unprecedented role in the procurement process, to include serving on Technical Evaluation Panels (TEP) to formally assess some of the same Wall Street firms with whom he was in frequent contact; at a minimum, this violated the principle of separation of duties. However, it should be noted that our audit did not identify evidence of criminal activity on the part of any bidders.”
“The former Director was advised that his actions could cast doubt on the intergrity of the procurement process, but he did not heed these warnings.”
Millard denies he was manipulating the contracts in order to land a job with one of the contractors, the report says – but e-mails show a senior official at Goldman Sachs, which won a contract to invest $700 million of PBGC’s money, was actively helping Millard find a job.
Should be quite an investigation.