After all, Minturn told PLANSPONSOR.com in a phone interview, reporting possible ethics violations by fund board members and trying to correct what Minturn termed overly risky and poorly performing investments isn’t exactly what makes friends. Minturn was fired at a meeting of the Teachers Retirement System of Louisiana (TRSL) board this week, effective in 90 days, and was placed on leave until then (See Louisiana Teachers Pension Board Sacks Director).
According to media reports, Minturn’s ethics allegations concerned a board member and a TRSL consultant improperly accepting trips on hunting and golf outings and tickets to professional football games. In his PLANSPONSOR.com interview, Minturn charged that the “leadership of the board” – he refused to be specific – threatened him with being fired if he pursued the ethics claims issue. Minturn alleged he was told “If you don’t back off the ethics (complaints), we will have you out of here.”
“Whenever a CEO is faced with only a choice between what the board members want and that’s different from what the teachers should have, then there’s a conflict of interest, and that doesn’t create good chemistry with board members,” Minturn told PLANSPONSOR.com . “When the board didn’t want to make changes, there would have been bad chemistry and that’s what happened.”
In interviews with reporters after the firing, Board Chairman Jerry Baudin blamed the move on sour relationships between Minturn and the 16-member panel. “The board was ready for a change,” Baudin told the Baton Rouge Advocate. “We wanted to see if we could find someone who could run it better. The board felt the chemistry wasn’t there.” Baudin, who told reporters earlier in the week that the ethics charges had been resolved, had not returned calls from PLANSPONSOR.com by presstime.
More Ethics Details
While Minturn said Louisiana ethics laws prevented him from discussing the substance of his ethics charges, the New Orleans Times-Picayune this week reported additional details of the allegations based on its examination of official documents.
According to the Times-Picayune story:
Dallas private equity firm Hicks, Muse, Tate & Furst Partnerships supplied Louisiana ethics officials with lists of dates when board member William Baker and employees of the system’s consulting firm were taken on hunting and golf outings around Dallas and Palm Springs, California, as well as given tickets to professional football games.
An unidentified spokesman for consultant Holbein Associates told the Times-Picayune that the firm previously was not aware of any possible ethics code implications. When firm members learned that they may be considered public employees coming under state ethics laws, the company reimbursed Hicks, Muse, Tate & Furst for any expenses and decided to pay for themselves from now on, the spokesman said.
In a written response to the ethics issue, Hicks, Muse, Tate & Furst officials said they had not been aware of the Louisiana ethics code and would in the future take steps to guarantee the company is in compliance.
Baker told the newspaper that the trips likely did not amount to a violation of the ethics code because the state’s various retirement system board members were then considered elected officials, just like state legislators.
Under Louisiana’s ethics code, elected officials are allowed to accept tickets to sports and cultural events, as long as the tickets are not worth more than $100 for a single occasion or more than $500 in a calendar year. A new state law that went into effect July 1, however, specifies that retirement board members are state employees, not elected officials who can benefit from the gift loophole.
State Treasurer Supported Minturn
Of the 12 retirement board members present Tuesday, two voted to retain Minturn and one abstained. The two voting to keep him were a representative of the Department of Education and a representative for state Treasurer John Kennedy.
“(Kennedy felt) Mr. Minturn had done a very good job and so rated him during his tenure,” Ron Henson, Kennedy’s first assistant treasurer, told PLANSPONSOR.com . “Brian had brought in fresh ideas and fresh approaches. He was very easy to approach from our office and we had a great working relationship with him.” Henson represents Kennedy on the TRSL board.
Although he refused to speculate about motivations for the board’s decision, he said most board members had a “radically different” view than his and Kennedy’s and the Education Department representative. At least some of the negative comments in board members’ ratings of Minturn – which Henson said Baudin read aloud during the meeting this week – came in areas where Minturn had proposed changes in policies and practices including shifts in the fund’s investment policy. In any event, Henson contended, comments in the ratings didn’t back up the panel’s action. “What was there didn’t justify dismissal,” he said.
For his part, Minturn said his TRSL experiences point out the need for specific performance goals to be set out at public pensions systems and that all of the pension fund’s interested parties – board members, staff and members – buy into them. “There must be accountability for the results at public pension systems and that has to involve firm goals, objectives and measurements,” Minturn said. “Leaving any (group) out can lead to an imbalance that can lead to one group or another getting into (a problem area).”