VA Fund to Ex-Leader: Give Back Your Severance Check

July 14, 2005 (PLANSPONSOR.com) - The controversy continues this week over a $263,000 severance package to a former director of the Virginia Retirement System (VRS) and the plan demanded the money be returned.

The VRS board on Wednesday reversed the exit payment to former director W. Forrest Mathews Jr. (See  VA Officials Eye Ex-Pension Fund Chief’s Severance ), as Virginia Governor Mark Warner Wednesday night demanded that the trustee who negotiated the Matthew deal step down from his post, the Richmond Times Dispatch reported.

Instead of the original package, the board offered Matthews the largest severance allowable under Virginia law – six weeks pay or, in his case, about $15,000, the newspaper said. “We’ve got to be like Caesar’s wife,” said trustee Raymond   Wallace Jr., who criticized the disputed payment as an affront to state and local retirees. “Maybe we haven’t looked like her lately.”

For his part, Matthews, who served for three years in the $131,000-a-year post, told the Times Dispatch that he hadn’t decided whether to return the money as trustees demanded.

Though his performance was labeled “minimally acceptable” by chairman Paul Timmreck, Matthews was allowed to resign from the $43.9 billion pension fund amid trustee concerns about his managerial and communications skills.

After the Wednesday meeting, Warner sought the resignation of trustee and former VRS chairman Alfonso Samper “to begin restoring the trust” of public employees, governor’s office spokesman Kevin Hall, told the Times Dispatch.

As chairman, Samper fashioned the six-figure deal with Matthews that the state Joint Legislative Audit and Review Commission said was excessive and had not been authorized by the board.

According to the news reports, VRS has several options for recovering the money from Matthews, including making deductions from his monthly checks. The pension system also could ask the attorney general’s office to seek restitution from Matthews.

During yesterday’s meeting, Samper said VRS staff members never told him Matthews was covered by the state law limiting severance pay. Samper has said he believed he had the board’s consent when he began negotiations with Matthews last fall.

Also at the meeting, the trustees put in place a new rule that could prevent a repeat of the conditions under which Matthews was elevated in 2002 from an unsalaried, part-time chairman to VRS’ full-time director. To minimize the potential for conflict of interest, a trustee would have to be off the board or its investment advisory committee for five years to be eligible for employment at VRS, according to the newspaper.

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