West Virginia Plan Settles Wachovia Contract Fight

July 7, 2005 (PLANSPONSOR.com) - The state of West Virginia has agreed to pay Wachovia Securities $185,000 as part of a settlement of dispute over a decision by the state's retirement board director to give the board's money management business to a Colorado firm.

The pact between Wachovia and the Consolidated Public Retirement Board resolves a Wachovia lawsuit which charged that board executive director Joe Jankowski blatantly ignored Wachovia’s state contract to invest West Virginia teachers’ retirement money, according to a news report in the Charleston (West Virginia) Gazette.

Jankowski was suspended in February as part of an investigation into the no-bid deal he struck with GWFS Equities. GWFS is a subsidiary of Great-West Life and Annuity Insurance Co., of Greenwood, Colorado, the plan’s existing recordkeeper.  Jankowski, who is still collecting his $115,000 salary, hasn’t worked in more than four months. “I have heard nothing from the board, nothing from anyone in any official capacity,” Jankowski told the newspaper.

According to the news report, Jankowski defended his actions, asserting that the contract change from Wachovia to GWFS will ultimately save the state up to $2.25 million in the long term. “When you do the numbers, the board is still hundreds of thousands of dollars ahead,” Jankowski told the Gazette. “We’re still way ahead by eliminating the middleman.”

State Department of Administration officials allege that Jankowski broke state purchasing rules.  Jankowski didn’t ask the retirement board for permission to cancel Wachovia’s contract and make the deal with Great-West until after the new contract was already signed, according to officials.

The plan invests more than $500 million of retirement money for about 22,000 school employees.