Audit finds ‘prudent’ management of O.C.’s investments

An independent auditor hired by the Orange County Board of Supervisors has found the county’s investment portfolio is being managed in a “thoughtful, prudent manner” by the elected treasurer and that the investment pools are sound, according to a report released Monday.

The report appears to vindicate the management of the $6.5-billion county portfolio by Treasurer Chriss Street, elected in June 2006 but beset during his first year in office by questions over his past business dealings, and contracts he sought to award for county business.

The findings also undercut the criticisms of board Chairman John Moorlach, Street’s onetime political ally who turned on the treasurer and sought – unsuccessfully – to have him stripped of his authority over the county’s investments.

Street remains under investigation, however, by the district attorney’s office for his handling of contracts dealing with work on the treasurer’s office. There is also a federal investigation into Street’s handling of the affairs of a bankrupt trucking concern before he entered office, in which he has been accused of self-dealing.

The report came at the request of supervisors, who wanted an independent risk appraisal of the county’s investments. The findings gave the treasurer’s office a clean bill of health in particularly strong terms.

“We were impressed with the diligence with which the treasurer and his staff approach the investment function,” said the report, produced by PFM Asset Management of San Francisco. “In our opinion, the county’s investments are being managed in a thoughtful, prudent manner.”

The report did, however, make recommendations for improvements, such as adding staff to the investment management area of the office and clarifying the role and responsibility of the Treasurer’s Oversight Committee, which monitors investment decisions.

In an interview, Street said the report supported his contention that the county’s investments were “safe, strong and secure.”

“This is a strong statement in support of our investment policies and procedures,” he said. “I think that it seems any criticism was clearly premature.”

In an interview, Moorlach, who served as county treasurer before he was elected to the Board of Supervisors, stood by his criticisms of Street and said he continued to be concerned that the investigations were too large a distraction while Street tried to run the treasurer’s office.

“I was questioning his being distracted by the entire job,” Moorlach said. “And the only route I have to send a message to him is to vote to not continue the authorization to invest.”

There was another ripple of unease late last year over Street’s management when he abruptly disclosed that $460 million in complex debt securities called structured investment vehicles held by the county faced a possible credit rating downgrade. But the concern has largely passed; the audit found that the county’s SIVs “have held up well to the market pressures” and recommended holding onto them to term rather than selling prematurely.

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