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Probes may open books at CalPERS

Under scrutiny, the public pension fund has hired a firm to examine its payments.

July 25, 2010|Evan Halper

And nearly all the contents of an e-mail in which a CalPERS senior staffer expressed doubts about investing in the firm Markstone Capital were removed when the pension system turned it over to the media in 2006. Markstone's chief executive, Elliott Broidy, recently pleaded guilty in New York to paying $1 million in bribes.

CalPERS made the full e-mail public after another government agency released it to reporters intact.

In another case, the fund refused to provide documents that could help explain its sudden divestment of $24 million from a fledgling venture capital firm. CalPERS declined to explain why it withdrew the money.

Pension officials in other states, who also withdrew their funds, said they were unhappy about requests from the venture capital firm's partners for donations to politicians on the CalPERS board.

And last week, the California First Amendment Coalition sued CalPERS for information about a 2006 real estate deal that lost $100 million.

A tenants' group had been denied multiple requests for records about the failed investment.

The law that CalPERS officials typically cite in withholding information was passed by the Legislature in 2005 at the fund's urging. But the law's author, Sen. Joe Simitian (D-Palo Alto), said SB 439 is meant to keep under wraps only legitimate trade secrets and confidential financial data.

"It is not designed, nor should it be used, to withhold anything beyond [a] narrow range of information," he said.

Pension officials say the information they are concealing fits those categories. Their commitment to openness, they say, is reflected in the system's hiring of the law firm Steptoe & Johnson to conduct a top-to-bottom review of CalPERS business practices.

What exactly CalPERS has ordered the firm to do and how much it is paying for those services are unclear. CalPERS is keeping its contract with Steptoe & Johnson secret.

Times staff writer Marc Lifsher contributed to this report.

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