SEANC hires forensic investigator to look at pension fund

by John Frank, News and Observer, January 5, 2014.

A familiar foe of Janet Cowell is intensifying its scrutiny of the Democratic state treasurer.

The State Employees Association of North Carolina announced Monday it hired a forensic investigator to look at the state pension investments for “conflicts of interest related to TSERS investments and potential violations of the federal securities laws.”

SEANC will pay Edward “Ted” Siedle, a Florida-based consultant who is known for investigating pension investments, $65,000 for the report.

“We believe the wolves of Wall Street are at our door and knockin’,” said SEANC Executive Director Dana Cope in a statement. “Given the treasurer’s expanded alternative investments authority that bleeds money in fees, we’re not going to wait until our retirement system is in near collapse like a Rhode Island or South Carolina to find out answers to pressing concerns about the state’s retirement system.”

Siedle did a similar investigation of the state employees pension in Rhode Island and issued a blistering report that attacked the state’s treasurer. The treasurer dismissed it as “a political attack paid for by opponents of pension reform,” according to the Providence Journal.

SEANC is a frequent thorn to Cowell, arguing that the $83-billion Teachers’ and State Employees’ Retirement System ought to be managed by a stakeholder board and not the state treasurer. North Carolina is one of four states with a sole fiduciary system.

The association also opposed Cowell’s effort in the 2013 legislative session to get broader authority to put pension money in alternative investments outside the stock market.

Cowell didn’t respond to SEANC’s hiring of Siedle but issued a statement saying she continues to focus on “transparency, accountability and ethics, which are critical to confidence in our investment process.”

The treasurer issued a report in December that analyzed how placement agents used political connections and favors to get business between 2002 and 2008 when Democrat Richard Moore was treasurer. The report did not look at Cowell’s tenure.

At the same time she released the report, Cowell announced she will launch a review of the investment management’s governance structure in 2014. Cowell’s spokesman said she will announce a commission to look at the issue soon.

Siedle said he will ask Cowell’s office to cooperate and provide information about the pension funds investments but much of what he will use is obtainable through public records requests. He said the report would likely take 90 days to produce.

“This is a very serious inquiry,” he said.