First, take a look at these two stories from last year:
- KRS Breaking Disclosure Law On External Audits? [November 7, 2011]
- What Are KRS & Steve Beshear Trying To Hide? [December 7, 2011]
That should bring you up-to-date on the shenanigans going on involving disclosure requirements and the secrecy games being played by Steve Beshear and his friends.
The mess is about to get worse.
No, it doesn’t help that Jack Conway’s guy, Mark Riddle, is/was a placement agent. It doesn’t help that Jack received more than $100,000 from the very corrupt tycoons running KRS into the ground.
But what truly doesn’t help is that Jack is turning a blind eye to it all. He uses staff shortages and budget reductions as the excuse, essentially.
Yep, he’s got plenty of staff and cash to launch an investigation against a political opponent. None to sniff out one of the biggest financial rackets in the United States.
On February 17, KRS trustee Chris Tobe sent a letter to the Office of the Attorney General requesting four opinions.
Here’s the text of that letter:
As a member of the board of Trustees of the Kentucky Retirement Systems under I would like to request the following 4 opinions related to fulfilling my fiduciary duty as a Trustee.
Three fall under KRS 61.645(19) (19) In order to improve public transparency regarding the administration of the systems, the board of trustees shall adopt a best practices model by posting the following information to the retirement systems’ Web site and shall make available to the public:
(c) All external audits;
To my knowledge the external audit entitled “Review of the Kentucky Retirement Systems Perimeter Park West, Inc.s Holly Hill Land Purchase” by the Finance and Administration Cabinet Office of Policy and Audit dated July 6, 2009, has never been posted on the web site while other outside audits or reviews have.
(i) All investment holdings and commissions for each fund administered by the board. The board shall update the list of holdings and commissions on a quarterly basis for fiscal years beginning on or after July 1, 2008; I believe all the placement agent commissions paid out from July 1, 2008 until August 2010 (when their existence was disclosed to me as a Trustee) could have violated this law on disclosing commissions. Fees of over $10 million for Record Currency have not been disclosed.
(j) An update of investment returns, asset allocations, and the performance of the funds against benchmarks adopted by the board for each fund and for each asset class administered by the board. The update shall be posted on a quarterly basis for fiscal years beginning on or after July 1, 2008.
In August 2011 I inquired why our overall performance trailed that of the individual managers that were disclosed by over $250 million. I was told it was due to two undisclosed managers Record Currency and Northern Trust Equitization. This to me would seem to have violated both the performance (j) and the (i) the holdings disclosure laws. KRS mails out a monthly performance report to the LRC and others which includes performance by individual named money managers, from October 2008 to August 2011 Record Currency Management was illegally omitted from this report, only after I questioned performance was it revealed that we had a secret currency manager.
Fourth seems to violate KRS 61.650 (2) All securities … shall be registered in the name “Kentucky Retirement Systems“. The forward contracts managed by Record Currency were not registered anywhere.
Major concerns that need to be addressed, right?
You’ll want to read Jack Conway’s response after the jump…
Here’s Conway’s response:
Dear Mr. Tobe:
You have written the Attorney General requesting a legal opinion as a member of the Board of Trustees of the Kentucky Retirement Systems related to fulfilling your fiduciary duty as a Trustee.
The conditions for furnishing opinions of the Attorney General are set out in KRS 15.025. Our office also does not render opinions to individual board members, but only to the board as a whole. Unfortunately, due to staff shortages and severe budget reductions, this office must adhere strictly to those conditions, which in our judgment are not met in this instance. Therefore, we cannot furnish an opinion on these questions.
Please consider inquiring of board counsel. We regret that we are not able to assist you with this matter.
Yours very truly,
Sean J. Riley, Director
Office of Civil & Environmental Law
It’s not enough to tell Tobe the entire board needs to request the opinion – which obviously would not happen – he had to trot out the excuse that he doesn’t have the man power and is too broke.
Welcome to the next few years of corruption in Frankfort.