CalPERS is pressing Apollo Global Management LLC, one of its private equity managers, over co-founder Leon Black's relationship with registered sex offender Jeffrey Epstein.
"CalPERS takes this issue very seriously. The actions our general partners take, both in professional and private contexts, impact our assessment of which firms we desire as long-term partners," said Megan White, spokeswoman for the $376 billion California Public Employees' Retirement System, Sacramento, in an email.
The market value of CalPERS' investment with Apollo was about $1.7 billion as of June 30, 2018, according to CalPERS' fiscal year 2018 investment report, its most recent. Apollo had $312 billion in assets under management as of June 30.
Mr. Epstein was found dead in his cell at the Metropolitan Correctional Center in New York on Aug. 10, awaiting trial on federal charges of operating a sex trafficking ring. In 2008, he pleaded guilty to Florida state charges of prostitution, one involving a minor, and was sentenced to 18 months in prison.
Reading from a memo to employees during Apollo's July 31 earnings call, Mr. Black said Mr. Epstein was on the board of the Black Family Foundation when it was created in 1997. Mr. Epstein resigned from the board in 2007, Mr. Black said, even though foundation federal tax filings continued to list him as a director for several years afterward. That discrepancy was a mistake, Mr. Black said.
Mr. Epstein also had provided professional services to Mr. Black's family partnership and other family entities, Mr. Black said. In addition, Mr. Black said that he donated to charitable organizations affiliated with Mr. Epstein and Mr. Epstein donated to charities affiliated with Mr. Black.
Mr. Black said on the call that his links with Mr. Epstein have not affected Apollo's relationship with its investors. He also said the firm itself did not have a connection to Mr. Epstein.
"We're entering our 30th year of business right now. And there is nothing that's more important to us than our relationship with our investors. So we take this all extremely seriously," Mr. Black said in response to questions concerning Mr. Epstein's relationship with him and Apollo during the earnings call.