Communication is a key ingredient of every successful enterprise -- communication of goals and strategies. And successful communication in management begins at the top. Therefore it's astonishing that State Treasurer Denise L. Nappier accused Thomas E. Flanigan of poor communication, when she has failed to communicate clearly why she abruptly fired him as chief investment officer of the $22 billion Connecticut Retirement Plans and Trust Funds only seven weeks after he was hired.
In fact, after the termination Ms. Nappier put out no announcement of his departure. Did she think no one would notice? A spokesman for the treasurer initially declined to comment saying only, "He is no longer an employee of the state treasurer's office."
Later she issued a statement saying in part Mr. Flanigan's "approach to communications and administrative process proved to be inconsistent with my own..." That inconsistency would appear, based on Ms. Nappier's handling of his firing, to redound to Mr. Flanigan's credit.
Beneficiaries of the funds, and the state's taxpayers, must be bewildered by Ms. Nappier's actions. Less than two months ago she recommended hiring Mr. Flanigan, praising his capabilities and including his experience as CIO of the California State Teachers' Retirement System.
Now her decision to fire him could prove costly. She and other state officials are negotiating a severance package for Mr. Flanigan. Probably its terms will be generous, in part in an attempt to fend off any wrongful dismissal lawsuit he might bring against her and the state. In addition, the time, resources and energy spent recruiting Mr. Flanigan have been wasted. And now Ms. Nappier and other state officials must redo the entire process. Without a CIO, the trust funds likely will get less attention, and that's especially dangerous in the current roiling investment market.
The Connecticut funds have careened from one trouble to another. The same issue of Pensions & Investments that reported the Flanigan story also reported elsewhere about a development in the Silvester scandal, a troubling kickback saga involving Ms. Nappier's predecessor, Paul J. Silvester, that still engages resources of the trust funds and time of its officials.
Even before Ms. Nappier and Mr. Silvester, the treasurer's office was no island of stability. Christopher B. Burnham left in midterm to join a money management firm, as did his predecessor, Henry Parker. In fact, including Mr. Silvester, every Connecticut treasurer since 1958 has left office midterm.
It's conceivable Ms. Nappier had reasonable, professional gripes that led her to sudden dismissal of Mr. Flanigan. But until she communicates them to beneficiaries and taxpayers, her action is suspect, serving only to fuel rumor. Her action also puts a cloud over Mr. Flanigan's reputation.
Among the questions Ms. Nappier needs to address publicly are:
What specifically did she expect from Mr. Flanigan in the way of communication? How did he fall short of those expectations? What problems did she have with his decisions? How is it she didn't discover the purported shortcomings before hiring Mr. Flanigan? After all, Mr. Flanigan has had a long, public career with a very large fund.
Without more explanation, taxpayers and others may speculate Ms. Nappier was reluctant to turn over too much power to Mr. Flanigan, whose position was created by the Legislature in the wake of the Silvester scandal.
The cavalier way some of Ms. Nappier's predecessors have treated their office demonstrates a deep problem Connecticut has with the treasurer's office. The trust funds need good, stable management. The legislative reform may not have been enough to clear up 42 years of instability of officeholders, but it was a start. More steps may be needed. Perhaps the chief investment officer should be further separated from the treasurer's control, perhaps reporting to a board of trustees of which the treasurer would be only one member.
Unfortunately, Ms. Nappier's decision to fire Mr. Flanigan will reduce the list of possible candidates to replace him unless she takes the time to explain the rationale for the action.
Ms. Nappier began 2000 by announcing an 11-point reform program for overseeing the assets, including full disclosure. Now is the time for her to live up to her reforms. As a public official, she has a duty to foster disclosure and communication with the public. In this case, she has failed to disclose, communicate and administer.