NEW YORK - Desmond Mac Intyre quit as chief investment officer of the $67.5 billion New York City Retirement Systems after just one month on the job, because he couldn't get complete control of the bureau of asset management, sources familiar with the situation said.
Mr. Mac Intyre declined to comment, except to say: "Shortly after my arrival it became clear to me that with my professional background and experience, I am better suited to working in the private sector."
Jeff Simmons, spokesman for New York City Comptroller William Thompson, said Mr. Mac Intyre left on amicable terms and that he resigned because he failed to get a residency waiver allowing him to live in Connecticut.
But sources said the waiver issue was minor compared to problems at NYCERS that Mr. Mac Intyre discovered after he took the job.
Securities lending loss
Among the troubled areas is securities lending. In an unfolding scandal that began months before Mr. Mac Intyre joined NYCERS, the city stands to lose up to $89 million in its investment in a securities lending program administered by Citigroup Asset Management, Stamford, Conn.
Staff at the Bureau of Asset Management allegedly had been keeping news of the losses from the trustees since October. Through the program, the city invested $89.4 million in bonds backed by National Century Financial Enterprises, which lost its investment-grade rating in October, and filed for bankruptcy in November. Marc Kalech, another spokesman for the comptroller, said: "It's not clear how much the city will recover. Like all bondholders, we have been watching the situation closely and will aggressively pursue any possible means of recovering any losses." He wouldn't comment on whether the news of potential losses had been kept from the trustees.
Other sources said Citigroup might make up some of the losses. Christina Pretto, Citigroup spokeswoman, did not return calls by press time.
Mr. Mac Intyre also was concerned about the city's investment process being highly politicized and was distressed about the lack of governance and resources, according to the sources. They said he didn't believe he would be able to change the operation. He also was upset about the scathing preliminary results of an audit, commissioned by Mr. Thompson and conducted by Independent Fiduciary Services, Washington.
The role of politics
Mr. Mac Intyre had accepted the $154,000-a-year New York City job without realizing how big a role politics played in the operation of the city funds, according to one source. For example, the source said, private equity deals were being brought in through political connections, rather than through the normal investment process.
Once Mr. Mac Intyre understood the political landscape, he left as quickly and as quietly as he could, the source said.
He began working for the city on Feb. 3; he quit March 1. He had moved from London, where he headed the European pension strategies group at Deutsche Asset Management. Before that, he was chief financial officer at General Motors Asset Management, New York, which manages the $67 billion GM pension plan. More than one source said he might consider returning to London to work in asset management.
Mr. Mac Intyre will be replaced, but it hasn't yet been determined if a search firm will be hired, and what the qualifications and salary will be, Mr. Simmons said. Adam Blumenthal, first deputy comptroller, is handling the job in the interim.
There also had been rumblings of a clash over governance procedures with Horatio Sparkes, assistant comptroller for pensions. The sources said Mr. Mac Intyre had asked to have him fired, but Mr. Thompson refused. Mr. Sparkes did not return calls seeking comment.
He made changes
Mr. Mac Intyre had implemented some changes during his short tenure and will be assisting in further changes, according to a web posting from the comptroller's office. One source said Mr. Mac Intyre had convinced the comptroller to expand the roles of the five consultants that advise the five pension funds in the system. The consultants' help is needed because only a handful of investment professionals at the Bureau of Asset Management oversee 80 money managers and 300 portfolios, the source said.
Sources said one of those investment pros - John Burns, head of equities - is seriously considering a job offer from the $96 billion New York State Common Fund in Albany. Mr. Burns didn't return telephone calls seeking comment. He had been acting CIO and lost out to Mr. Mac Intyre for the job.