California Controller John Chiang said Wednesday he is sponsoring two new bills in the state Legislature aimed at tightening ethics requirements for CalPERS and CalSTRS, according to a news release.
One bill tightens post-employment restrictions for board members and employees of the $226.5 billion California Public Employees' Retirement System, Sacramento, and the $146.4 billion California State Teachers' Retirement System, West Sacramento, requiring a two-year wait after leaving before working with a firm that does business with the funds.
The second bill reduces the amount of gifts board members for both systems and CalSTRS employees can receive to $50 a year, down from $420 currently. CalPERS employees have been banned from receiving any gifts since 2009.
“The appearance of impropriety by some former board members and investment staff of CalPERS raises concerns that members and staff may be using their past relationships and positions of power to influence decisions regarding the investment of public pension funds,” Mr. Chiang said in a statement. “I believe these bills are a critical step toward restoring the public's confidence in the professionalism of all of our activities on behalf of the retired public employees and teachers, and the taxpayers of California.”
The bills follow recommendations made two months ago by Philip Khinda, a Washington lawyer with Steptoe & Johnson, which is conducting an investigation on behalf of CalPERS following the placement agent scandal.
Mr. Khinda's investigation, which is still ongoing, followed disclosures that former CalPERS board member Alfred Villalobos earned upward of $50 million as a placement agent representing private equity firms that won business from CalPERS.
State officials have filed a civil complaint in state court charging Mr. Villalobos with bribing former CalPERS CEO Fred Buenrostro to influence investment decisions.