Judy Baar Topinka and James F. Clayborne Jr., trustees of the Illinois State Board of Investment, voted in favor of hiring Northern Trust Bank for a $3.4 billion deferred compensation plan, even though the bank and some of its directors contributed to their political campaigns.
Ms. Topinka is Illinois state comptroller and chairman of the Illinois State Employees’ Retirement System, whose $10.4 billion in assets ISBI oversees. Mr. Clayborne, a state senator, is chairman of the Illinois General Assembly Retirement System, whose $105 million in assets ISBI also oversees.
Trustees voted unanimously June 29 to hire Northern Trust over State Street Bank & Trust Co., the incumbent, and J.P. Morgan Chase in a search for a custodian for the Illinois State Employees’ Deferred Compensation Plan. ISBI, based in Chicago, oversees the 457 plan along with $11.4 billion in defined benefit assets.
Under its policy, ISBI discloses political contributions to trustees from vendors, said William R. Atwood, ISBI executive director.
In separate contributions from Northern Trust and its directors John W. Rowe and Robert C. McCormack and former director William D. Smithburg, Ms. Topinka received a total of $23,000. Mr. Clayborne received $2,250 total from Northern Trust and Paul L. Williams, lobbyist for Northern Trust. The contributions to the two trustees were made between 2005 and 2011, according to ISBI.
Trustees have no obligation to recuse themselves from voting on bidders, Mr. Atwood said.
J.P. Morgan and State Street didn’t make any contributions to any of the trustees, according to ISBI.
Bradley Hahn, spokesman for the comptroller’s office, wrote in an e-mail, Ms. Topinka “uses her best judgment in deciding when to vote. There is no question of conflict in this instance. In fact, the board voted unanimously with a unison ‘aye’ to accept the low bid, after full review and recommendation from (ISBI) staff.”
Mr. Clayborne couldn’t be reached for comment.