Members of Congress asked the Government Accountability Office on Tuesday to investigate the investment decisions made by the $17.8 billion Teamsters Central States, Southeast & Southwest Areas Pension Fund, Rosemont, Ill., including assumed rates of return, asset allocations and the influence of investment advisers.
A letter signed by 10 senators and 41 representatives asks GAO officials a series of questions to consider, including how the pension fund's fiduciaries and relevant parties ensured conflict-free investment advice with reasonable fees. The letter also asked about the investment strategy and returns from 1997 to 2015, including comparisons to similar funds for each asset class.
“It's astonishing to now read about how Wall Street firms hired by Central States invested retirees' pension funds in Iraqi banks in 2008, right in the middle of a full-scale war in Iraq,” said Rep. Marcy Kaptur, D-Ohio, in a news release. “Or how they invested in unstable Russian banks, when the economy there is in shambles, or how they sunk $1.4 billion into risky single-A-rated mortgage-backed bonds in the middle of the housing meltdown. Something is simply wrong, and the GAO will get to the bottom of this.”
Central States said in a statement that it welcomed the review. “We are confident the GAO will conclude there was absolutely no wrongdoing at any time in connection with the fund's investment practices, which will finally put to rest all of this groundless speculation. We will cooperate fully in any GAO review.”
In addition to annual audits and reports filed with the Department of Labor, the fund files quarterly reports by an independent special counsel to a federal judge as part of a 1982 consent decree with the DOL, the statement noted.
On May 6, the Treasury Department denied Central States' application to reduce benefits, as allowed by the Multiemployer Pension Reform Act of 2014.