The Detroit Policemen & Firemen Retirement System board filed a lawsuit Tuesday against its investment committee, alleging a breach in fiduciary duty involving a pay raise to the fund's former deputy chief investment officer.
The board, which oversees the $2.8 billion fund, filed the complaint for injunctive and declaratory relief with the U.S. Bankruptcy Court in Detroit.
The dispute stems from pay raises the investment committee granted to investment office staffers, chiefly, deputy CIO Kevin Kenneally. His annual salary rose to $224,000 in March from $162,781, according to the lawsuit. When the PFRS board objected, the investment committee arranged a deal for Mr. Kenneally to resign as an employee and be hired as an "independent contractor" with fewer duties, higher pay and a $60,000 signing bonus, a news release from the board said.
Mr. Kenneally resigned from his staff position on Dec. 27 and assumed a role as an independent contractor on Jan. 6, according to the lawsuit.
The board and investment committee for the $2 billion Detroit General Retirement System, which has the same investment office as PFRS, has refused to take any action to support Mr. Kenneally's raise, according to the lawsuit.
A PFRS board spokesman could not immediately be reached for comment.