OPERS staff had determined that an investment case could not be made for dropping BlackRock and State Street, saying that the asset managers were more advantageous from a pricing and performance standpoint than any of the bidding firms.
OPERS also estimated that it would cost about $10 million to transition the funds plus an additional amount in "implicit costs" that could be determined only after the transition had taken place.
Russ blasted the RFP process as incomplete, biased and rushed, and demanded that the board "immediately begin a new RPF process."
"The RFP process demanded responses in three weeks for several multibillion-dollar deals," he said in the letter. "Last year, a similar RFP for a single type of fund allowed bidders six weeks to respond."
Russ also ridiculed the board for using Verus Investments, its investment consultant, to the evaluate RFP submissions, noting that the firm advocates for ESG regulatory mandates.
"OPERS put Verus in charge of overseeing a high-profile attempt to move billions of dollars away from ESG-focused asset managers who are fellow collaborators in the ESG movement," Russ said. "Unsurprisingly, Verus' reports all pushed OPERS toward staying with BlackRock and State Street, the two largest and most notorious ESG-promoting asset managers."
At its meeting Oct. 19, the OPERS board authorized a special committee appointed by Manek to issue a request for proposal to hire an investment consultant, law firm or accounting firm to review its RFP process in July.
"The board would have to take final action before hiring any such entity," Fox said.
State legislators now are considering tweaks to the controversial legislation. During a three-hour hearing led by state Sen. David Rader on Oct. 11, Russ pushed for changes to the legislation that would clarify or walk back the fiduciary exemption.
"If the bill is important to the state of Oklahoma, it's got to be clear enough that it's defensible. Otherwise, we won't change one penny of our position financially for the state," Russ said.