CalPERS officials met with the staff of Rep. James E. Banks, R-Ind., concerning the congressman's Feb. 12 letter asking California Gov. Gavin Newsom to investigate CalPERS' CIO for investing more pension fund capital in Chinese companies.
In a letter dated Feb. 20 to Mr. Banks, CalPERS CEO Marcie Frost recapped the four points discussed in the meeting. The letter said CalPERS officials do not select the companies it invests in and Mr. Newsom does not hire the CalPERS CIO.
The letter also said "the Office of Foreign Asset Control is responsible for restricting which equities investors may trade."Lastly, the letter emphasized that "CalPERS has a duty to seek returns in the market sufficient to meet the pension obligations to its beneficiaries, not to promote a policy agenda of any persuasion through its investment strategy."
Ms. Frost reiterated that the international equity portfolio of the $401.4 billion California Public Employees Retirement System, Sacramento, is passively managed using the MSCI and FTSE indexes.
"CalPERS uses the MSCI and FTSE indices as do many public pension funds across America, including the ($36.7 billion, Indianapolis-based) Indiana Public Retirement System in your home state," Ms. Frost said.
In a Feb. 12 statement, Mr. Banks had claimed that "CalPERS has been funneling retired public servants' savings to companies that abuse human rights and supply the Chinese military. And it has done so at the behest of its CIO, Yu 'Ben' Meng."
Ms. Frost's letter is not the only recent show of support by CalPERS officials for Mr. Meng. At the Feb. 19 board meeting, CalPERS Board President Henry Jones restated that like the majority of pension funds across the U.S., CalPERS invests in countries around the globe, including China, and that CalPERS' international equity investments are passive.
"At no time did our chief investment officer direct investments in China. I speak on behalf of our entire board that Dr. Meng has our full and unwavering support," Mr. Jones said. "He's a globally respected financial expert who has worked for leading firms in the United States including Barclay's, Lehman Brothers and Morgan Stanley. His commitment to California public service is extraordinary and his integrity above reproach."
