Pennsylvania Public School Employees’ Retirement System, Harrisburg, will not consider new investments with Apollo Global Management due to investigations over Chairman and CEO Leon Black’s professional relationship with financier and registered sex offender Jeffrey Epstein.
PennPSERS spokesman Steve Esack said in an email that the $59 billion pension system made the decision after speaking with the private equity firm “about the ongoing legal investigations involving the late Jeffrey Epstein and his past personal financial relationship with Apollo founder Leon Black.”
The “investment team informed Apollo that it will not consider any new investments at this time,” Mr. Esack wrote, adding that PennPSERS “is closely following the ongoing legal issues and the newly launched internal Apollo investigation.”
PennPSERS currently has $918 million committed to Apollo funds.
Another Apollo investor, the $416.9 billion California Public Employees’ Retirement System, Sacramento, is pressing Apollo on the matter.
“Last week, CalPERS initiated a call with Apollo to discuss newly published information” regarding Mr. Black and Mr. Epstein,” said spokeswoman Megan White in an email. CalPERS first contacted Apollo last year when Mr. Black’s relationship with Mr. Epstein first came to light.
“We expect the general partners we do business with to follow the same core values of integrity and accountability that guide our own investment decision-making,” Ms. White said. “We are monitoring this situation closely.
CalPERS had $20.2 million invested in Apollo Global Management stock and close to $1 billion in private equity investments managed by Apollo as of June 30, 2019, according to CalPERS’ most recent investment report.
Consultant Cambridge Associates could stop recommending Apollo, according to a report by Bloomberg. Cambridge told clients its deliberations were prompted by lingering questions over the ties between the two men. A representative for the firm declined to comment.
On Wednesday, a filing with the Securities and Exchange Commission said Apollo hired law firm Dechert to conduct a “thorough, independent review” of Mr. Black’s relationship Mr. Epstein.
Apollo’s board of directors on Tuesday asked its conflicts committee, made up of independent directors, to retain outside counsel to independently confirm information Mr. Black has given about his professional relationship with Mr. Epstein.
Mr. Epstein was found dead in his cell at the Metropolitan Correctional Center in New York on Aug. 10, 2019, awaiting trial on federal charges of operating a sex trafficking ring.
During Apollo’s July 31, 2019, earnings call Mr. Black said Apollo did not have a business connection with Mr. Epstein. Mr. Black said Mr. Epstein was on the board of the Black Family Foundation when it was created in 1997. Mr. Epstein resigned from the board in 2007, Mr. Black said, even though foundation federal tax filings continued to list him as a director for years afterward. That discrepancy was a mistake, Mr. Black said during the call.
Mr. Epstein also provided professional services to Mr. Black’s family partnership and other family entities, Mr. Black said. In addition, Mr. Black said that he donated to charitable organizations affiliated with Mr. Epstein, and Mr. Epstein donated to charities affiliated with Mr. Black.
Apollo had about $414 billion in assets under management on June 30.
