The Term is "Kafkaesque"

Katie Muth, a trustee of the Pennsylvania Public School Employees Retirement System pension fund, has had to file a lawsuit to find out what the fund's investments actually are.

It appears that the private equity looters are claiming that their investments are proprietary, and so no one, not even an official who is nominally in charge of the fund, and has a fiduciary responsibility toward the fund, should not be allowed access:

Despite, or maybe because, the Pennsylvania Public School Employees Retirement System is in a boatload of trouble, including falsifying returns, its executives are fighting tooth and nail against the efforts of recently-appointed trustee Katie Muth to get basic records on what the fund owns, leading her to have to sue to get information that is clearly necessary for any board member to do an adequate job. We’ve embedded her filing and the latest, interim ruling at the end of this post.

Anyone in corporate America or investment land will recognize how batsh%$ crazy this situation is…..yet it is pervasive across public pension funds. A board member has the right to any record in the possession of the organization they oversee. And any board that is met with the sort of defiance that PennPSERS is engaging in should tell the CEO that if staff does not fall in line, they will be axed. But public pension fund boards too often give top priority to avoiding any controversy, out of fear that it will help those who want to gut or end public pension funds. The result instead is deep seated corruption and lousy returns.

(%$ mine) 

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In The Lever, Matthew Cunningham-Cook spoke to Muth, where she describes how she is also seeking broader information about the fund’s holdings and is being stonewalled. Muth is troubled both about the poor returns of opaque, complex, high fee investments like private equity and hedge funds, and also that PennPSERS may be funding socially destructive investments like outsourced hospital staffing firms engaging in predatory billing practices. Note that the interview indicates that Muth sought a full inventory of alternative investments, meaning investment level, not fund level. That would mean the portfolio companies currently in Apollo VIII, for instance, and not “Apollo VIII”. From The Lever:

But Muth says that when she asked the fund’s investment staff for more information about its high-risk investments, she was rebuffed — so in June 2021, she sued the fund for basic information about its investments.

“[I asked them to] give me a comprehensive list of all alternatives and traditionals, and find if we have private equity in ambulances and hospitals,” Muth told The Lever. “Their response was, ‘We have over 495 portfolios it would be impossible to track what’s in it.’ That’s BS… That’s why I’m suing: I don’t know what the money is spent on. I have an obligation as a fiduciary to make informed decisions.”

This response, if Muth has it even remotely right, is damning. PennPSERS as a fiduciary must know what it is investing in. It is a complete breach of its fiduciary duty to say, “Oh we invested in all this complicated stuff, don’t ask us to know what we did.”

Seriously, this buggers the mind.

It also makes one wonder how the professional staff for the pension fund are getting paid off by private equity and the rest of the banksters to do this.

This sh%$ is corporate governance 101.