Monday, July 14, 2014

Three Little Public Sector Pigs

Consider the following three stories.  The first deals with a former public official:

Former mayor Ray Nagin, the businessman-turned-politician who became the worldwide face of the city after Hurricane Katrina, was sentenced to 10 years in prison Wednesday.

Nagin, 58, was ordered to report to federal prison Sept. 8 and to pay restitution of $82,000. He was found guilty Feb. 12 of fraud, bribery and related charges involving crimes that took place before and after Katrina devastated the city in August 2005.

The second focuses on those entrusted with public assets:

The first two payments were made in paper bags. The last installment came in a shoebox. The handoffs all came at a Sacramento hotel near the Capitol.

In a stunning admission covering years of corruption, the former chief executive of CalPERS said Friday he accepted $200,000 in cash, along with a series of other bribes, from a Lake Tahoe businessman who was attempting to influence billions of dollars in pension fund investment decisions.

Fred Buenrostro, who ran the nation’s largest public pension fund from 2002 to 2008, pleaded guilty in U.S. District Court to a charge of conspiracy to commit bribery and fraud. He has agreed to cooperate with federal prosecutors as they pursue charges against his longtime friend, Nevada businessman Alfred Villalobos, a former CalPERS board member.
The third involves a CPA who tried to hide the annual summary of Congressional junkets from public view.  

House Ethics Committee Chairman Mike Conaway said Thursday that his panel would undo its controversial decision to delete the requirement that lawmakers list free trips they receive on their annual disclosure reports.

"We will reverse that decision," Conaway said during an appearance on a local radio talk show in his Texas district.  The Ethics Committee had quietly deleted the disclosure requirement behind closed doors and without any public announcement.

The last story is interesting in light of the first two.  Behind closed doors is where influence is traded.  Ask Jeb Bush who landed a seat on Tenet Healthcare's board after the company lobbied his brother's White House after Hurricane Katrina.  Bush's Lessons Learned report omitted 35 deaths in Tenet's Memorial Medical Center post Katrina and brother Jeb received a specially created board seat.  Coincidence?
CalPERS invested in The Carlyle Group in 2001, holding its PEU stake until last summer.  The Carlyle Group's LifeCare Hospitals was responsible for 25 of Memorial Medical Center's Katrina deaths.  In our small PEU world neither Carlyle nor LifeCare made the Bush Lessons Learned report.

At least they nailed Ray Nagin, two CalPERS chiefs and shamed a CPA Congressman.

Update 1-14-15:  Alfred Villalobos committed suicide a week before his trial was to begin.

Update 6-1-16: CalPERS ex-CEO is going to jail for 4 and 1/2 years for placing his greed over pensioners