By Stephen Janis
Heavy stock market losses and calls for increased taxpayer contributions to fund city employee pensions have not stopped some board members of the Baltimore Employees' Retirement System from taking trips to the Middle East, a swank Caribbean resort, and tropical locales like San Paulo, Brazil to attend “investment” conferences.
Minutes of ERS board meetings reviewed by Investigative Voice show that the body that manages retirement funds for 10,000 city employees approved a travel itinerary in 2007 and 2008 that would make Marco Polo blush.
Among the trips paid for with taxpayer-provided retirement funds was an April 2008 trip to St. Thomas, Virgin Islands by Comptroller Joan Pratt, approved by the board last February, an excursion to San Palo, Brazil in the summer of 2007 by Executive Director Roselyn Spencer approved by the board last year, and most recently a trip by Pratt and Spencer to Dubai approved by the board in the fall of 2008.
Several of the trips occurred as investment advisors told the board they could not determine the extent of losses from illiquid mortgage-backed securities and worthless Lehman Brothers bonds held by the fund, losses that board members now peg at hundreds of millions of dollars.
In all, Investigative Voice found roughly 14 trips both foreign and domestic approved by the board, including at least six to international destinations funded by taxpayer money set aside by the city to pay for the retirement of city employees.
The travel comes as city taxpayers will have to fork out an additional $7 million in payments to the fund come July 1, a 15 percent increase over the previous year, to cover past market losses.
Still, despite the increased demand for taxpayer dollars, the board generously funded overseas travel, according to meeting minutes. In 2007 and 2008, trips were made to Portugal, Brazil, South Africa, the Virgin Islands, and Denmark -- all ostensibly to participate in “educational investment” conferences sponsored by investment advisers and hedge fund managers seeking lucrative deals to manage city pension funds.
Trustees who chose to travel within the contiguous 48 states for investment conferences also traveled in style. Treated to golf tournaments, sumptuous dinners and stays in five-star hotels like the Arizona Biltmore Resort & Spa in Phoenix and the Waldorf-Astoria in New York City, according to event agendas, Investigative Voice uncovered at least eight domestic investment conferences that listed ERS board members as attendees since April 2008.
The board’s penchant for travel does not sit well with all board members.
Board member Ernest Glinka questioned how his fellow trustees managed to fund exotic trips to hotels like the Arizona Biltmore Resort and Spa that charge up to $1,000 a night for a room, with a $10,000 annual individual “educational” allowance.
“The sponsors of the conferences pay for part of the expenses because they want access to the trustees; that’s why they pay -- they want business,” he said. “But it’s a violation of city ethics to accept gifts from people who are doing or want to do business with the city, and not declare them.”
Glinka, who routinely voted against travel for board members, said that while the costs of each trip are not divulged, he did not believe the extensive travel of other board members could be funded with the $10,000 allowances.
“I used to travel myself, but when the rules changed, I stopped.”
Spencer, the ERS' executive director, did not return multiple e-mails and phone calls for comment. When asked last week about the board’s overseas travel, Board Chair Pratt declined to comment.
City ethics code requires board members to disclose gifts valued at more than $50 from people doing business with the city. But none of the ethics disclosure forms filled out by board members in 2007 listed any travel perks concerning investment conferences. In fact, one board member, Thurman Zollicoffer, has yet to file his 2007 ethics disclosure, a violation of the city ethics code.
City Councilman Bernard "Jack" Young, chairman of the city’s Budget and Finance committee, said travel during a fiscal crisis sends the wrong message to city employees who may soon be facing layoffs.
“I think they should stop traveling, I don’t think the board should be going anywhere right now given the city’s fiscal situation,” he said. “When people are about to lose their jobs you shouldn’t be going to a resort to play golf … period.”
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However, it would seem unlikely that opportunities for investment education exist overseas exclusively. That being said, I wonder what the penalty is for an ethics violation at this level? If these guys accepted gifts from these entities in excess of allowable amounts, knowingly I'd say we have an integrity problem. With recent events having happened and people's faith in their futures shaken, I'd have to say ethics violations of this type need swift, decisive action. People need to know that at least their pensions are safe. Especially those who don't live a lifestyle where they can globe hop. I think and investigation is warranted to figure out what kind of, if any business was generated from these "educational" trips, how the members were compensated for their business, and to what extent if any ethics were violated. If it becomes evident that the ethics rules were violated, there should be punitive action.
It is time that people are held accountable to an ethical standard. If this has been happening all along, maybe we wouldn't be in such a mess now.