News:

Bush denies 'secret conspiracy' in Florida pension fund audit
TALLAHASSEE — Gov. Jeb Bush said Tuesday there was no conspiracy afoot when a top deputy asked the federal government to delay an audit on Florida's pension fund until after the general election. After the request, the inspector general of the Health and Human Services Department ordered delays in an audit of Florida's pension fund that ensured the review couldn't be finished before Bush won re-election. 11/27/02

Pension fund audit delayed after governor's office call
WASHINGTON — At the request of Gov. Jeb Bush's office, the inspector general of the Health and Human Services Department ordered delays in a federal audit of Florida's pension fund that ensured the review wouldn't be completed before Bush won re-election, officials say. The delays by Janet Rehnquist, daughter of Chief Justice William Rehnquist, are now being investigated by Congress. 11/26/02

Investigator's role in delay of state audit is questioned
Congressional investigators are looking into whether federal Inspector General Janet Rehnquist, daughter of U.S. Supreme Court Justice William Rehnquist, went out of her way to help Jeb Bush win reelection in Florida. 11/26/02

Pension plan unpopular for several reasons
When the Legislature created the "defined contribution" pension plan two years ago, everybody said state employees wouldn't eagerly jump into it. 9/2/02

State pension plan hit by market woes - 
TALLAHASSEE - When Gov. Jeb Bush first proposed changing the state's pension plan two years ago, he promoted it as a way for the state to help out its workers and give the state an ability to attract eager employees who otherwise may avoid public service. -- But the steep declines on Wall Street have scared away many state workers from switching to this new Florida Retirement System ''Investment Plan.'' Four and a half months into the largest ever public pension plan change in the United States, only about 3,000 state workers and other public employees have chosen to give up their traditional pension plan that guarantees them benefits when they retire. 7/28/02

Pension Plans Shortfalls Hit Record - WASHINGTON -- Shortfalls in private companies' pension plans soared to $111 billion last year, the highest level ever reported by the Pension Benefit Guaranty Corp.-- 
That was four times the $26 billion shortfall that companies reported for 2000, according to the PBGC, the government's insurance program for private workers' pensions. A shortfall is the amount of money that would be owed to pension participants if a plan was terminated. 7/26/02

Where has all the money gone? Retirement cash vanishes from 401(k)s
For many American workers, 401(k) plans are their sole retirement money after Social Security and their introduction to investing in the stock market.-- 
Most companies have abandoned traditional pension plans, which guaranteed employees a set monthly income at retirement. Instead, they encourage employees to save for retirement in tax-deferred accounts that became popular in 1980s and 1990s while matching a portion of the employees' savings.-- 
But it means the responsibility -- and risk -- for retirement investing shifted from the companies to the individual, which means potential for losing one's entire investment portfolio.-- About 35 million people, or a third of all workers, participate in these retirement plans, with new groups, such as government workers, joining every day. Last month, Florida began to allow 600,000 local, county and state government workers to opt out of the state pension system and manage their retirement savings through an individual account. 7/22/02

Top

AFSCME Investigation Reveals Mismanagement
by Florida Trustees Led to State Pension System's $335 Million Loss on Enron
Public Employees' Union Calls
for Outside Review, Revamped Oversight Board

Tallahassee, FL - The American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO, has uncovered a primary cause of the shocking $335 million loss on Enron stock held by the Florida public pension system - grave mismanagement by the government body charged with overseeing the state's investments.

According to a report released today by AFSCME Florida Council 79, Inside the Florida State Board of Administration: Mismanagement Made the Enron Loss Inevitable, the State Board of Administration (SBA) repeatedly engaged in poor investment practices under the watch of its Board of Trustees, chaired by Gov. Jeb Bush. Despite warnings from inside and outside the SBA, the trustees failed to correct these problems, leading to a stunning loss on Enron stock nearly three times greater than that of any other state retirement fund. The trustees failed to act as Alliance Capital Management, one of the pension fund's money managers, continued to invest in Enron even as its financial instability became public and the Securities and Exchange Commission was investigating the corporation.

"SBA's bad investment practices led to the massive loss of retirement funds for state employees and taxpayers," AFSCME International President Gerald W. McEntee said. "Governor Bush and the other trustees betrayed the faith put in them by Florida workers by putting their retirement security at risk. Plain and simple, there was a reason that the Florida pension fund lost three times more on Enron than any other state fund: mismanagement by the SBA."

"Public employees who have a stake in their retirement future are best able to ensure that their funds are well managed. Florida, unlike most other states, leaves investment decision-making completely in the hands of politicians. For Americans to regain confidence in the security of their retirement funds, equal representation of workers and retirees on public pension funds is essential," McEntee added.

As a result of the investigation, AFSCME Florida Council 79 called today for major reforms of the SBA, including outside review by an investment fiduciary who will report findings to the state legislature and restructuring the state's retirement system as an independent agency with investment powers and a new board of trustees with half of its members chosen from the ranks of plan participants and retirees.

"The State Board of Administration was asleep at the wheel. After 30 years of service to the State of Florida, my pension is my primary retirement income. Jeb Bush may not think essential reforms are needed to the Florida retirement system because it's not his money. Most Florida workers like me don't have golden parachutes like greedy corporate executives so we need our pension protected," AFSCME Council 79 President Jeanette Wynn said.

AFSCME staff reviewed 15,000 pages of SBA documents gathered from a Freedom of Information request under Florida's Government in Sunshine laws. Inside the Florida State Board of Administration: Mismanagement Made the Enron Loss Inevitable describes the management problems of the SBA. In addition, unlike most other states which have independent fiduciary boards that monitor the investment process, the Florida SBA has three elected officials (the Governor, Treasurer and State Comptroller) with exclusive responsibility for overseeing the state employee retirement fund.

The trustees of the Florida State Board of Administration are the least representative of plan participants of the 100 largest public pension funds, ranking dead-last in the number of active and retired employees who are board members - zero.

In its report, AFSCME Council 79 calls for four actions that must be taken in order to avoid another Enron-type loss of state pension money by the Florida SBA. These include:

1. A full operational review of the SBA by an external compliance agency or consultant reporting its findings to the state legislature.

2. The creation of an independent auditor and independent evaluation of compliance procedures with specific lines of authority and direct accountability to the SBA Board of Trustees.

3. The restructuring of the Florida employees retirement system as an independent agency with investment responsibilities and a separate board of trustees with specific authority to hire a chief executive officer. Plan participants and retirees should represent at least half the members on a reconstituted board of trustees.

4. A delay in the current implementation of the "investment plan" defined contribution program until the completion of the full operational review and reform of the management and the oversight of the SBA.

The Florida SBA is responsible for managing the investments of the Florida state government. The SBA invests the funds of approximately 25 different government agencies and trusts. The largest trust is the Florida Retirement System (FRS), the country's fourth-largest public pension system, with approximately $100 billion in assets.

AFSCME Council 79 represents 110,000 Florida public service employees with a direct stake in the pension system's financial security and sound management. Nationwide, AFSCME's 1.3 million members lost more than $1.5 billion of their retirement assets as a result of the Enron scandal through their participation in 150 public pension systems.

Complete 25 page report available for download here    8/31/02

Top

State pension plan hit by market woes

TALLAHASSEE - When Gov. Jeb Bush first proposed changing the state's pension plan two years ago, he promoted it as a way for the state to help out its workers and give the state an ability to attract eager employees who otherwise may avoid public service.

But the steep declines on Wall Street have scared away many state workers from switching to this new Florida Retirement System ''Investment Plan.'' Four and a half months into the largest ever public pension plan change in the United States, only about 3,000 state workers and other public employees have chosen to give up their traditional pension plan that guarantees them benefits when they retire.

Although state officials contend it's too early to say what impact the market woes will have on their plans, they concede that questions coming from state workers show they are fearful about being asked to take control of their investments.

''It's too soon for us to say what the volatility might be doing to the mindset of the participants,'' said Kevin Sigrist, chief of defined contributions programs for the State Board of Administration. ''But it comes back very clearly from state employees that they are thinking less about gain. There is a lower level of comfort overall in investing.''

But if the Florida experiment proves to be a bust it won't be just a setback for Gov. Bush - it will also provide ammunition to Democrats in Washington who oppose the plan put forward by President George W. Bush to privatize Social Security accounts. The president's proposal has been placed on hold due to debates over homeland security and corporate fraud, but the president has continued to back the idea.

The union that represents state workers has clashed repeatedly with Gov. Bush over his push for privatization and civil service changes. The union also has actively urged its members to reject the state's new ''Investment Plan.''

''We believe that the State Board's move away from guaranteed pensions for state workers is bad policy and bad for these workers,'' said Jeannette Wynn, president of the American Federation of State, County and Municipal Employees Council 79, in a recent statement. With some 600,000 active participants and assets of more than $90 billion, the Florida Retirement System is among the nation's largest publicly controlled pension plans. Bush, Comptroller Bob Milligan and Treasurer Tom Gallagher are the three elected officials who control the State Board of Administration, the agency that manages the pension plan.

It's not just state workers and university professors that rely on the state pension plan. Teachers, school district employees as well as many county workers across the state also use it.

Bush and other Republicans, prodded on by Wall Street investment firms that have donated to the Republican Party of Florida and Republican candidates, pushed through legislation in 2000 that allows state workers and other pension plan participants to invest their money in retirement accounts similar to 401(K) plans.

Right now those in the state pension plan are guaranteed a portion of their salary when they retire. The final amount is determined by how long they worked as a teacher or state worker as well as how much they were paid. Employees in the traditional pension plan, who must work at least six years to earn retirement benefits, don't have any say in how or where the money is invested. The State Board of Administration hires money managers to oversee the accounts.

Under the new ''FRS Investment Plan'' how much someone gets when they retire depends entirely on what kind of investments they chose and how well those investments perform. Gov. Bush touted the new plan as a way for employees to earn retirement benefits even if they don't want to spend 20 years as a state worker. Unlike the traditional pension plan, an employee that leaves a public job can transfer assets from the ''Investment Plan'' to other retirement plans.

For the last two years, the state board has hired investment advisers, public relations firms and set up an investment counseling service in order to tell employees about the new plan that offers employees a chance to invest in money market funds, stocks and bonds.

Employees must decide whether they want to switch to the ''Investment Plan'' or stay in the pension plan. Once the deadline passes, they will have one other chance during their life to reconsider. All new employees are also given a chance to choose.

State workers first started hearing about the ''Investment Plan'' in late February. Teachers received their inch-thick packets in April, and kits will be mailed out to county employees in August. The entire selection process for all 600,000 participants won't end until early next year.

Sigrist said that last year the state board estimated 235,000 people overall would opt to switch from the pension plan to the ''Investment Plan.'' But as the Aug. 31 deadline for the first group of employees approaches, many appear content to stay put.

Some 159,000 state workers and university employees are included in that first group of employees. As of mid-July just 2,400 state workers and 3,000 employees overall have decided to switch to the FRS ''Investment Plan.''

''It's disappointing only 3,000 or so have taken advantage of it, but I don't blame them,'' said Rep. Mike Fasano, R-Spring Hill, one of the sponsors of the legislation that created the FRS ''Investment Plan.''

Fasano, who works for investment firm Morgan Stanley Dean Witter, says he's not bothered by the low amount of participation so far, adding that any employee should weigh whether the new plan is right for them.

''That's why we went through all of that process to make sure people are well informed,'' said Fasano, who said he is one of the 3,000 people who has switched from the pension plan to the new ''Investment Plan.'' ''No one should just fly into an investment just because it sounds good. I believe once the market comes back around maybe more people will want to participate.''
State pension plan hit by market woes, By GARY FINEOUT, Gainesville Sun, 7/28/02

Top

Public Citizen calls for JEB to recuse himself from ENRON investigations

Letter to Florida Gov. Jeb Bush

February 8, 2002

The Honorable Jeb Bush
Office of the Governor
The Capitol
Tallahassee, Florida 32399-0001

Dear Governor Bush:

Florida’s pension fund – for which you chair the oversight board – lost $334 million on Enron stocks and bonds in the wake of the company’s collapse. Many of the pension fund’s investments were made as Enron’s stock was plummeting in value and financial problems at the company were being publicly revealed. Investigations into the fund’s losses are now being conducted by the Florida attorney general, the Florida State Board of Administration and a committee appointed by the state House of Representatives.

Because of the conflicts of interest resulting from your strong ties to Enron and your extensive entanglements with the company, we call for you to recuse yourself from making any decisions or taking any actions relating to these investigations, and from taking an active role in any lawsuits against Enron, Arthur Andersen or other entities related to the Enron collapse. We also call on you to refrain from taking any actions on behalf of the Board of Administration that relate to Enron.

Your longstanding relationship with the company and its executives requires that you step down from any potential involvement in bringing Enron to justice. It is a state and national imperative that any wrongdoing be fully and independently investigated and that these investigations avoid even the appearance of conflict of interest.

We make our request because:

• You have been a business partner with Enron. In 1995, you invested nearly $92,000 in an Enron affiliate, Enron Liquids Pipeline, and sold your interest 10 months later for a $7,100 profit;

• You appointed Walter Revell to be chairman of the Florida 2020 Energy Study Commission, which was established to develop energy strategies for the state. Mr. Revell is a 25-year friend of Ken Lay. The policies set forth by the commission could have greatly benefited Enron;

• In 1999, Enron subsidiary Azurix proposed a scheme under which it would help pay for Everglades restoration in exchange for water rights. Approximately two weeks after Enron’s plan was proposed, you appointed James Garner III, an Azurix lobbyist, to the Governor’s Commission for the Everglades;

• Enron has been a generous contributor to your campaign and to Florida Republicans. Enron, its subsidiaries and its employees contributed $420,000 to Florida political campaigns between 1995 and 2001, more than 80 percent of that going to Republicans, according to the St. Petersburg Times. And the Florida Republican Party received at least $76,500 from Enron towards your election in 1998, state records show;

• According to Florida Department of State records, you accepted nearly $20,000 from Enron, its subsidiaries, and the company’s accounting and law firms, during your 1998 campaign, including $6,500 directly from Enron executives;

• Ken Lay reportedly gave money to the Foundation for Florida’s Future, a think tank you founded (the foundation refuses to reveal its funders or the amount of their gifts);

• The Board of Administration’s deputy executive director is Coleman Stipanovich, brother of J.M. "Mac" Stipanovich, a Republican political consultant and lobbyist who ran your gubernatorial campaign in 1994;

• In January of this year, Richard Kinder, former Enron president and large donor to your brother, George W. Bush, and the Republican Party, held a fundraising event for you at his Houston home, which you attended;

• Enron and its employees contributed $312,500 to your brother’s 1994 and 1998 Texas gubernatorial campaigns, and another $113,800 to his presidential campaign. Enron also gave $10,500 to the Bush-Cheney Recount Fund and $300,000 to the Bush-Cheney 2001 Inaugural Fund, according to the Center for Responsive Politics.

Other prominent officials have recused themselves from involvement in any investigation or litigation involving the company. U.S. Attorney General John Ashcroft did so, as did John Cornyn, attorney general for Texas. Three federal judges have recused themselves, as has the entire U.S. Attorney’s office in Houston.

In light of the fact that other public officials have acknowledged their conflicts and reacted accordingly, we believe that you owe the people of Florida a complete explanation of the extent of your ties with Enron. We ask you to:

• Disclose all contacts you have had with Enron executives or agents since you have been governor and explain the nature of those contacts;

• Tell the public when you knew Enron was in financial trouble, particularly whether you had knowledge of Enron’s shaky financial condition as the state pension fund was buying shares that were rapidly declining in value;

• Explain what safeguards you put in place, or attempted to put in place when you became governor to ensure that such dramatic pension fund losses would not happen; and,

• Tell Floridians what measures you plan to enact to ensure that such losses do not occur again.

We look forward to your making this information available to the public.

Sincerely,

Joan Claybrook
President
Public Citizen  (click here for much more from Public Citizen on this topic)

(...posted by JacobL, 2/20/02 

(Top)

Florida, Enron, and Alliance Capital

http://www.buzzflash.com/contributors/2002/01/011402_Florida_Enron_Alliance.html

January 14, 2002

The wealthy and powerful, because they are a small segment of the population, move in the same small circles. They look out for each other, despite their competitiveness, thus ensuring they all retain their riches -- while further enriching themselves off the "little people." The immolation of Enron and the malfeasance of Alliance Capital Management are perfect examples.

As reported in the Sunday, January 13, edition of the Palm Beach Post, Florida lost more than $300 million from its state pension fund due to stock losses after Enrons collapse. The Post reported:

"Last month, the [Florida] state Board of Administration, which Gov. Bush heads, fired Alliance Capital Management Corp., saying it was troubled by the New York financial adviser's decision to continue buying Enron stock even after Enron admitted it had lied about its finances."

http://www.gopbi.com/partners/pbpost/epaper/editions/sunday/
news_c314e1bc268f40b10070.html

Now, why would Alliance Capital continue to buy plummeting Enron stock with state employee pension contributions? For one, there might have been a relationship that the Post didnt touch upon in its report. According to an October, 29, 1999 press release from Enron:

"The Board of Directors of Enron Corp. announced today the election of . . . Frank Savage to the Board, effective immediately . . . Savage is chairman of Alliance Capital Management International . . . "

http://www.enron.com/corp/pressroom/releases/1999/ene/boarddirector.html

Curiously -- or disingenuously -- Enron announced in late October of 2001 that it was forming a "special committee" to investigate . . . itself! Though Frank Savage was appointed to the Enron board of directors in 1999 (above), in last Octobers announcement Enron claimed the special committee would be joined by "independent director Frank Savage, CEO of Savage Holdings LLC."

http://biz.yahoo.com/prnews/011031/daw077_1.html

Furthermore, according to Qualcomm, Mr. Savage is "Chairman of Alliance Capital Management International and is a Director of Alliance Capital Management Corporation."

http://www.qualcomm.com/about/bios/bod.html

And on the Council on Foreign Relations website, his biography states:

"Mr. Savage is Chair of Alliance Capital Management International and director of Alliance Capital Management Corporation. He has had a long career in international banking, corporate finance, and global investment management, serving in the Middle East and Africa for the International Division of Citicorp in earlier years. Mr. Savage serves on the boards of corporations and not-for-profit organizations, including Lockheed, ARCO Chemical Company, Essence Communications, The Johns Hopkins University, Howard University, and the New York Philharmonic."

http://www.cfr.org/Public/resource.cgi?pers!199

However, if you look at Alliances websites there is no mention of Mr. Savage, and according to the board of directors page on Enrons website Mr. Savage is only the CEO of Savage Holdings. Whats more, when one links to Enrons bio page, Mr. Savages name doesnt even appear on Enrons board.

http://www.enron.com/corp/pressroom/board.html
http://www.enron.com/corp/pressroom/BIOS/

If this cross-pollination of executive direction isn't explanation enough for Alliances irresponsible purchase of Enron stock, the other shoe drops with a report by the South Florida Sun-Sentinel, where they write that, "Alliance Capital was the biggest holder of Enron shares on Sept. 30, with 43 million shares or 5.78 percent of the stock."

http://www.sun-sentinel.com/business/local/sfl-
zfunds06dec06.story?coll=sfla-business-headlines

Under those circumstances, Alliance Capital had an obvious interest in protecting its own hefty investment in Enron. Put that together with the apparent high-level relationship between Alliances board and Enrons board; put it together with the fact that the Florida Board of Administration was led by George Bush's brother Jeb; and one must ask the question, "Was Florida's pension fund was purposely looted?"

The only logical explanation for the continued waste of Florida's money on Enron stock is that well-connected people in Florida government, Alliance Capital, and Enron tried to funnel money into Enron in an effort to prop it up. And its hard to believe that Floridas pension fund was the only source being tapped for this purpose.

Wealth and power are the ties that bind in politics and corporate America. Are we to believe that Alliance Capital knew nothing about Enrons woes before it publicly announced its shady bookkeeping? Are we to believe that Jeb Bush, his Board of Administration,
Alliance Capital, Mr. Savage, and the entire Enron board never communicated with one another? That they never discussed ways to assist Enron? That they did not seek ways to bail out George Bushs benefactor and Bush family friend Kenneth Lay?

From the theft of the presidential election, to West Coast energy market manipulation; from the secret Bush/Cheney energy policy, to the biggest bankruptcy in US history; the same names keep popping up over and over again. They all hold power in the executive
branches of government and in the executive boardrooms of some of Americas largest multi-national corporations.

The only question left to ask is, "What did these people know and when did they know it?"

* * *

by BuzzFlash Reader Mike Kress, Everett, WA.