Riley: Why Does NY Have Funded and Honest Pension Plans?
Tuesday, February 23, 2016
There have been several efforts over the last few decades in Rhode Island to create an Office of Inspector General. Operation Clean Government introduced legislation in 2001 and nearly every year since them some version of that legislation has been introduced.
I am very interested in the idea because I believe our Government has stopped working and protecting taxpayers. Despite the very obvious corruption and abuse in elected officials no serious attempt like the OCG effort has even come close to happening. Massachusetts implemented an OIG in 1981 and in New York Comptroller Thomas P. DiNapoli established the Office of Inspector General by executive order in 2008. His OIG was specific to his office.
Treasurer Magaziner has an opportunity
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTMy suggestion is that Treasurer Seth Magaziner can build on his transparency and accountability campaign by considering creating an Office of Inspector General within Treasury related to pension abuse by local public officials or public employees. As it stands now, the Attorney General has said that Public Pension Abuse is not within his jurisdiction and Auditor General Dennis Hoyle makes the same claim.
Therefore, it is open season on retirees and taxpayers to be swindled by elected officials and unscrupulous public employees alike. That is exactly what is happening in Providence right now. I have reported abuse to both offices with little satisfaction. There is zero incentive for these officials to investigate Providence for federal violations. Yet every taxpayer will lose due to Providence’s lies. Establishing this office will bring obvious scams to a halt. I believe the oversight that has been ignored and sidestepped by both the Speaker and the Governor could help improve overall performance.
Treasurer Raimondo’s efforts of the ill-fated Pension Crisis Commission of 2012 to 2015 was a hoax as Mayor Taveras refused to attend and Johnston’s hopelessly underfunded Mayor Polisena used the commission as a soap box. There is now reason to believe that a well-run and well-monitored pension system will produce better long-term investment results than a system with no rules or accountability. Providence has almost no rules regarding accountability for pension investments and returns. They have illegally loaned plan funds, they have consistently manufactured false returns and lied about their assets. The City has joined in with the investment Chair as always the current Mayor. Whether Cianci, Cicilline, Taveras or now Elorza, the City has issued false and misleading information about the pension plan and the financial condition of the city year after year.
Providence still lying
The recent Providence 2015 CAFR is no exception. Providence continues to mislead. Consider this, the Providence pension investment commission and Pension Plan has had only ONE investment adviser since 1995 and he was hired by the late Mayor Buddy Cianci. Why? Look at the returns in the table. They have been horrible. The adviser “Wainwright Investment Counsel” will no doubt say the City of Providence only gives them “some” of the assets that the city reports to the world in legal public documents. If that is really the case why is Providence the only city in America overstating and over-reporting its pension assets? Why is no one looking at this? Mr Kilmartin? Mr. Doyle?
The table below shows four different pension plans in the Northeast and their returns on reported assets.
I have provided evidence-made charges to Rhode Island officials regarding Providence pension accounting that are similar to Mr. Markopoulos (of Madoff fame) charges against MBTA pension accounting. In Massachusetts these charges are taken seriously because there is an inspector general. In Rhode Island charges like these are ignored and almost laughed at. Someday, maybe soon, local regulators or federal regulators will move into Providence. Either way taxpayers deserve and Inspector General who is concerned about pension fraud and corruption.
Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.
Photo courtesy of static/flickr.com
Related Slideshow: Timeline - Rhode Island Pension Reform
GoLocalProv breaks down the sequence of events that have played out during Rhode Island's State Employee Pension Fund reform.
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