Trustees in charge of the Missouri Highway Patrol's employee pension fund made a questionable $15-million investment decision, according to a report by Auditor Susan Montee.
The report also found the pension fund has racked up sizable travel bills. In one instance, the chief investment officer was reimbursed $505 for a night at a Boston hotel. The investment officer blamed the exorbitant rate on the Fall Classic. The trip coincided with the 2007 World Series. The first two games of the series, which the Red Sox won in a sweep, were played in Boston.
A Big Papi-influenced room rate is chump change next to the money the pension fund placed in a private equity investment fund called Vectis II. In 2008, the board authorized an investment of up to $15 million in the fund, which was fairly new, over the objections of the pension fund's top staff.
The investment decision strayed from board policy. Typically, the chief investment officer works with a consultant on the hiring of investment managers. The process is supposed to be documented to ensure that investments are being made "solely in the best interests of plan participants and beneficiaries." But the board did its business in a closed meeting.
In a response that's included in Montee's report, the trustees do not explain their reasons for investing in the fund, which is sponsored by Stifel Nicolaus Co. and managed by Brooke Private Equity Advisors. Instead, the board says that in 2009 it established a governance committee and engaged a governance consultant.
The pension fund placed $2 million in Vectis II as of May 2010, according to a spokeswoman in Montee's office. The auditor's report does not indicate how the investment has performed.
As for the travel bills, the board says it has moved to a per-diem system for paying for meals and will work to determine "reasonable maximum lodging rates," which is to say that pension fund officials should sign up for Best Western's rewards program.
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