The Hicks Muse Deal In 1997 the Board approved a $100 million closed session deal with Hicks Muse (a limited partnership). The investment, opposed by CalPERS staff and consultants, was lobbied by former Board member Alfred Villalobos and Senator Richard Polanco. Villalobos reportedly was paid at least $750,000 to act as a "placement agent." The deal was made public by Paul Schnitt of the Sacramento Bee. A later LA Times article noted that Hicks Muse could profit from its partners "by as much as $40 million a year from fees even if the deal lost money for the pension plan." McRitchie Wins Release of Minutes Jim McRitchie began pressing for release of the closed session votes and minutes in June of 1997. After claiming the Government Code requires that closed session minutes "be kept confidential," CalPERS finally released them to Jim on 8/25/97. Senator Schiff Holds Hearing Also on 8/25 the Chairman of the Public Employment Retirement Committee questioned how the public could monitor the effect of political contributions on investment and contract decisions at CalPERS. That's the job of the Fair Political Practices Commission (FPPC), he was told by a CalPERS representative. The FPPC only has access to political contributions, Senator Schiff pointed out; if CalPERS doesn't release the votes, we can't know if there's "pay to play." Jim McRitchie, the only person to testify on behalf of state or university employees, praised Senator Schiff for his intervention and urged further disclosure measures at CalPERS. Ponzi Scheme The closed session minutes reveal that CalPERS consultant Hamilton Lane raised "conflict of interest issues." Hicks Muse was purchasing investments from prior partnerships. In common language, a pyramid or Ponzi scheme. They noted CalPERS already had a "large exposure to the types of transactions which the Fund will pursue," performance has been below that of "funds pursuing similar investment targets" and Hicks Muse presents "risks which are not present in other funds pursuing similar investments." McRitchie Questions Loyalty and Care McRitchie questioned whether the Hicks Muse investment met the fiduciary duties of loyalty and care. He was the only candidate to testify before the Benefits and Program Administration Committee and recommend specific disclosure measures to increase the accountability of individual Board members. Jim McRitchie Goes Online How can we hold Board members accountable if their most important votes are taken in private and never released? Even people with the best intentions are more likely to take compromising positions if they know they'll never be held accountable. I'll work to put agendas, votes and minutes online so that you can easily find out how individual Board members vote on the issues that count. Ever try getting in touch with Board members or other candidates? I'm not hiding; I want to work with you. Here's my home phone number 916-691-9722, e-mail address jm@perswatch.net, internet site http://www.perswatch.net.