State pension trustees stepped up criticism of the system's staff yesterday, disavowing the top investment official's assertion that the firing of an indicted money manager was "not in our purview."
Comptroller William Donald Schaefer, chairman of the pension board , said he disagrees with Chief Investment Officer Carol Boykin's claim that there was nothing the staff could do to force the dismissal of Alan B. Bond after he was charged with fraud in 1999.
Bond was hired by Baltimore investment banker Nathan A. Chapman Jr., who supervised a group of minority money managers who invested state pension funds. The $26 billion system lost millions of dollars in a fraud perpetrated by Bond.
Schaefer said Boykin had a duty to see that the full pension board was informed about Bond's indictment rather than just telling then-Chairman Richard N. Dixon, who failed to bring the issue to the attention of all trustees.
"Telling the chairman is not telling the board. There's a duty to tell the chairman and report to the board," Schaefer said. "If [Boykin] sees something wrong, it's her duty as the investment adviser to tell the board and not just stand on 'it's not my purview.' "
Boykin was traveling yesterday and could not be reached for comment.
Schaefer's comments after a board meeting yesterday followed his criticism Monday of Executive Director Peter Vaughn for failing to keep the board properly informed about Bond.
The pressure on the agency's top staff mounted yesterday as other trustees agreed with Schaefer's call for a speedier review of the staff's performance than previously discussed.
The board approved a plan under which a consultant is to report by early spring, rather than as late as August, on personnel issues. The consultant would continue to study other issues, such as the trustees' own performance, after delivering findings on the staff.
The compromise addressed Schaefer's opposition to the original study plan, which he criticized as too slow. After the board's vote to change its proposal, Schaefer dropped his threat to oppose the contract award at the Board of Public Works.
Other trustees echoed Schaefer's disappointment with remarks by Boykin and Vaughn putting responsibility for the losses from Bond's activities on Chapman.
State Treasurer Nancy K. Kopp, vice chairman of the board, said that while "legal technicalities" prevented the system from directly firing Bond, it would have been appropriate for the system to communicate its concerns to Chapman.
"I don't see anything that prohibits the board and staff from raising questions about anything that is wrong in the portfolio," she said.
Kopp, who joined the board shortly after trustees fired Chapman in January, declined to say whether she was satisfied with the presentation by Vaughn and Boykin at a legislative hearing Monday.
Bond was indicted for fraud a second time in August last year for a scheme whose victims included Maryland's pension system. Federal regulators shut down his business at that time. He has since been convicted of multiple counts of fraud stemming from both indictments and is in jail in New York awaiting sentencing.
Chapman was fired after the trustees learned that he was under investigation by the Securities and Exchange Commission. The agency is looking into Bond's use of state pension money to invest in Chapman-controlled companies. The pension system lost about $5 million on the investments.
Boykin told legislators Monday that under Chapman's contract with the pension system, he had sole authority to decide which "sub-managers" to include in his investment business.
Chapman's agreement with the system contained such a provision, but it also allowed the system to terminate his company with 30 days' notice without penalty. The Maryland system was the largest client of Chapman's minority investment fund, giving it considerable leverage over his decision-making.
Joseph Coale, the system's spokesman, said yesterday there is no question that the system could have fired Chapman if he refused to get rid of Bond.
"To me, the board is the ultimate authority," Coale said. "To say that we don't have authority to act on behalf of the pensioners when we feel that there is a problem that potentially involves a 'prudent and ethical' standard is absurd."
Also yesterday, two trustees gave further details of a meeting in spring 2000 with a Glendening administration official who wanted to reverse a vote to remove $100 million in pension funds from Chapman's care.
Trustee Carl Lancaster disclosed the meeting with then-Budget Secretary Frederick W. Puddester, a fellow board member, at Monday's hearing in response to a lawmaker's question. Lancaster and trustee G. Bruce Harrison said yesterday they felt no improper pressure during the meeting.
Comptroller William Donald Schaefer, chairman of the pension board , said he disagrees with Chief Investment Officer Carol Boykin's claim that there was nothing the staff could do to force the dismissal of Alan B. Bond after he was charged with fraud in 1999.
Bond was hired by Baltimore investment banker Nathan A. Chapman Jr., who supervised a group of minority money managers who invested state pension funds. The $26 billion system lost millions of dollars in a fraud perpetrated by Bond.
Schaefer said Boykin had a duty to see that the full pension board was informed about Bond's indictment rather than just telling then-Chairman Richard N. Dixon, who failed to bring the issue to the attention of all trustees.
"Telling the chairman is not telling the board. There's a duty to tell the chairman and report to the board," Schaefer said. "If [Boykin] sees something wrong, it's her duty as the investment adviser to tell the board and not just stand on 'it's not my purview.' "
Boykin was traveling yesterday and could not be reached for comment.
Schaefer's comments after a board meeting yesterday followed his criticism Monday of Executive Director Peter Vaughn for failing to keep the board properly informed about Bond.
The pressure on the agency's top staff mounted yesterday as other trustees agreed with Schaefer's call for a speedier review of the staff's performance than previously discussed.
The board approved a plan under which a consultant is to report by early spring, rather than as late as August, on personnel issues. The consultant would continue to study other issues, such as the trustees' own performance, after delivering findings on the staff.
The compromise addressed Schaefer's opposition to the original study plan, which he criticized as too slow. After the board's vote to change its proposal, Schaefer dropped his threat to oppose the contract award at the Board of Public Works.
Other trustees echoed Schaefer's disappointment with remarks by Boykin and Vaughn putting responsibility for the losses from Bond's activities on Chapman.
State Treasurer Nancy K. Kopp, vice chairman of the board, said that while "legal technicalities" prevented the system from directly firing Bond, it would have been appropriate for the system to communicate its concerns to Chapman.
"I don't see anything that prohibits the board and staff from raising questions about anything that is wrong in the portfolio," she said.
Kopp, who joined the board shortly after trustees fired Chapman in January, declined to say whether she was satisfied with the presentation by Vaughn and Boykin at a legislative hearing Monday.
Bond was indicted for fraud a second time in August last year for a scheme whose victims included Maryland's pension system. Federal regulators shut down his business at that time. He has since been convicted of multiple counts of fraud stemming from both indictments and is in jail in New York awaiting sentencing.
Chapman was fired after the trustees learned that he was under investigation by the Securities and Exchange Commission. The agency is looking into Bond's use of state pension money to invest in Chapman-controlled companies. The pension system lost about $5 million on the investments.
Boykin told legislators Monday that under Chapman's contract with the pension system, he had sole authority to decide which "sub-managers" to include in his investment business.
Chapman's agreement with the system contained such a provision, but it also allowed the system to terminate his company with 30 days' notice without penalty. The Maryland system was the largest client of Chapman's minority investment fund, giving it considerable leverage over his decision-making.
Joseph Coale, the system's spokesman, said yesterday there is no question that the system could have fired Chapman if he refused to get rid of Bond.
"To me, the board is the ultimate authority," Coale said. "To say that we don't have authority to act on behalf of the pensioners when we feel that there is a problem that potentially involves a 'prudent and ethical' standard is absurd."
Also yesterday, two trustees gave further details of a meeting in spring 2000 with a Glendening administration official who wanted to reverse a vote to remove $100 million in pension funds from Chapman's care.
Trustee Carl Lancaster disclosed the meeting with then-Budget Secretary Frederick W. Puddester, a fellow board member, at Monday's hearing in response to a lawmaker's question. Lancaster and trustee G. Bruce Harrison said yesterday they felt no improper pressure during the meeting.