State treasury under attack by unwarranted campaign of innuendo
John Calhoun
In Sunday and Monday’s Oregonian, back-to-back front page stories by reporters Les Zaitz and Ted Sickinger attacked Oregon State Treasurer Ted Wheeler for alleged ethical and managerial lapses. Using extensive innuendo (and occasional ignorance of investment management and state law) they imply that the crew at Treasury is mishandling state resources and doing its best to hide information from the public. Nothing could be further from the truth.
It is a critical part of our democracy to have a press that forces government to answer to the citizenry. As individuals we cannot check on government agencies and our elected officials. We depend upon the free press to do this for us. At the same time it is a responsibility of the press to avoid false accusations and the creation of scandal where none exists. When this is done it damages both the credibility of the press and the reputations of those citizens working on our behalf.
Oregon is lucky to have Ted Wheeler as State Treasurer. He is both highly competent and extremely ethical. The campaign by the Oregonian distorts his performance and the integrity of the Treasury staff. In fact, the Oregon Treasury is a model for transparency and accountability and the investment decision-making process is characterized by a system of rigorous checks and balances to protect taxpayers and public retirees. Treasury employees are subject to the highest ethical and financial disclosure requirements of any public employees in Oregon and yet they are paid less, and in some cases much less, than their national peers.
Furthermore the Oregonian campaign of innuendo puts at risk millions of dollars of tax payer money. The investment results for Oregon are among the best in the country and the state’s credit rating was just upgraded by Standard and Poor’s. The Treasury manages $74 billion. If their performance drops by only one tenth of one percent the annual cost to us taxpayers is $74 million. If the Oregonian’s campaign causes good investment managers to leave Treasury or makes it difficult to recruit new talent, we could be exposed to even greater potential losses.
Let us remember how this all started. The Oregonian uncovered expense account discrepancies at Treasury just as Ted Wheeler was taking over as Treasurer. This was a case where the press was serving the public interest. Ted then issued new guidelines for his investment officers and called for an audit. The ethics commission got involved and then cleared 5 of the 8 investment officers they were investigating. The other three are providing additional information on a total of $450 of expenses. However, this has resulted in legal expenses that now exceed $200,000. The Department of Justice cannot provide legal support for these individuals so outside counsel was hired. The Oregonian implies that this is wasteful spending on Treasury funds.
I would suggest everyone ask themselves if they would continue to work for an organization where they did not get legal support when they believed that they complied with that organization’s policies. Why not just leave and work for private firms for more pay and less hassle? Remember that in the balance is $74 million per 0.1% of asset performance. While public employees do have to account to the public, private employees would never have to endure such public attacks or legal exposure over trivial discrepancies. Was the prior policy appropriate? No, but don’t attack Wheeler for what he inherited or staff that followed the then existing policy.
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3:54 p.m.
Apr 4, '11
They must have exhausted their vendettas against Wu, Kitzhaber & Cylvia and John Kroger, so now they are going after Wheeler. When was the last time they went after an R??
4:21 p.m.
Apr 4, '11
Probably a decade or more when there were state level R's. There aren't any left. I don't think this is a partisan issue.
4:40 p.m.
Apr 4, '11
Well, it's been less than 2.5 yrs since voters ejected Gordon Smith -- despite the Oregonian's habit of regularly giving him big fat sloppy wet kisses.
5:15 p.m.
Apr 4, '11
Whining about the press is a sure sign a political party is losing. I know because my party has been doing it for years.
I sympathize with the situation Ted Wheeler is in but he needs to get off defense and find a positive strategy to address this issue. I agree with him that legislation is a better way to deal with this issue than individual ethics investigations but his "safe harbor for following agency policies" won't cut it. The policies need to be confirmed by statute if they are going to take the Treasurer off the hook.
The public is not sympathetic to arguments that business as usual is necessary in order to get and keep good investment managers. The events of recent years have put Wheeler in a difficult position but that's what he signed up for when he took the job.
6:37 p.m.
Apr 4, '11
Jack is spot-on here.
I can't speak to the ethics investigations and don't have a big problem with the agency spending money to defend treasury officials, but the practice of allowing members of the state investment board to accept golf junkets and expensive trips funded by businesses that make millions in fees from the state's pension fund is troubling to say the least, particularly since the treasurer also appears to be shielding those officers from the same kind of public disclosures that other agencies are required to report.
If a Republican Treasurer advocated those kinds of policies, most Blue Oregonians would blow a gasket. Ted Wheeler is an honorable and capable man, but he doesn't deserve a free pass on this one.
10:06 p.m.
Apr 4, '11
how to you go positive when the attacks are based, as John laid out so clearly, on nothing substantial? Wheeler has been positive from the very beginning. he's not the one complaining about the Oregonian; that would be people like John Calhoun, whose experience in matters political outstrips all of us in this room combined.
Ted Wheeler has done any but business as usual. he set new standards for behavior, and he's made sure the #1 thing is being done: Oregon' s money is being invested wisely.
somehow, that little fact seems to slip right past the O's reporters. that is because facts are not things they recognize.
8:16 a.m.
Apr 5, '11
I must demure on your accolades T.A. There are a lot of very experienced, knowledgeable people who have posted here who know more than me about politics.
7:03 a.m.
Apr 5, '11
Right. This isn't about partisan politics. It's about two Oregonian reporters who skirt good journalism. I pointed out (in O comments) that the reporters never appear to have asked Mr. Wheeler to comment on their story (as good journalists would do). They (Les) responded that they had asked 28 detailed questions of Treasury, but they didn't actually elaborate on those responses. IMHO, they're desperate for a scoop, and so do shoddy work.
7:42 p.m.
Apr 4, '11
You guys only care about trumped up charges based on rumor and innuendo at the O when they pertain to your lefty darlings from Multnomah County.
Wait 'til they get the goods on Earl. Then you'll be so beside yourselves defending your far lefty darlings that we can finish getting rid of Wu and all the other Democrats that are spoiling our way of life in Washington County.
I say keep up the good work Oregonian.
10:07 p.m.
Apr 4, '11
oh please, Mr Murrow, do let us know what Earl's goods are. you seem to be in the know; please share with the rest of the class.
you do have something, right? not just making noises?
10:51 p.m.
Apr 4, '11
I take exception to the comment "Treasury employees are subject to the highest ethical and financial disclosure requirements of any public employees in Oregon..." But that's a different topic. However, that being said, why do employees need legal counsel? I appreciate that the state paid for it but I do find that concept offensive. If you are doing your job, following agency policy and your actions are in connection with your job, why do you need legal counsel to defend yourself? Just a rhetorical question.
7:05 a.m.
Apr 5, '11
If someone is asking questions with legal implications, you need a lawyer.
8:41 a.m.
Apr 5, '11
I get that but if you are just doing your job, why do you need legal counsel to defend yourself against management? As I said, just a rhetorical question and in theory, I find the concept offensive. But not uncommon. That's essentially what a union steward does for a represented employee.
10:58 p.m.
Apr 7, '11
And innocent defendants don't need defense lawyers. Right, Lea?
4:22 a.m.
Apr 5, '11
John thanks for the opportunity to discuss this. I don't at all want to come across as defensive -and have been mostly staying out of this. (But since I'm awake and saw this, I can't help but set the record straight on a couple of points.) Jack is right when he says I knew what I was getting into when I ran for office - this all goes with the territory. I have no regrets about it.
That said, its safe to say that the articles are pretty confusing. For example, Sal read them and came to the reasonable conclusion that golf is allowed by Treasury officials when, in fact, I banned all golf nearly a year ago along with first class travel on domestic flights. Likewise, all of the travel conducted by Treasury is ultimately paid for by Treasury through our partnership fees, not by the investment firms (a practice that has been in place for over two decades in Oregon as in other states.) Finally, readers like Sal are led to believe that Treasury officials are somehow being "shielded" from disclosure requirements, when in fact they already have the most stringent financial dislcosure requirements of any public employees in Oregon. (They already fill out a comprehensive quarterly financial statement that goes to the Treasury Compliance Officer, the Sec. of State and DOJ.) I have recently increased these disclosure requirements by requiring investment officers to also fill out the public "Statement of Economic Interest" form.
Jack - the legislation I support would require that policy be informed by DOJ to ensure complaince with state statute, and the Ethics Commission would still have full license to investigate any potential ethical violations. This legislation would apply to ALL public employees (not just Treasury) and is not retroactive, so intentionally excludes individuals involved in the current ethics investigation. I think its a reasonable solution to both protect the interest of public employees who follow the rules, and taxpayers who don't want to pay for costly legal battles.
Lea - they are entitled to legal counsel because two prior investigations concluded that there was no willful violation of agency policy. In other words, they made a good faith effort to follow what were, at the time, the stated work rules in place at Treasury. While I think those rules were badly flawed (and I have since overhauled them) our employees acted in good faith at the time to follow those policies. As such, even though I hate spending the funds, I think it is appropriate for the agency to defend its employees.
6:01 a.m.
Apr 5, '11
Ted, thanks for taking the time to respond. I still think the legislative fix you're suggesting is both too broad (by applying to all state employees) and too open-ended (by allowing state agencies and the state's attorney to define the safe harbors).
I actually sympathize with the special problem you face with investment managers which is why I think you need to come up with a solution dealing with them specifically. This needs to be done openly and publicly with legislative sign-off if this issue is going to be put to rest.
I wish I could tell you where the line should be drawn and how the policy should be framed but I'm afraid my supply of gratuitous, unsolicited advice on this subject is about exhausted.
I do wish you well. As John pointed out in the original post, all Oregonians have a stake in maintaining high returns on our state investments. I also thought (and still think) Governor Kulongoski made a good choice in appointing you and believe that this is primarily a public relations and political problem, not a case of actual corruption or mismanagement within the department.
7:08 a.m.
Apr 5, '11
Wouldn't it have been nice if the Oregonian reporters had the guts to ask their questions directly ... then again, I suppose they would have gotten answers that didn't fit into their preconceived notions. Thanks for these clear answers, Ted.
8:09 a.m.
Apr 5, '11
It looks as though I was "reasonable" but wrong. Thanks for taking the time to respond and correct this.
8:45 a.m.
Apr 5, '11
Thanks Ted. As I said, I appreciate and understand the agency footing the bill. I get it. I just find it offensive that legal counsel has to be involved when someone is just doing their job. But, that is essentially what a union steward is and does when you are dealing with represented employeess.