Former Pension Benefit Guaranty Corp. director Charles E.F. Millard was subpoenaed to testify Wednesday, May 20, before the Senate Special Committee on Aging, which said it has been investigating the agency’s manager hiring process over the past month.
The move Friday, May 15, follows the release Thursday of a draft report by Rebecca Anne Batts, PBGC inspector general, which alleges Millard made “inappropriate” contacts last year with BlackRock, JPMorgan and Goldman Sachs before they were hired as strategic partners to run a combined $2.5 billion for the PBGC in real estate and private equity.
The contracts of the managers could be canceled if the PBGC’s board agrees that Millard’s contacts with the firms during the procurement process gave them an unfair advantage.
Ashley Glacel, a Senate committee spokeswoman, said that at least one member of the PBGC board—Labor Secretary Hilda Solis, Treasury Secretary Timothy Geithner or Commerce Secretary Gary Locke—has been asked to testify along with Batts.
Glacel said the results of the committee investigation into the PBGC are expected to be released at the May 20 hearing.
The investigation has also been looking into whether the PBGC “will be able to continue fulfilling its mission as we weather the financial crisis,” Glacel said.
The committee’s chairman, Sen. Herb Kohl, D-Wisconsin, was concerned in particular about the PBGC’s ability to continue meeting its financial obligations to plans it takes over because the agency, under Millard’s leadership, shifted to a less conservative investment allocation policy.
Vince Snowbarger, the PBGC’s acting director, said in a statement that no assets have yet to be transferred to BlackRock, JPMorgan and Goldman Sachs.
“We will work with our board to decide whether these contracts should be terminated and whether strategic partnerships fit into the board’s investment approach going forward,” Snowbarger said in the statement.
Also, agency staff would work with the board to implement Batts’ recommendation that future agency directors stay out of the procurement process, Snowbarger said in the statement.
Filed by Douglas Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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