Jeff Glasgow: Hite and the 'Missouri experience'

Jeff Glasgow to Molly Janczyk, August 28, 2007
Subject: Messasge from Sally Buis

Molly,

If Hite's argument is based on the 'Missouri experience" which most of the 'success stories are, it is a sham. Here is what Mandel had to say about the "Missouri experience" in a hearing with the Ohio Retirement Study Council on May 22, 2007. The stories about Missouri are at best, disingenuous and at worst arrogant lies. First he says, at page 6 of the document that 'They (the pension systems) are not telling them that after seven months of divestment, their return on investment has increased by 3.9%." HOWEVER, he later admits in responding to a question from Senator Shuring:

"Rep Mandel said the Missouri program is different in a couple of ways. One it was not a legislative mandate;the state treasurer, Sarah Steelman, had a seat on the pension board and kept asking questions to the extent of which the pension funds were doing business with companies doing business with terror sponsoring states as identified by the federal government. She wasn't getting answers to those questions so she announced [emphasis is mine] for the dollars SHE controlled under the Missouri Investment Trust, she would divest. IT IS A COMPLETELY DIFFERENT PROGRAM. HE SAID HE MUST GIVE A DISCLAIMER, WHILE HE USES THE FACT THAT SEVEN MONTHS AFTER DIVESTMENT, THEY HAVE A 3.9% INCREASE IN RETURNS, IT IS IMPORTANT TO DISCLAIM THAT IT IS A SIGNIFICANTLY SMALLER POT OF MONEY THEY ARE TALKING ABOUT THERE. HERE IT IS BILIONS OF DOLLARS, THERE IT IS PROBABLY TENS OF MILLIONS OF DOLLARS. He said they have concerns about the Missouri program because it does not have a mandate on t he pension funds. While they applaud the state treasurer there for ding it with the dollars SHE controls, their main concern with the Missouri plan is that it does not impact the pension funds. THERE IS NO PENSION FUND DIVESTMENT THERE." THIS IS FROM MANDEL HIMSELF ON MAY 22.

I am sending you a PDF file of the entire hearing. Please pass it (and this message) on. As you read the minutes, it will make your skin crawl.

Even if there is a benefit to divesting as Ms. Buis and Mr. Hite seem to think, the burden of proving that is on Hite--if he could prove that it is so, why is he ramming it down our throat and why does Section 137.08 of HB151 get rid of the fiduciary duty of the boards. If it is such a great deal, they wouldn't need that provision, because that type of investment wouldn't be a breach of fiduciary duty and no immunity would be necessary. What do they think they have to protect the fund managers from if it is a good investment? I smell several rats.

Stay in touch.

Jeff