Lawmaker asks feds to investigate CA pension fund clean energy losses after The Center Square story

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(The Center Square) - California Assemblyman Carl DeMaio, R-San Diego, requested a federal investigation into possible wrongdoing and fiduciary negligence at the California Public Employees' Retirement System regarding its clean energy fund losses that were exposed in an investigation by The Center Square. 

“It’s hard to just show a quid pro quo between campaign contributors and the granting of a contract or voting for subsidies or programs,” DeMaio said in an interview with The Center Square. “In this case it’s different … there are federal statutory provisions regarding fraud, regarding fiduciary responsibility.”

The Center Square’s investigation found CalPERS lost 71% of its $468 million taxpayer-funded investment in a clean energy and technology private equity fund. This type of investment often is referred to as ESG – or Environmental, Social and Governance – which critics argue prioritizes progressive policies over the fiduciary responsibility of such funds to maximize returns.

Mary Lynne Vellinga, division chief at the CalPERS Office of Public Affairs, wrote to The Center Square in an email statement that the pension system is doing well.

“It’s easy to reach back nearly 20 years and cherry-pick one investment that performed particularly badly,” she wrote. “The important thing is the overall performance that CalPERS has and continues to deliver on behalf of its pension fund members. 

“Since 2007, the value of the fund has risen from $249.5 billion to $587 billion,” continued Vellinga. “Private equity has been CalPERS’ strongest performing asset class over the past 20 years with a return of 12 percent.”

The Center Square requested a wide range of documents, such as management contracts and information on specific companies that received investments from the fund. But CalPERS declined to release the information -- aside from sharing already-public records -- citing a state law exempting many records for alternative investments, such as private equity, from disclosure requirements. 

“We are going to also be looking at the issue of transparency, because it’s hard to get to the bottom of something like this from the standpoint of public policy, because they have exempted themselves from disclosure under the California Public Records Act, so what we’re going to do is try and address that issue as well,” DeMaio said. “Perhaps the feds, if they open an investigation, can compel document production where we currently don’t have the right to get that.”

The office of United States Attorney General Pam Bondi, where DeMaio addressed his letter, declined comment in response to a request from The Center Square.