“By the end of approximately 2007, Villalobos had made, and I had accepted, bribes totaling approximately $200,000 in cash, all of which was delivered directly to me in the Hyatt Hotel in downtown Sacramento across from the Capitol. Villalobos delivered the first two payments of approximately $50,000 each in a paper bag, while the last installment of approximately $100,000 was delivered in a shoebox.”—Plea Agreement, United States of America v. Fred Buenrostro, U.S. District Court, Northern District of California, filed July 11, 2014.
The government official who pleaded guilty here, Fred Buenrostro, wasn’t some city council member or state senator, but rather, from December 2002 to May 2008, the CEO of the California Public Employees Retirement System. Calpers, the largest public pension fund in the country, managed assets of as much as $250 billion during that period.
The bribing of Buenrostro was part of a successful effort by a New York money management firm (which claims it had no knowledge of the bribe and has not been charged with any wrongdoing) to win $3 billion in business managing pension money for California state employees and retirees.
Crooked government officials come along often enough that there’s a tendency to tune them out, but this case is worth pausing to analyze further for a number of reasons.
For one thing, there’s the hypocrisy angle. Calpers has been at the forefront of criticizing company boards for practices that are not shareholder friendly. Sometimes it’s right about that, but even when it is, it manages to come off as holier-than-thou. It doesn’t exactly add to Calpers credibility denouncing board-management coziness at big publicly traded companies when its own CEO is taking paper bags full of cash from a representative of a contractor.