Billy Guice has released a statement on findings from LaPorte’s examination of the Singing River Health System Employee Pension Trust.
Highlights:
- There was “[…]no evidence of theft, embezzlement or pilfering from the Trust Assets.”
- “There remain questions as to the investment of Trust Assets, particularly in 2008 and 2009.”
- “[…]there is no evidence that any senior officer of Singing River Health Systems [sic] withdrew their individual contributions to the pension trust in anticipation of or consistent with the failure[…]”
- “[…]the cost of defense of various parties […] is being paid by SRHS’s Officer and Director Liability insurance carrier[…]”
Analysis:
1. This simply rules out two unlikely scenarios at the bottom of a long list of probabilities.
2. Guice mentions questionable investments, but fails to indicate in which asset class. He goes on to discuss losses suffered by the Trust due to the financial crisis in late 2008. This is to be expected; every pension plan in the country was affected. He next discusses the fluctuations in the total value of the trust from 2007 – 2009.
The total value of the Trust is poor measure of performance of a specific asset class. More simply: if you want to understand how your investments are performing, you should look at one type of investment at a time. If stocks make up 50% of the portfolio, you should look only at that 50%, and not the value of the entire fund which would include bonds, real estate, cash, and accumulated employee contributions.
3. This seems to be an attempt to squelch the question of “did the top executives cash out?” Reading between the weasel words, we find the answer seems to be: “YES, but…” It is an impossibility for a current employee to roll their pension plan proceeds into an outside account. This could only be done when employment ends. Given that Chris Anderson was leaving for pastures he had yet to soil and Mike Crews was retiring, they had a handy excuse for withdrawing their contributions. At least Guice does answer the question.
Senior executives who left SRHS DID NOT leave their contributions in the SRHS pension plan. The timing of the withdrawal is irrelevant. These executives participated in and were fully aware of the looming plan failure. It stands to reason that they would withdraw their money at the earliest possible time, which happens to coincide with leaving SRHS.
4. We gain a little insight into the reason why SRHS may have retained Dentons. An insurance carrier on the hook for $1 million may not want to leave it to SRHS’ previous counsel to defend the case. The policy limits seem very low for an organization the size of SRHS. Your local real estate agent or carpet cleaner usually carries a minimum of $1 million coverage. There is the possibility that the $1 million is per officer/director or per occurrence with a much larger aggregate limit. Guice’s statement didn’t elaborate on that fact. UPDATE: Slabbed has further discussion of the insurance policy.
Keep in mind the examination by LaPorte was commissioned by Billy Guice as special counsel for the Board of Supervisors. This is separate from SRHS’ own pension plan audit, currently being conducted by Horne. You can see previous years pension plan audits by clicking here.
Read Billy Guice’s full statement at the Mississippi Press, below.
“Supervisors: No evidence of ‘theft, embezzlement or pilfering’ from SRHS pension fund” Warren Kulo, Mississippi Press, June 2, 2015
“SRHS investigation shows no evidence of theft, so far” Patrice Clark, WLOX, June 2, 2015
“Jackson County supervisors find no theft or embezzlement from pension trust” Karen Nelson, Sun Herald, June 2, 2015
“No Evidence of Theft From Singing River Pension Trust” Staff reports, WXXV-TV, June 2, 2015
the BOS “investigation” is a waste of taxpayer money. Is it suppose to make us feel better that Mr Guice sees noevidence of theft? Does he or the BOS think we thought their answer would’ve any different? Did Mr Guice even consider investigating the “misappropriation” of funds? According to the Trust Pan document, SRHS had a fiduciary responsibility to make contributions to the plan as determined by the plan actuary. The employees, former as well as current, did their part: they worked full time and contributed the MANDATORY 3% each pay period. The Actuary did his job; he calculated how much SRHS needed to contribute to keep the retirement trust viable. SRHS FAILED to do their part;SRHS DID NOT make t heir REQUIRED contribution. SRHS spent the money due the trust on other things such as more buildings, buying physician practices, duplicating services less than 25 miles apart. It is very easy to understand.