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This page contains a single entry from the blog posted on April 18, 2010 4:18 AM. The previous post in this blog was From farce to force it. The next post in this blog is The ventriloquist. Many more can be found on the main index page or by looking through the archives.

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Sunday, April 18, 2010

State Treasurer junket story crosses into scandal territory

It was bad enough that State of Oregon treasury department officials were getting free meals, entertainment, and who knows what all else from the financial companies with whom they were dealing. Now it turns out that they were putting in for expense "reimbursements" from the taxpayers for the very same meals that they were getting for free.

Stunningly, their supervisors are insisting that it was all legitimate, and that there's no rule against the employees collecting "per diem" checks for meals that someone else paid for. There were also some meals that the employees collected from the state for twice -- once as reimbursement of conference registration fees, and again as "per diem." That last practice is against even the state treasury's laughable "rules" on the subject.

These guys may get away with the double dipping at their place of employment -- though heaven knows, they shouldn't -- but it's going to get mighty interesting if the IRS or the Oregon Department of Revenue doesn't find those reimbursements on their tax returns as gross income. "Per diems" and other travel "reimbursements" are taxable if you don't have out-of-pocket expenses. Just ask the NBA officials who were busted in a similar racket in the late 1990s.

Usually when the O sends out Les Zaitz to play "Who Had the Pickle?" with some bureaucrat's expense account, we just laugh. But this time, it's quite a bit more serious.

Comments (22)

I'll start paying attention when it is revealed that prostitutes are involved.

Oregon is fortunate indeed to have investment managers in its Treasury of such profound integrity, rectitude and objectivity that they are able to accept and organize very substantial personal benefits and advantages for themselves without in any way impairing their dispassionate judgment on investment performance.

Ah yes, it seems the winds of change are clearing the air at other state agencies and this in advance of any door openings.

Why even DHS has stopped delivering StatesmanJournal newspapers via auto route and this after five plus years of dutiful service. This spells and smells as their close relationship is in trouble.

"These guys may get away with the double dipping at their place of employment"

Who knows eventually we may even go after the pension double-dippers like Randy - which is a heckuva lot bigger bill.

Unfortunately, at this rate Wheeler may be the next target of the public employee unions once he really looks at how the state spends.

I think C.W. Jensen lost his career over a similar move.
Why do they even bother to attend such events? A big show, lots of lies about everything going well, basically a paid vacation.
If this reimbursement practice is basically illegal, does Treasury have some authority to make it legal?

See the prior post on this blog at
http://bojack.org/2010/03/on_wheelers_new_todo_list.html
and the attached pdf at
http://bojack.org/images/persbankdealpitch.pdf
to see what the state gets from these highly paid, lavishly entertained investment officers--a parroting of sales brochures submitted by the promoters, with no independent analysis whatsoever. The ethics of Wall Street slop into Salem.

The big question is ... Did Ted Wheeler discover this in his first weeks, or is it something that Ben Westlund and Randall Edward knew about, but turned a blind eye to?

Garage Wine, good question. But from what has been reported it seems that the discovery didn't come from Wheeler but the Oregonian.

I'm wondering what percentage of these trips are honestly spent on business meetings, etc. vs. all the time being entertained. I hope the Oregonian and Wheeler investigate this. I've certainly noticed that many attendees spend an hour or two having a "breakfast meeting" with little actual learning benefit, but a lot of time being entertained. It is time we clean up this whole practice.

Hmmm, the supervisors don't see anything wrong?

Wow.

First, its a violation of the state's Ethics Commission rules. State employees are not allowed to acquire something of value by virtue of their state employment that non employees can't get. That sounds convoluted, I know. Here's an example.

Several years ago, a big shot at state general services tacked onto a fleet vehicle purchase a car for himself. He paid the state exactly what the state paid the manufacturer for the car he ordered,which was a whole lot less than the cost of buying it from a dealer. Civil action was brought against the guy by the Ethics commission, he was subjected to a civil penalty of several thousand dollars, and was fired.

AFIK, those rules are still on the books.

What I can't believe is Wheeler saying 110 of these junkets per year are "necessary" to oversight of the state's business interests. Everybody knows these functions are pure fluffing by the promoters of the investment. Analysts have to be independent and aggressive to separate the wheat from the chaff. Going on broker-sponsored fluff tours? That's lap dog behavior, not independent, aggressive analyst behavior.

So what. The money is peanuts. it's probably bad practice doubling dipping on expense accounts. But it was all done in the open.

Who cares if the clients pay for lunch?

It's not a scandal until you can show mismanagement of the funds.

Thanks, "Mike," for that hilarious comment.

It's not just the clients paying for lunch. It's bilking the taxpayers for the same lunch.

If you don't report it on your tax return, it's a felony.

And even if you do, as another reader has explained, it appears to be a violation of state ethics laws.

Ted Wheeler - Please stay true to your principles and fire all of these corrupt public officials. Do not shrink from your duty here, do the right thing and clean out this stinking trough.

And so how 'bout the double-dipping by the legislature? Taking per diem (without having to account for any of it), and mileage expenses on the taxpayers' dime, while paying for the same out of "unused" campaign funds. That's another one that really irks me.

Bartender, I agree on this double-dipping, and its prevalent throughout government. No one should laugh or call it "peanuts" when candidates for public office, or even those in office cite the numerous examples in answering how deficits could be greatly reduced by stricter adherence to even the laws we have. It's time for Wheeler and Kroger to step up to the plate. I suggest that any candidate for Governor to make it a major platform, then act on it when elected.

Yeah, the ethically challenged make the ethics laws. We're screwed before we even get outta the gate.

Per the Oregonian story, the officials contacted stated that the meal reimbursement made up for other items such as a magazine or tipping.

1) Sounds like these "other items" are personal in nature and should be paid by the employee.

2) The article states that the investment officers earn close to $200K - and they can't afford to buy a magazine to read on the plane?

3) An example was given of Andy Haynes who claimed $2,300 for meals provided free during a 16-day trip. That guy must be doing some serious magazine reading........

4) I loved the Oregonian article providing example after example of double dipping, followed by the comment "(investment officer) didn't respond to written questions, and Treasury refused to confirm his attendance at the dinner." The same comment was repeated three or four times.

When I travel for the bank that employees me, I pay for the aforementioned items out of my own funds. And if I continually submitted false reimbursement requests, unlike Treasury, which stated "Minor mistakes were made....and they are being corrected" - I would be fired.

It appears that at least five ethical fallacies are at play here:

1. I've got it coming to me.

2. It doesn't hurt anybody.

3. Everybody does it.

4. It's legal.

5. Others are a lot worse.

All great ways to get yourself convicted of a crime.

Any acknowledgment of wrongdoing would necessarily be coupled with a mandate that thereafter the person shall not be entrusted with managing other people's money.

Ted Wheeler should have these crooks drawn and quartered, and he should have their ding dongs stuck on posts across the state. That's the only fair punishment, since they probably cost Oregon billions by giving our money to companies that wine and dine them the best, instead of investing it with companies that provide good returns. Once a crook, always a crook. I trust Wheeler. I know he'll do the right thing.

One last nail in the coffin for these overpaid state thieves. I saw an article several weeks ago touting the Oregon Investment Council as having one of the best investmnet returns of all state boards in 2009. If I recall correctly, the number was well below half of what the Dow and S&P 500 did in 2009. And while I realize these people have to invest large amounts of money; almost anyone could have had better results by sticking to major dividend paying stocks, mutual funds and bond funds.

Why aren't they simply investing in Vanguard's index funds? Read "A Random Walk Down Wall Street" for a great read and a great enlightenment -- monkeys throwing darts are just as good as investment advisers, and monkeys really will work for peanuts, and don't get all excited about golf.

Anybody who actually knows how to get better-than-average returns consistently is (a) one in a million and (b) NOT working for the State of Oregon. The entire fund manager thing is a scam -- not only should these guys lose their jobs, but their jobs should be abolished in favor of a clerk who ensures that all the money she has to invest is in a diversified index fund with the lowest investment cost. Period. $100,000 per annum tops. Everything else is just insider backscratching and graft. On the public dime.




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