Reform CalPERS or sink us all.
By Steven E. Masone
---------- With revelations of alleged bribe payments, the scandal-plagued California Public Employees' Retirement System has ended contract renewal negotiations with a company that administers prescription drug benefits for 300,000 members.
A CalPERS internal investigation report released earlier this week alleged that Medco Health Solutions Inc. paid more than $4 million in what was called "consulting" fees to win the original contract in 2006. Politics as usual that has California going broke.
The money was allegedly paid in secret to Alfred J.R. Villalobos, a former CalPERS board member turned dealmaker. According to the investigation, the suggestion that Medco pay the money to Villalobos came during a meeting that was also attended by Federico Buenrostro Jr., who was then the pension fund's chief executive.
Buenrostro allegedly helped Villalobos collect more than $50 million in fees for closing billion-dollar deals with CalPERS.
Buenrostro and Villalobos are co-defendants in a fraud lawsuit brought by the California attorney general's office in Los Angeles County Superior Court. Both Villalobos and Buenrostro have denied any wrongdoing in their CalPERS dealings. Both state and federal agencies are investigating the alleged payments, according to CalPERS and disclosures made by Medco in documents filed with the U.S. Securities and Exchange Commission.
Medco, the nation's biggest pharmaceutical benefits administrator with $66 billion in annual sales, had been until the report was released the favored candidate to win a new contract set to start in 2012.
Medco was "obviously disappointed with the board's decision not to follow through with the renewal award," said company spokeswoman Jennifer Leone Luddy. Its stock on the New York Stock Exchange closed down 4.9% at $56.23 a share.
The internal CalPERS report by the Washington law firm of Steptoe & Johnson chronicled alleged wrongdoing with the procurement by Medco Chief Executive David Snow, Villalobos, Buenrostro and then-board members Charles Valdes, Kurato Shimada and the late Robert Carlson. Valdes declined to comment and Shimada was not available to comment.
"The behavior revealed in the Steptoe report on the part of former CalPERS leadership is intolerable and violated basic ethical norms," according to Controller John Chiang, a CalPERS board member.
"Because PERS cannot afford to partner with firms facing such serious allegations of impropriety, I and other members of the board decided not to award a new three-year contract to Medco and begin an orderly transition to a new vendor," said Chiang.
The Steptoe report also revealed, "the events in 2004 and 2005 surrounding the award of the PBM [pharmaceutical benefits management] contract provide a striking example of the manner in which certain business was apparently conducted while Buenrostro was CEO of CalPERS."
In May 2004, according to the report, Villalobos hosted a meeting at his Nevada mansion overlooking Lake Tahoe, attended by Buenrostro and Medco's Snow. The report did not include details of the contract discussions "in deference to law enforcement authority requests."
These latest revelations and the coming fight to cut the budget in order to salvage the California economy must focus on a complete overhaul of CalPERS.
California had self inflicted wounds as it were, and CalPERS is a "severed artery" that must be attended to first, or the patient will die. The problem we face is not can the patient be saved?... but can the medical team ( liberal democrats ) do what is necccesary to succeed?
They will no doubt incure the wrath of the unions and party bosses who would rather be in control of a dying patient then become a minority if they do what must be done ( reform CalPERS) but have a recovered and healthy patient.
So we must start with firing the operating team and get the best and the brightest team of 'surgeons' to save the greatest state in the union.
.
Govenor Jerry Brown is already blaming Republicans concerning the budget crisis, so we are hearing the "same old tired blame game" that does not wash in California since the democrats have had the reigns for decades.
Govenor Brown can either be a 'hero' or a 'zero' and leave a "Legacy of success or failure" based on how fast he gets the patient back to good health...time is a matter of life and death.
Already, it's the same song and dance "blaming Republicans" when it was a Democratic "operating room" the patient went in for routine proceedure, but now lies dying from malpractice. Do we really want the same team to keep operating?
End Notes
http://www.courthousenews.com/2016/01/14/judgments-entered-in-calpers-conspiracy.htm
http://www.latimes.com/business/la-fi-calpers-bribery-20140808-story.html
http://www.trialinsider.com/?p=5007
Conspiracy of fools Cal Per Scandal
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