THE SENATE

S.R. NO.

112

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 
   


SENATE RESOLUTION

 

REQUESTING A LEGISLATIVE AUDIT OF THE ALLEGED FIDUCIARY VIOLATION BY STATE OF HAWAII, EMPLOYEES RETIREMENT SYSTEM TRUSTEES.

 

WHEREAS, since, the State of Hawaii, Employees Retirement System ("ERS) has recently lost approximately $1.5 billion in its investment portfolio; and

WHEREAS, a recent investigative report in a prominent daily newspaper detailed a possible fiduciary violation of trustees resulting in a direct loss of approximately $90 million; and

WHEREAS, in light of the alleged fiduciary failure by the ERS trustees, more investigation is essential to prevent further loss and protect the investment of all State and County workers' assets; and

WHEREAS, despite inquiries by a State Senator, the ERS trustees failed to disclose to the Hawaii State Senate pertinent information related to their management of ERS investments in a timely manner; and

WHEREAS, as reported recommendations were made by ERS advisory consultants that ERS not continue investment with a San Francisco-based firm that allegedly resulted in the direct loss of $90 million of the total $1.5 billion loss reported this year; and

WHEREAS, this body believes that there is cause for concern that a politically-motivated relationship existed between the ERS trustees and the above-mentioned investment firm; and

WHEREAS, the ERS trustees and administration must be beyond fiduciary reproach; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-First Legislature of the State of Hawaii, Regular Session of 2002, that the legislative auditor is hereby requested to immediately investigate the management of ERS investments by the ERS trustees and the possibility of a breach of fiduciary duty by the trustees; and

BE IT FURTHER RESOLVED that the Legislative auditor will submit an interim report of her findings to the Legislature of potential violations of law no later than adjournment sine die of the Regular Session of 2002; and

BE IT FURTHER RESOLVED that the Legislative auditor will submit a final report of her findings to the Legislature of potential violations of law no later than 20 days before the convening of the Regular Session of 2003; and

BE IT FURTHER RESOLVED that this body hereby admonishes the ERS trustees to pay the strictest attention to their fiduciary duties, to act responsibly in accordance with these duties, and to strive to provide all ERS beneficiaries with complete confidence in their retirement fund; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Legislative Auditor, Trustees of the Employees Retirement System, the Employees Retirement System Administrator, the Mayors and Council members of the City and County of Honolulu, Kauai, Maui, and Hawaii Island.

 

 

 

 

OFFERED BY:

_____________________________

Report Title:

ERS; Requesting Legislative Audit