An anonymous CalPERS employee did himself a financial disservice by exposing a potential fraud to us rather than pursuing the monetary recovery that he would have been entitled to by taking legal action. Specifically, the whistleblower alerted us to yet another instance of CalPERS executives engaging in personal compensation feather-bedding by manipulating inputs to bonus formulas instead of correcting documented organizational shortcomings.
Our source reports that CalPERS executives are systematically gaming the results of an employee satisfaction survey so as to improve their bonuses. CalPERS employees take note: if you can substantiate that CalPERS officers and senior staff are manipulating records and surveys to produce fabricated results and therefore raise their bonuses, that is a fraud. You could file a False Claims Act suit. California’s qui tam laws are generous and provide for treble damages and allow the whistleblower to participate in the recovery.1 Moreover, qui tam filings are confidential. But if you were pursue this option, you need to make the filing first and talk to the press afterwards.2
Here are the allegations:
CalPERS management compensation is partially tied to the results of an annual organizational health survey that is “supposedly” filled out anonymously by the employees. Last year, they received extremely poor management scores resulting from this survey. They did nothing to respond to the weaknesses pointed out by the survey.
Instead, to try to get a better outcome this year, they
1) Changed the survey administrator
2) Shortened the survey, eliminating any questions where they received poor marks the year before
3) Shortened the window by which people could respond, and
4) Timed the survey to correspond with the holidays so that employees would be less likely to respond negatively.
Shouldn’t such management surveys be conducted without management involvement? Instead of management shaping the content and timing of the survey? Also, if these are to be truly anonlymous, shouldn’t they collect the survey results anonymously? Instead, they provide respondents with a (!) special internet link for each individual and they track whether or not the employee participated.
Notice that CalPERS has repeatedly tried to de-anonymize voting in multiple board elections, in violation of the California constitutional requirement that “Voting shall be secret.” The first time was by putting the bar code which identifies if a beneficiary has voted (to prevent multiple votes by the same person) on the ballot proper, as opposed to on the mailing envelope. In the old practice, which CalPERS reverted to after we publicized this abuse, the mailing envelopes would be scanned to prevent duplicate votes, and then the ballots would be removed and tabulated separately.
But CalPERS refused to drop their chicanery. On the last election cycle, CalPERS used see-through ballots, so that anyone could determine how a beneficiary voted:
It isn’t hard to see that even if CalPERS didn’t directly engage in election tampering via disappearing ballots with the “wrong” vote, the mere fact of a Constitution-violating non-secret vote would intimidate employees who would have reason to fear retaliation if they voted for the candidate that management and the unions vehemently opposed, JJ Jelincic. Keep in mind that despite this election being fiercely fought, with far more press coverage than recent contests, and CalPERS engaging in more voter outreach than before, the turnout was poor. Lack of confidentiality is the most likely explanation.
So we encourage CalPERS employees to engage in managerial ju-jitsu. Don’t fill out the survey. CalPERS is already taking steps to suppress participation. If enough employees follow CalPERS’ lead, the response level will hopefully be so low and so skewed as to call the integrity of the results into question.
If any CalPERS employees can substantiate instances of management gaming the inputs to bonus computation so as to increase their compensation, or instances of fraud being perpetrated by outsidee parties, please contact us so that we can supply the names of skilled counsel in California so they can determine if you have a case and help you make the qui tam filing. Note that it would be critical to be able to provide evidence to identify the individuals that were responsible for the scheme. Qui tam attorneys will often work on a contingent fee basis if they believe the claim has merit and offers enough upside to make it worth their time. Our e-mail address is yves-at-nakedcapitalism-dot-com.
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1 From a Jones Day write-up on California’s False Claims Act:
A qui tam plaintiff is entitled to 25 to 50 percent of the proceeds of the action or settlement when the government declines to intervene and 15 to 33 percent when the government elects to intervene.
2 Skilled whistleblower lawyers regularly publicize the abuses they’ve targeted in their filings so as to increase pressure on the defendant. Note that this strategy does not result in exposure of the identity of the whistleblower unless they chose to come forward as part of the campaign.
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Practices of this type are not unique to CALPERS. I used to work for a Wall St bank that used a similar employee survey for similar purposes, including as a factor in manager compensation. Low response rate within a work unit was a negative so discouraging participation was not an effective manipulation strategy. Instead we were subjected to repeated mandatory staff meetings where managers orally instructed us on how to complete the survey, followed by daily emails updating our unit’s completion rate.
Management Club. Like a lot of corporations. Complete decay of oversight and control systems. Self-dealing the general rule of such. Very bad and unfortunately becoming pervasive in the Empire. Depressing. Glad I’m not dependent on these Bobs and Betties for my retirement income.
I can’t help but wonder who is the devious s.o.b. who comes up with all these shenanigans.
It seems like not a month passes without Yves exposing another underhanded way that CalPERS executives and staff are promoting their personal best interests instead of the best interests of the participants, beneficiaries, and contributors.
“who is the devious s.o.b. who comes up with all these shenanigans.”
This sort of self dealing is very commonplace and is not limited to CALPERS. This sort of self dealing is depressingly common particularly when a bonus or some sort of compensation is attached, Most corporations are well aware of the clever or not so clever methods of improving compensation. I once was with a firm whose management routinely “froze” set accounts i.e. the maintenance account to make savings goals.
Of course this is counter productive in the general scheme of things, however it can be used to effectively goose quarterly returns
Also I suspect that another commonplace shenanigan is to require that employees who travel use a specific corporation mandated credit card which includes a cash back feature with the cash back being fungible.
even for any company, I didn’t know surveys from the lowly employees could even have had an effect on anyone’s bonus
Is there any chance Gov. Newsom will select a “public interest” oriented person to replace AG Becerra, assuming he is confirmed to a high post in the JB administration?
Mr Conner, I believe Chelsea Clinton has a Law degree and if she’s willing to take a break from her all consuming work for the Clinton Foundation…
That would be as good as we’ll get.
For over a century, the government business of California was conducted in San Francisco and Los Angeles, under the eyes of an active newspaper culture and in close proximity to the business and financial centers of the state. Generally, the state government annually decamped to the backwater town of Sacramento for two 60-day sessions, devoted every other year to either the budget or to legislation.
That all changed in 1966, when California adopted a full-time “professional” legislature based in Sacramento. Attempts were made to reign-in the Legislature by establishing term-limits through the initiative process in 1990 and 2012, but the game of musical chairs that was established only made the empire-building and corrupt culture of never-ending fund-raising worse. Today as many as 70 percent of the legislators live full-time in Sacramento, rather than in their home districts.
There is no real industry in Sacramento other than the state government and its supplicants and courtiers. It is evident that the “business” of CalPERS executives is to be big-shots in their backwater town. This insularity has inevitably led to corruption, as their oversight board has also come to be dominated by Sacramento-centric swamp creatures.
The behavior at Cal-Pers is normal for those involved with the business of Governing in California, as David pointed out.
Everything is like Cal-Pers at the State level.
Or worse.
Don’t take a look at California’s Prison Industrial complex unless you have a very strong stomach.
Reality isn’t always pleasant, however ignoring it has consequences…
I predict that 2021 will be even more interesting than 2020!
Enjoy the show while you are here.
So CalPERS employees get to vote their bosses a bonus, and they can be held accountable for non-performance. Seems legit.
Lambert, that’s as legit as things get in the Golden State.
It’s straight up about being rigged, there’s no pretense otherwise.
For the love of god, don’t do it. I consulted with Admiral Ackbar and he assured me that it’s a trap. There is no such thing as a confidential survey form at CalPERS and anybody that thinks otherwise could be finding a pink slip in their CalPERS Christmas Stocking this year. If you are connected with the voting process, make sure that you record and document everything that you see as you may need it if certain managers try to put the blame on you down the track for what happened. But don’t keep it on a work computer and don’t keep any such documentation at home in case CalPERS tries to hype up a police raid on all employees if it comes time to save themselves. Look at what happened to that whistle-blower in Florida. Would you really trust your future to a Marcie Frost or a Henry Jones not throwing you to the wolves when they finally come unstuck?
There is no such thing as a confidential survey form at CalPERS and anybody that thinks otherwise could be finding a pink slip in their CalPERS Christmas Stocking this year.
This! A few years ago, my uni sent out a ‘confidential survey’, which I did not fill out or return, knowing there are no ‘confidential surveys’ issued by the admin interested parties. (Often the admin is only looking for the employees with real performance grievances about how the place is run and who the admin will then dismiss. And, sure enough…. ) A few weeks after the survey was due to be returned, I get a phone call from uni HR central asking why I haven’t returned my ‘confidential survey’? If it was really confidential then they wouldn’t know that I hadn’t returned it. ;)
Thanks to NC for continued reporting on CalPER, PE, and pensions.
I wonder if CalPERS has switched over to Microsoft’s O365 and their “Productivity Score” system yet?
https://www.theguardian.com/technology/2020/nov/26/microsoft-productivity-score-feature-criticised-workplace-surveillance
Microsoft is already in Apology Mode over this.
Holy moly! My uni switched from its self hosted email system to O365 supposedly for the cost savings of not running and maintaining it’s own email system and servers. Well well. Be careful out there. ;)