Walker warned pension firm not to drop consultant as SEC probe was underway

While a federal investigation into the Macon-Bibb County pension business was underway, County Manager Dale Walker was preparing for an expected battle with two commissioners over the pension boards.

Walker was attempting to drum up support from other commissioners for the firm managing two of the county’s pension plans, while also expressing his displeasure with changes being made by the same firm. His efforts would be in vain as commissioners and another pension board decided re-bid two pension funds that had been managed by Independent Portfolio Consultants.

A few months later — in April 2017 — Walker resigned as county manager after an Securities and Exchange Commission investigation into the pension plans and his emails with a senior Independent Portfolio consultant came to light, including several emails where he expressed his love for the consultant.

Emails obtained by The Telegraph through an Open Records Act request also appear to show Walker allowed some Independent Portfolio employees to have some control over the bidding process in 2014.

But in November 2016, when Commissioners Gary Bechtel and Larry Schlesinger said they wanted to re-open the bidding process for the Macon-Bibb County Pension Plan, Walker sent a letter to Independent Portfolio Consultants’ executives urging the firm’s officials to retain senior consultant Cheryl Underwood.

“He basically threw IPC under the bus and indicated this was all about her,” Bechtel said this week. “That verified all of our concerns that this was done to her benefit her and no one else.”

In the letter, Walker expressed disappointment with Independent Portfolio as the company was undergoing some executive restructuring. Consultant John Whitledge, who worked closely with Underwood, had been terminated because of budgetary reasons, Walker wrote.

Walker’s letter referenced Underwood 26 times.

He said losing Underwood as senior consultant could be a “fatal” blow to having Independent Portfolio manage the two pension funds. It was imperative that she continue attending regular pension board meetings. Underwood was instrumental in keeping the County Commission from replacing Independent Portfolio when its fee structure was “at least double the competition,” Walker wrote.

“John’s departure can be dealt with but Cheryl’s unparalleled expertise in orchestrating this entire relationship, her extensive industry knowledge, and her ability to translate complex concepts in an understandable manner to the board is critical to the retention of this account,” Walker said in the letter.

But in case Underwood retained a prominent role with the main pension plan, Walker was also courting votes with some commissioners to prevent a new firm from taking over, according to several emails.

In a Nov. 26, 2016, email exchange between Walker and Underwood, Walker mentioned that one of the county commissioners was “preparing for the fight” over pension management.

That fight, however, would end with a whimper just two months later when Macon-Bibb commissioners decided to put the main $112 million pension plan out for bid again. The decision came after Whitledge’s and Underwood’s departures and several former IPC employees filing involuntary bankruptcy claims against the firm, although those would later be resolved.

Independent Portfolio officials said at Jan. 17 meeting that their portfolio outperformed its 2016 benchmark by $1.6 million.

The fallout comes after three pension boards, including the County Commission, approved Independent Portfolio Consultants to manage three plans in 2014. Walker recommended the Florida investment consultant firm to each the trustee boards.

Walker has said he cannot comment on the pending investigation. Underwood, in emails sent to The Telegraph last week seeking comment, declined to discuss any of the accusations related to the investigation. She did say that there was never any romantic interest on her part with Walker.

Commissioner Scotty Shepherd, who had supported Independent Portfolio, said he was upset when Walker’s emails were uncovered.

“They made us millions of dollars but I was disappointed when I read the emails and disappointed in how they go the (pensions),” he said.

Mayor Robert Reichert has said he doesn’t think there is a need for an overhaul with how Macon-Bibb handles proposals it receives for projects. In most cases, there is a review committee of at least three people who then make recommendations to officials.

“I don’t know if we need to make wholesale changes when we put out (requests for proposals),” he said. “Typically we have a review committee of three to five (people) to go through responses ... and make a recommendation.”

Bechtel says that more is and will be done to prevent a bidding process that occurred with the pensions. He along with Schlesinger attempted to get the main pension plan re-rib in 2015 after learning that Walker had a previous professional relationship with Underwood.

The pension boards for the main county plan and former city of Macon plan are interviewing firms to find a new manager. The fire and police pension, on which Bechtel and Schlesinger serve on the trustees board, has had a different investment consultant since the fall of 2015.

“I think we’ll learn from this that any time you have a situation where you have this much money at risk you need to be thorough, do all the due diligence because you’re making a decision on who is responsible for investing the dollars,” Bechtel said.

This story was originally published May 26, 2017 at 4:56 PM with the headline "Walker warned pension firm not to drop consultant as SEC probe was underway."