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PA. PENSION FUND Official accuses Casey of conflict of interest



Published: Mon, February 17, 2003 @ 12:00 a.m.



The pension boards say Casey has no jurisdiction to conduct the audits.

HARRISBURG (AP) -- Two of the state's top elected officials traded barbs Thursday as Treasurer Barbara Hafer accused Auditor General Robert P. Casey Jr. of a conflict of interest in his handling of a proposed audit of two state pension funds.

Casey, a Democrat, denied allegations by Hafer, a Republican, that he was in conflict because he received campaign contributions from some of the funds' investment managers. He said the audit he seeks does not focus on the investment managers that gave to his campaign.

Casey countered that some of the same investment companies in question also gave to Hafer, creating a conflict for her as she fights Casey's efforts to conduct investment performance audits of the State Employees' Retirement System and the Public School Employees' Retirement System.

Won't cooperate

The boards of the two pension funds have refused to cooperate in the audit, saying that Casey is out of bounds.

Casey filed papers last month with the Commonwealth Court asking a judge to order the state's two largest public-employee retirement systems -- which combined have more than 580,000 members -- to divulge the financial records he needs to audit their investments.

On Thursday, the two systems filed objections to Casey's complaint, arguing that Casey has no authority to conduct the audits, would engage in a "disabling" conflict of interest if he did so and seeks to charge the funds as much as he wants to conduct the audits.

The reported conflict of interest focused on hundreds of thousands of dollars in campaign contributions that Casey received from some of the funds' investment managers.

Hafer, who chairs the board of PSERS and sits on the board of SERS, said Casey is "sensationalizing and playing on the fears of the elderly in Pennsylvania" by leading them to believe that their pensions could be in jeopardy.

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"This is an outrageous abuse of his office," Hafer said. "And he has told me that he wants what he wants and we can agree to disagree. Well, there has to be a common meeting ground on this or we're going to spend a lot of money in the courts."

Casey shot back, saying that his intentions were honorable.

"I think what Barbara Hafer has shown here today is that she's a smear artist. That's what she's trying to do, she's trying to smear me," Casey said.

The systems objected to a surcharge that the auditor general sought to impose on the boards to cover the cost of an independent audit.

Casey, who acknowledged that he was a "highly likely" candidate for treasurer in 2004, did say he was willing to absorb the costs his office incurs for auditors' time in the audits rather than bill the two systems.

Casey also said he possessed the legal authority to conduct the audits under the state constitution.




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