US Congressman Goes After CalPERS's CIO
A U.S. Republican lawmaker on Wednesday urged California to fire the chief investment officer of its public pension fund, the nation’s largest, citing what he called the CIO’s “long and cozy” relationship with Beijing, and assailed the fund’s investments in Chinese companies.Kaelen Deese of The Hill also reports that GOP lawmaker accuses California public pension fund of investing in blacklisted Chinese companies:
In a letter to California Governor Gavin Newsom, U.S. Representative Jim Banks of Indiana said Yu Ben Meng, the CIO of California Public Employees’ Retirement System (CalPERS), should at least be investigated.
“Governor Newsom, if it were up to me, I would fire Mr. Meng immediately,” Banks wrote in the letter.
“At the least, I think a thorough investigation of Mr. Meng’s relationship to the Chinese Communist Party and a comparison of CalPERS investments in Chinese companies before and after Mr. Meng’s 2008 hiring are both warranted,” he added.
A U.S. citizen born in China, Meng has twice worked for CalPERS, the first time starting in 2008 and the second time beginning in January 2019 when he became CIO managing $400 billion in investments, according to the CalPERS website.
In between the CalPERS stints, Meng worked for three years as deputy CIO with China’s State Administration of Foreign Exchange (SAFE), which oversees China’s U.S. Treasury security holdings, the website says.
Citing an online article in China’s People’s Daily, Banks asserted that China’s Thousand Talents Program recruited Meng for the job at SAFE. According to the FBI, TTP is a part of “China’s non-traditional espionage against the United States.”
CalPERS CEO Marcie Frost defended Meng in a statement.
“This is a reprehensible attack on a U.S. citizen. We fully stand behind our Chief Investment Officer who came to CalPERS with a stellar international reputation,” she said.
A CalPERS spokeswoman declined to provide a method to contact Meng, saying they had no further comment.
The Trump administration has been urging U.S. states to join the geopolitical battle with China. In a speech to governors on Saturday, U.S. Secretary of State Mike Pompeo urged states to be vigilant against local threats “with consequences for our foreign policy,” specifically pointing to CalPERS.
“California’s pension fund...is invested in companies that supply the People’s Liberation Army that puts our soldiers, sailors, airmen and Marines at risk,” Pompeo said.
Echoing Pompeo’s comments, Banks specifically criticized CalPERS’ investments in China’s Hikvision, whose surveillance equipment is used in detention camps for China’s minority Uighurs.
The Banks letter criticizes the fund for holding shares of China Communications Construction Co, which has helped build naval bases for Beijing in the South China Sea, it said.
CalPERS’ Frost defended the holdings, saying, “We’ve had a globally diversified portfolio for decades. This is a politically opportunistic attempt to force us to divest, undermining our ability to perform our fiduciary duty to provide retirement security to California’s public employees.”
Rep. Jim Banks (R-Ind.) on Thursday said that he has written a letter to California Gov. Gavin Newsom (D) to voice concerns over the state's public pension fund chief and his connections with China.I read these articles this morning and if this story wasn't so outrageously true, I would have tossed these articles into the "fake news" pile.
The Indiana congressman is calling out the California Public Employees' Retirement System (CalPERS), the largest state pension fund in the U.S., for allegedly investing in numerous select blacklisted Chinese companies that manufacture military products.
The California-based fund invested $3.1 billion into 172 different Chinese companies, Banks said in an appearance on Fox Business Network. He said that some of the companies invested in have been blacklisted by the U.S. government.
Banks said that he wrote in the letter to Newsom that Yu Ben Meng, the chief investment officer of CalPERS, should at least be investigated.
"Governor Newsom, if it were up to me, I would fire Mr. Meng immediately," Banks wrote in the letter. "At the least, I think a thorough investigation of Mr. Meng's relationship to the Chinese Communist Party and a comparison of CalPERS investments in Chinese companies before and after Mr. Meng's 2008 hiring are both warranted."
Meng is a U.S. citizen born in China and has worked for CalPERS two times, once starting in 2008 and then beginning in January 2019 when he was appointed to CIO managing $400 billion in investments, according to Reuters.
In the Fox Business interview, Banks said some of the equipment these Chinese companies are responsible for include technology such as Hikvision, which the Chinese use for surveillance on Uighur Muslim populations that the Chinese government has been accused of abusing.
CalPERS CEO Marcie Frost backed Meng in a statement.
"This is a reprehensible attack on a U.S. citizen. We fully stand behind our Chief Investment Officer who came to CalPERS with a stellar international reputation," she said.
A CalPERS spokeswoman declined to provide contact information for Meng, saying they had no further comment, according to Reuters.
Unfortunately, it is true. Jim Banks is really a congressman who was elected to represent Northeast Indiana in 2016. He even has his own website which states:
Through the years, Banks has been honored with various recognitions for his service. In 2008, he was named to Northeast Indiana’s “Future 40 Leaders under 40” and in 2011, he was recognized as one of the top rising Republican legislators by Governing Magazine. Ivy Tech Community College awarded Banks the Distinguished Public Official Award in 2013 and he received the American Legion’s Distinguished Public Service Award in 2013 and 2014 for his work on behalf of Hoosier veterans. In 2014 he was invited to speak at the American Conservative Union’s CPAC conference in Washington D.C. as a top conservative under 40 years old.Suffice it to say, Banks is a diehard, right-wing conservative from Indiana and while he is considered a rising star in the Republican party, this certainly isn't one of his finest moments.
It is mind-boggling to accuse Ben Meng, CalPERS's CIO, of having a "cozy relationship" with the Chinese Communist Party. I'm surprised he didn't accuse him of engineering the coronavirus and bringing it to the United States.
All kidding aside, the amount of racist bigotry being spread on social media about the "Chinese virus" (it's a virus, could originate anywhere!) has reached a fever pitch and this attack by a US congressman on a US citizen is beyond preposterous, it's emblematic of the political divisiveness in the United States today where logic is often thrown out the window (can't stand watching CNN or Fox News, they both insult my intelligence).
Importantly, if Jim Banks wasn't such a right-wing puff cake looking to score political points, he would have Googled Ben Meng and read this on CalPERS website (added emphasis is mine):
Yu (Ben) Meng rejoined CalPERS in January 2019 as chief investment officer (CIO).Now, let me ask you a question, if Ben Meng was really a "Chinese spy", don't you think the FBI, CIA and NSA would have been all over him and tossed him in jail?
He oversees an Investment Office of nearly 400 employees and manages investment portfolios of roughly $400 billion, including the Public Employees’ Retirement Fund and affiliate funds.
Yu, a U.S. citizen born in China, returned to CalPERS after more than three years as the deputy CIO at the State Administration of Foreign Exchange (SAFE), the largest asset pool in the world with assets under management of over $3 trillion U.S. dollars.
Prior to his time at SAFE, he served at CalPERS for seven years with his last role as the investment director of Asset Allocation. He also was a portfolio manager in fixed income.
Before joining CalPERS in 2008, Yu worked at Barclays Global Investors as a senior portfolio manager, Lehman Brothers as a risk officer, and Morgan Stanley as a fixed-income trader.
He also serves as a member of the Future of Finance Advisory Council (CFA Institute) and is an associate editor for the Journal of Investment Management.
In 2014 Yu was the recipient of the Cheit Award for Excellence in Teaching at the Haas School of Business.
He holds a master's degree in financial engineering from the Haas School of Business at the University of California, Berkeley, and a doctorate in civil engineering from the University of California, Davis.
Importantly, you don't become the CIO of the largest US public pension fund without passing a rigorous background check. All this is lost on Jim Banks which makes me wonder if there is something in the water in Indiana which renders you brain-dead.
I've spoken to Ben Meng, had a long discussion with him, and let me assure congressman Banks that he's no more of a Chinese spy than Warren Buffett is.
What about these investments in "shady" Chinese companies? It's not the first time we have heard of this. I covered how senators Marco Rubio, a Republican, and Jeanne Shaheen, a Democrat, urged the Federal Retirement Thrift Investment Board (FRTIB), one of America's biggest government pension funds, to reverse investments in questionable Chinese state-owned enterprises.
I stated the following back then:
I'm not saying that US senators aren't right to sound the alarm and demand more transparency on which funds are investing in questionable Chinese companies that can impact US security, especially a fund like the Federal Retirement Thrift Investment Board which invests on behalf of members of the uniformed services, but it sets a dangerous precedent when US politicians get involved in fund investments.Well, now we see how CalPERS is the next whipping boy for investments in Chinese companies but my question is this part of ETF investments in China and more to the point, if it's illegal, then make it illegal and deal with the ramifications (and blacklisting doesn't equal illegal!).
The Federal Retirement Thrift Investment Board (FRTIB) is an independent Federal Agency with a single mission: To administer the Thrift Savings Plan solely in the interest of its participants and beneficiaries.
Ideally, there would be no government interference but I understand that in some cases, especially if it concerns military security, it needs to act accordingly and be a lot more sensitive when it comes to these investments.
My fear is a full-blown trade war with China is already degenerating into a currency war, and if high-profile US senators start demanding large US pensions to divest from certain companies, the Chinese will respond in kind and it might mean they will refuse to invest in some US companies and funds.
It's a slippery slope, one that will not only affect FRTIB but other large asset managers.
Instead of US politicians meddling into public pension fund investments, which is a recipe for disaster regardless of which side it comes from, I suggest they shut up and pass laws making certain investments illegal based on national security concerns.
If these concerns are valid, fine, but get ready for retaliation from China which won't sit idly by.
Attacking Ben Meng is cowardly and reprehensible. He's one of the nicest and smartest CIOs I've spoken to and CalPERS is very lucky to have him as its chief investment officer.
California Governor Gavin Newsom should demand a public apology from Jim Banks. Period.
In this highly politicized environment, it's extremely disconcerting to see people like Jim Banks going after a guy like Ben Meng. This is why I decided to take a public stance against these racist, vitriolic, unfounded and outrageous claims.
Ben Meng didn't put me up to this, I put myself up to it. I'm sick and tired of the political nonsense from the Right and Left down south. What happened to moderates with brains and reason?
Below, Fox Business talks to Rep. Jim Banks, (R-Ind.), who argues $3.1 billion from CalPERS, the largest state pension fund in the country, has been invested in many different blacklisted Chinese companies that make military equipment (totally ridiculous comments based on partisan nonsense and if these investments are blacklisted, why aren't they illegal?). Watch the clip here if it doesn't load below.
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