A Cynical Response: The Treasurer’s staff will study her conflict of interest
North Carolina Treasurer Janet Cowell tacitly admitted that her membership on two corporate boards might be inappropriate. This came to light at a recent meeting of the trustees of the state’s retirement system. However, the Treasurer expressed her view in a way that is very disappointing. Rather than resigning from the boards of Channel Advisors and James River Group Holdings, she had her acting General Counsel read a statement that calls for her staff to prepare proposals to prohibit the practice in the future. The Treasurer was reacting to concerns expressed by two board members, John Aneralla and Michael Mebane. She was not at the trustees’ meeting.
A couple of years ago the Treasurer used the same tactic to fend off questions about her role as sole fiduciary. She put together a study group, asked for recommendations, and didn’t reach a conclusion on the issue. She’s doing it again. While indicating that she has sympathy for Mssrs. Aneralla’s and Mebane’s concerns, Treasurer Cowell is initiating a process that won’t have any substance. She has asked her staff to develop recommendations that will result in a lot of discussion and no change. Moreover, Treasurer Cowell has further muddied the waters by expressing her preference that any policies cover other Council of State members (i.e., the Governor, Attorney General, Secretary of State).
The Treasurer is right that public employees shouldn’t serve on corporate boards. Given
the Treasurer’s role as sole fiduciary and as the state’s banker, her office should be the first one to be barred from serving on corporate boards. It doesn’t require any study or delay. The Treasurer simply needs to send out a couple of resignation letters. Her successor, Dale Folwell or Dan Blue, III, have promised not to join any boards, so it’s only Treasurer Cowell who has created a potential conflict of interest.
Managing a public pension should involve as little politics as possible. Unfortunately, Treasurer Cowell has taken a completely political and cynical position. While she’s agreed that public officials and fiduciaries shouldn’t accept private board positions, she’s started a process that merely deflects political pressure. Meanwhile she gets to keep her board positions, cash compensation, and stock grants.