Two years ago, Texas Attorney General Greg Abbott went before the Supreme Court and successfully defended the constitutionality of a Ten Commandments monument on the grounds of the state capitol. In June he told a gathering of Texas pension officials to take the Ninth Commandment --Thou shalt not bear false witness -- more seriously.
In a scathing speech at a closed-door conference in Austin, the wheelchair-bound Abbott accused pension systems and their boards of playing down unfunded liabilities and engaging in pay-to-play schemes with consultants. "The audience was a little bit stunned," says Robert Smith, president and CIO of Sage Advisory Services, an investment consulting firm in Austin. "There's a new sheriff
The Texas Pension Review Board has found that the state's pension plans have unfunded liabilities of more than $23 billion, but Abbott said funds minimized the true figure by using "overly optimistic and unrealistic actuarial assumptions." The attorney general, who declined to be interviewed, also accused pension boards of conflicts of interest, saying he had heard of several board members who were hired by investment managers employed by that board.