I just came across the following "Pensions & Investments" article from its January 9, 2012 issue concerning failing private equity deals that refuse to die. They just keep on collecting their fees.
The article actually mentions the NYC pension pension funds as having to deal with this problem.
I wonder how many zombies the NYCERS trustees are dealing with in their secret executive board meetings? Well, at least one zombie died.
As of June 30, 2011 NYCERS had entered into 140 private equity contracts with 100 managers. In its FY-2011 CAFR, NYCERS failed to report the annual fees for 27 of those contracts. The total fees for the private equity contracts was reported at $41.94M. That amount is overstated because six non private equity managers were included in the list of private equity managers. The amount to be subtracted is $7.72M.
Of course, in addition there is the $26.60M charge for private equity that NYCERS is unable to identify who are the parties receiving the payments. It's like your wife telling you that she spent $29M shopping but she can't remember what she bought.
This whole program is an accounting shambles. Private equity firms generally want to hide everything they are doing. Public pension plans are required to be transparent to prevent fraud. Guess who wins out?
We are all going to learn a great deal about private equity firms because of Mitt Rommney and Bain. Pay attention. Even when they make money, they are very often putting workers out on the street.
