California Public Employees' Retirement System (Calpers) announced on August 6 Asia time, August 5 in the US west coast, that Yu (Ben) Meng was resigning as chief investment officer, effective immediately.
Meng had been the CIO of the $389 billion asset owner, which is the largest defined benefit pension fund in the US, since January 2019.
Meng’s tenure was controversial, tainted by allegations of close ties with China. His departure, though, was precipitated by a failure to fully comply with the California Fair Political Practices Commission rules in relation to financial disclosure. These indiscretions were brought to light by the website ‘Naked Capitalism’ last week.
In a statement, California state controller Betty Yee said, “I am incredibly disappointed to hear about the former CIO's lapse in both judgment and adherence to standard conflict-of-interest policies."
In the official statement from Calpers, Meng said, “I deeply believe in the Calpers mission of serving those who serve California.
“I’m proud of the work we did to change the portfolio, build a skilled investment office and set Calpers on a strong path to achieve our return target. But at this time, it’s important for me to focus on my health and on my family and move on to the next chapter in my life.”
Subsequently, Calpers board president Henry Jones issued a statement on August 6 stating that "Calpers has known about questions regarding Ben’s Fair Political Practices disclosure filings. These are private personnel matters and have already been addressed according to our internal compliance protocols."
Calpers said Dan Bienvenue, deputy chief investment officer, will serve as interim CIO while the pension fund starts an immediate search for a permanent successor.
A US citizen born in China, Meng had been a controversial CIO appointment from day one, embarking on an internal reform programme that may have cost him support when his leadership came under challenge.
The Trump administration has escalated its war of words over China’s perceived trade infringements, and there has been growing bipartisan support for measures against Beijing. This has fuelled the view that US pension funds and other asset owners would increase their investment risk by making higher allocations to China at a time when dialogue between the two nations is at such an impasse.
Amid these rising tensions, Meng drew criticism from US senators hostile to China that he was compromised by having worked at the State Administration of Foreign Exchange (Safe) during a three-year secondment from Calpers, which ended in 2018.
Meng was also part of a Chinese Thousand Talents Program, which FBI assistant director for counterintelligence Bill Priestap described as an example of a "brain gain" programme from the Chinese government that "encourages intellectual property theft" before the US Senate Judiciary Committee in 2018.
This anti-China sentiment has escalated to the point where Calpers was singled out by secretary of state Mike Pompeo in February for its investments in Chinese military contractors. Calpers holds some $3 billion worth of shares in Chinese companies.
The increased sensitivity over Chinese investments has forced other federal and state pension funds in the US onto the defensive in justifying their support for Chinese companies.
Calpers website makes it clear that all investment decisions are the result of collective discussion: “At no time did Calpers' CIO direct investments in China.”
An updated report on the Naked Capitalism site said, "Since Meng was seen in the office in routine internal meetings Wednesday morning, it appears his departure was not voluntary."