Audit: State investment board skirted hiring rules, brought in co-workers of former exec

By Shereen Siewert

The board overseeing the state’s pension fund could make changes in hiring policy for highly paid executives after state auditors discovered the agency gave preferential treatment to candidates who previously worked with the agency’s then-executive director.

As a state agency, SWIB is bound by state civil service law requiring an open and objective process for hiring.

According to a Wisconsin State Journal report, the Legislative Audit Bureau questioned whether SWIB equally considered all qualified applicants for the positions reviewed. But the LAB stopped short of questioning whether the hires met the qualifications established for each position.

Annual salaries for the positions reviewed range from $125,000 to $310,000.

Four of the five hires examined in the audit previously worked with former executive director Rick Smirl at the Chicago-based William Blair Investment Management. Smirl began at SWIB in late January 2018 at a base salary of $400,000, but later resigned.

According to the audit, between 11 and 61 people applied for each position but only one person for each received an in-person interview. SWIB “lacked documentation in its hiring files” that explained why no other applicants received interviews, and staff showed preference for the people who were ultimately hired before those positions were ever posted, the audit discovered.

In one instance, an applicant emailed a SWIB staff member two weeks before the position was publicly announced and openly stated the executive director planned to bring the applicant on board.

In his response to the audit, current SWIB executive director David Villa said the board “hires for very specialized positions and the necessary skills often require significant investment industry experience.”

According to the Journal report, SWIB has vowed to better document its hiring processes.

SWIB is responsible for managing more than $100 billion in Wisconsin Retirement System funds on behalf of more than 632,000 current and former state employees. It is one of only a handful of fully funded or near-fully funded state pension funds in the United States.

December’s audit of SWIB’s hiring practices was spurred by a report to the LAB’s Fraud, Waste and Mismanagement Hotline.