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Archive for Wednesday, April 24, 1991

CROWTHER RESIGNS AS KPERS DIRECTOR AMID INVESTIGATION

April 24, 1991

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— Marshall Crowther, executive secretary of the Kansas Public Employees Retirement System for nearly 10 years, has resigned amid the burgeoning investigation into investment policies of the state's public pension program.

Crowther, whose retention as director of KPERS was publicly questioned recently by Gov. Joan Finney, sent a letter on Tuesday to Thomas Hamill, chairman of the KPERS Board of Trustees. Crowther, a Lawrence resident, issued a news release shortly before the close of state offices.

His decision to quit, effective July 1, came 11 days after Mrs. Finney announced she was immediately joining the board. She questioned in a public statement at that time whether Crowther should be fired.

Mrs. Finney appointed herself to the KPERS board to lead an investigation into why the state's public employee pension fund has lost $118 million in bad investments during the past four years, including $65 million in a failed Kansas City, Mo., savings and loan.

Crowther was not responsible for those investments, and Mrs. Finney never spelled out in her statement why she wanted his performance reviewed and why she questioned whether he should be retained.

Responding to Crowther's resignation, Ann Cook, a spokeswoman for the governor, said, ``The governor appreciates his many years of service, and hopes he will remain in state government. She looks forward to working with him.''

Ms. Cook did not elaborate on what Mrs. Finney meant, but said the governor plans to proceed ``to steer KPERS in a new direction.'' That means, Press Secretary Martha Walker said, that Mrs. Finney wants to take a critical look at KPERS' direct placement and real estate investments during the past five years.

IN HIS announcement, delivered to reporters shortly before state offices closed Tuesday, Crowther noted a reconstituted KPERS board will be in place May 1, and will ``undoubtedly wish to set in place their own philosophy and management.''

He added in his statement, ``During the past 10 years, KPERS has grown and prospered. It has been a privilege to have been part of the KPERS system and to have served the board of trustees, public employees and the citizens of my state.

``At the present time, the Joint Committee on KPERS Investment Practices is reviewing the entire system. I look forward to continuing to work with the committee. When their deliberations turn to and focus on statutory provisions relating to KPERS, I hope to make several significant contributions.''

Crowther was named executive secretary of KPERS in 1981 after John K. Corkhill retired. Corkhill held the post for 20 years, from KPERS' creation in 1961.

CROWTHER grew up in Salina and graduated from Kansas Wesleyan. He earned a law degree from Kansas University in 1965 and was an attorney for the state Highway Commission for two years before becoming KPERS' chief attorney in 1967. He became KPERS' deputy executive secretary in August 1980 and was named acting executive secretary in August 1981, then executive director in November 1981.

Sen. Wint Winter, R-Lawrence, chairman of the legislative investigative committee, said of Crowther's resignation, ``I can't say I'm shocked. I assume he may have seen the governor's handwriting getting closer to the wall, and getting closer to the opportunity of appointing somebody new.

``I don't know whether it's good, bad or indifferent as far as our investigation. I wouldn't think it would have any impact on what we've been doing. I assume Marshall still will be available to work with us.''

SEN. FRANK Gaines, D-Augusta, a member of the investigative committee, said, ``I'm a little surprised, but I guess I shouldn't be, based on what the governor said the other day. The thing about Marshall's position is he was never in any policy position. He wasn't involved in any investment decisions.''

Winter and Gaines said Crowther probably would have been fired if he had tried to oppose the KPERS investments now being scrutinized.

The failure of Home Savings Assn. of Kansas City, Mo., which was taken over by federal regulators in mid-March, triggered the legislative investigation last month and prompted Mrs. Finney's decision to join the KPERS board.

The KPERS board voted March 29 to suspend all direct investments, but decided at a followup meeting April 5 to honor commitments it was legally bound to honor in the form of add-on investments for companies to whom it had loaned money. Primary among these was the Duckwall-Alco Stores Inc. of Abilene, which the board voted to give another $2 million to try to keep it from going under.

The legislative investigative committee has scheduled hearings for May 8-10, and may call former Govs. John Carlin and Mike Hayden to testify about the start and continuation of the direct investments program while they were in office.

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