Wilshire disappointed; board calls for meeting

The NMI Retirement Fund’s investment consultant expressed disappointment yesterday with the signing into law of the controversial beneficiaries derivative act despite Gov. Benigno R. Fitial’s earlier promise to junk the bill.

“This is a disappointing development,” Wilshire Associates principal Maggie Ralbovsky told Saipan Tribune upon hearing the news.

She said the matter is now with their legal counsel and that they will issue later a formal statement of reaction and plans.

Lt. Gov. Eloy S. Inos, as acting governor, signed Senate Bill 17-43 into law on Monday, paving the way for retirees to take legal action on behalf of trusts or the Fund when the trustees who manage them refuse to bring such actions.

The Fund earlier urged the Fitial administration to junk the bill because its passage may result in the cancellation of the Fund’s existing contracts with its investment consultant, money managers, and other vendors.

The Fund believes the new law will result in an annual loss of $9 million in its investment portfolio, currently valued at $271 million.

Viola Alepuyo, the Fund’s legal counsel, declined yesterday to comment but disclosed that the trustees will meet tomorrow to come up with a formal statement and reaction.

“The board has decided to have a meeting on Thursday at 3:30pm at the Fund conference room and will make a formal statement after the meeting,” she said.

Alepuyo earlier disclosed that Wilshire Associates had expressed a desire to reconsider its contract with the Fund if the measure is signed into law. Wilshire’s Ralbovsky declined to comment yesterday when asked about this.

The Fund hired Wilshire in October 2010, replacing its long time financial adviser Merrill Lynch.

Fund administrator Richard Villagomez earlier reiterated the damaging effects of Senate Bill 17-43 if it passes, saying the cost of doing business with the Fund would increase due to added litigation. He said the Fund’s investment consultant and money managers would likely cancel their contracts with the Fund because of the additional risk of potentially being sued by people who are not parties to the contract.

The law, the Fund said, would also damage the reputation of the CNMI, “which will be perceived as being a hostile business environment” and it will increase cost of some services such as Group Health or Life Insurance.