PA Treasurer Unveils Investment Advisory Council, Governance Investment Principles

Council, principles essential elements of Treasury's continued commitment to enhanced governance

HARRISBURG, Pa., Dec. 4 /PRNewswire-USNewswire/ --Pennsylvania Treasurer Robin L. Wiessmann today presided over the first meeting of the independent Advisory Council on Investment Affairs, made up of five investment and finance professionals. The Council, which will serve as an investment decision-making resource for the Pennsylvania Treasury Department, is the latest measure in Treasurer Wiessmann's ongoing efforts to institutionalize good governance at Treasury. As part of her emphasis on good governance, Treasurer Wiessmann also unveiled the third application of the Pennsylvania Investment Principles, corporate governance factors.

"The recent subprime mortgage meltdown that in large part triggered our current financial crisis demonstrated the importance of governance and transparency in business and financial transactions -- without these corporate values it is very difficult to assess a company's sustainability and make investment decisions with confidence," Treasurer Wiessmann said. "Governance and transparency are critical underpinnings of prudent investing and the Advisory Council on Investment Affairs is one of the critical elements in embedding these values into our internal investment policy to safeguard the Commonwealth's funds."

Created by Treasurer Wiessmann through executive order, the Advisory Council on Investment Affairs is a resource for Treasurer Wiessmann and the Department to draw upon in their discretion. Council members will assist in providing advice on the management of investments held by Treasury and provide as needed general advice regarding management and investment of moneys.

Members of the council are:

• Lisa Duda, partner, Investment Management/Mutual Funds Practice Group, Stradley Ronon Stevens & Young, LLP
• Orin Kramer, Chairman, New Jersey State Investment Council
• William Luterman, Chief Investment Officer, Brooks Capital Group, LLC
• Michael McCarthy, Chairman, VMAC LLC
• Tina Byles Williams, Chief Executive Officer & Chief Investment Officer, FIS Group

Treasurer Wiessmann's commitment to enhanced governance marks the third application of the Pennsylvania Investment Principles, which she developed to ensure the consideration of long-term factors that affect sustainability, such as geopolitical, environmental, governance factors, when assessing an investment's financial appropriateness. Treasury's governance policy aims to identify governance risks not captured in traditional investment analysis and opportunities that offer Treasury superior risk-adjusted returns through investing in companies that adhere to good governance.

In addition to the Investment Council, Treasurer Wiessmann will direct Treasury's external investment managers to screen for both elements of poor governance and good governance when evaluating investment opportunities, in addition to traditional investment analysis. Treasurer Wiessmann and her investment staff are also currently working to identify direct investments in companies that exemplify or champion good governance practices.

"Since Treasury has a long-term investment horizon, judging the long-term sustainability of a company's practices is a necessary and prudent measure," Treasurer Wiessmann said. "Governance also plays a role in the ability to survive systemic financial and economic turmoil. Good governance may not ensure survivability and profitability; however, poor governance can be a catalyst for downfall in times of turbulence. Treasury must be acutely aware of governance structures and business practices that could be at risk during periods of systemic turmoil."

Treasurer Wiessmann has already applied the Pennsylvania Investment Principles, which she established in January of this year, using two distinct strategic factors, environmental and geopolitical drivers, to enhance and protect the Commonwealth's investments. When it was clear that the volatile climate in Sudan, combined with growing international pressure, threatened the long-term value of the Commonwealth's holdings in companies that do business there, Treasurer Wiessmann divested Pennsylvania's modest investment in China Petroleum and Chemical. Next, Treasurer Wiessmann conducted an analysis of environmental issues, which represent both risk and opportunity to investment portfolios. She then made the first investments in a new environmental investment strategy for the Treasury Department, Keystone Green, to capitalize upon the advantages of the evolving clean and green technology sector to achieve prudent yet competitive returns for the Commonwealth's investments.

Treasurer Wiessmann is directly responsible for investing money belonging to nearly all state agencies. Her broad authority to place these funds in a wide range of investments, including equity securities and mutual funds, is subject to well-established standards that prudent persons would follow in the management of their own funds. As chief executive of the Pennsylvania Treasury Department, Wiessmann exercises exclusive or shared investment authority over more than $100 billion in public funds.

The Pennsylvania Treasury Department, under the leadership of Treasurer Robin L. Wiessmann, is a leader in changing the way treasuries do business. The Department and its employees are accountable for safeguarding the financial assets of all Pennsylvanians, serving as custodians, investors and disbursers of the Commonwealth's funds. Treasury also helps Pennsylvanians achieve financial success through a variety of programs and services like the Unclaimed Property program, the nowU College Savings Program, the KeystoneHELP low-interest loan program, and the INVEST program for local governments and nonprofits. For more information about Treasurer Wiessmann and the Pennsylvania Treasury Department, visit www.patreasury.org.