Metro pension holding at risk By Thomas Goldsmith / Staff Writer More than $6.5 million of Metro employees' pension money is invested in a poorly performing fund headed by two ousted executives of Prison Realty Trust, the financially struggling Nashville-based owner of prisons.
Late last week, principals of DC Investment Partners sent Metro a draft memo that says they will "terminate" the firm's Opportunity fund, days before the Metro Employee Benefit Board was to decide whether to unload its investment in it.
"We have been notified, in a way that appears to not be official, but comes from sources within DC Partners, that they are dissolving their fund," Metro Finance Director David Manning said. "We have asked the lawyers to review this matter and advise the investment board on Tuesday as to how to best protect the interests of the Metro Benefit Board portfolio.
"I have asked them to get a complete accounting of (the fund's) assets."
An original $7.5 million stake in DC Investment Partners has lost some $800,000 -- more than 10% -- in less than two years of booming financial markets. The benefit board committee that oversees a $1.6 billion pension fund had scheduled a meeting Tuesday originally to decide whether to get out of the investment because of the performance.
"That confirms that I had a right to be concerned," investment committee member Larry Ashworth said of the fund's potential dissolution.
"My guess is the reason is that they are worried about the adverse press of our pulling out of it."
The public stake in the DC Partners fund is a small part of the fast-growing Metro pension fund; Metro and DC Partners could not estimate Friday the city's eventual payout from it. But details of the investment open a window on benefit board practices as the agency undergoes the first audit in its 37-year history. The audit comes as Mayor Bill Purcell's administration questions past investment strategies.
The pension fund's investment in DC Investment Partners came after investment committee members heard a presentation in May 1998 by principals Michael W. Devlin and Doctor Crants III. The presentation was bolstered by the presence on the DC fund's advisory board of names of prominent Nashville business figures, including former Columbia/HCA Healthcare Corp. executive Clayton McWhorter, board members said.
Devlin and Crants left Prison Realty Trust late last year after a planned restructuring brought new leadership to the company, whose shares fell some 75% in 1999.
"Since that occurred, I had some concern about how the corporation was structured and how that applied to DC Partners," Ashworth said.
Ken Renner, a spokesman for DC Investments Partners, said the termination of the fund had been coming for several months and had little to do with any relationship with Metro.