Over a series of posts, we will discuss what we believe is a serious governance lapse at CalPERS, which is the hiring of Charles Asubonten, who joined as its Chief Financial Officer on October 2, 2017. As we will show, even if Asubonten lived up to the description on his resume, he is not qualified for the job, as can be easily seen by comparing his resume with CalPERS’ job specs. The first required qualification is at least 10 years of experience in a large pension fund or financial institution. Asubonten has none.

But more troubling is that comparing the resume to authoritative public domain evidence showed Asubonten has made multiple misrepresentations. Interviews with former executives who reviewed his performance, and other sources of information, confirmed our interpretation of those documents and exposed more discrepancies.

Asubonten also has meaningful inconsistencies in the presentation of his professional history over time prior to applying for his position at CalPERS. It also appears that Asubonten made a material misrepresentation on a financial conflicts of interest filing by California government officials, the Form 700.

These allegations are serious. We will therefore provide the documentation supporting our findings over a series of posts.

We will begin today with an overview of the misrepresentations and discrepancies. In a second post today, we will focus on the disparities between what Asubonten’s resume says about his purportedly most significant executive position, that of serving as CFO for a South African mining company, compared to evidence from public records and former executives.

Tomorrow, we will turn to his more recent “man of many names” history in private equity and his related Form 700 issue, and will discuss how even taking Asubonten’s claims at face value, he is not qualified for the CFO role.

Background

Someone close to CalPERS called my attention to Asubonten’s hiring and the fact that his CFO experience was limited. His LinkedIn page said for the last few years that he’d been a private equity executive, yet neither his profile nor CalPERS’ press release named his firm, which seemed peculiar. Anyone who has ever worked in private equity understands the importance of the pedigree of their firm and would actively promote the firm they were working for.

It was in fact difficult to find out anything out about Asubonten’s private equity activities. As one 30-year industry veteran pointed out, “If the firm did a deal it should have shown up someplace.” Further digging turned up more troubling discrepancies. I obtained his resume, which is embedded at the end of this post, from CalPERS via a Public Records Act request.

Asubonten graduated magna cum laude from North Carolina Central University and obtained an MBA degree from what is now called the Ross School at the University of Michigan. He worked between college and business school at KPMG and Dow Chemical. He then advanced in finance positions at Ford Motor and DTE Energy. He next went to Rio Tinto, where he was posted to Palabora Mining Company in South Africa, in which Rio Tinto held a majority stake, as its Chief Financial Officer. He left Palabora after three and a half years, then spent two and a half years in private equity. In mid 2012 he went to another mining company, Mopani Copper Mines in Zambia, where he was the Chief Financial Officer for thirteen months. In 2013, he returned to the US to work for a private equity firm. He has a CPA, a CFA, and holds a diploma from a two-day Financial Times governance course.

Main Findings

Asubonten has made numerous misrepresentations on his resume. These are so prevalent and the degree of inaccuracy is so marked that they cannot be viewed as normal puffery. As McKinsey’s former co-head of its organization practice put it, “This goes beyond sloppy. It’s in an entirely different class.”

Specifically, Asubonten considerably exaggerated his job scope at Palabora, claiming that he had authority and positions that are contradicted by public records and reports from former Palabora executives. His claims of significant achievements are also at odds with a court ruling in a suit Asubonten lodged over his bonus and his flights back to the US. The decision described Asubonten’s poor performance ratings for the last 2 years of this three and one half year tenure and his termination. The judge did not find in favor Asubonten’s claims that he deserved a better personal performance score and noted that Asubonten provided only “the most sketchy evidence”.

As we indicated earlier, not only has it been well nigh impossible to find any evidence of private equity activity associated with Asubonten, he has generally not used a business name and when he has, he does not appear to have exposed any name publicly more than once. One of the few place where his name is listed with advisory board assignments, in Ghana, his name is spelled differently: Asubonteng, as opposed to Asubonten.

Finally, Asubonten provided an address for his business on his Form 700, the disclosure of financial interests filing required of all California officials, where there was not only no office in his business name at that location, but even mail sent to that address would not have been delivered. A informal reading from the Fair Political Practices Commission is that this address is non-complaint with the requirements of Form 700. The form has strong language about the seriousness of the responses, such as “I have used all reasonable diligence…”. The form is filed under penalty of perjury.

We sent the e-mail below to Asubonten last week. We sent it separately to the CalPERS board and its Chief Executive Officer, Marcie Frost, letting them know we had sent it to Asubonten and providing an example of some of the additional information that we had.

Dear Mr. Asubonten, I publish the website Naked Capitalism, which provides independent news coverage of key CalPERS developments. Recently, it came to my attention that the resume and the Form 700 you provided to CalPERS contain material misrepresentations and substantial discrepancies vis-à-vis public records and sources that have first-hand knowledge of your history and activities. I will shortly be publishing a comprehensive review of my findings. In the meantime, I wish to give you the opportunity to comment. This summary is only a partial review, focusing on major issues: 1. Mr. Asubonten was the CFO of Palabora Mining Company from July 2006 to December 31, 2009 when his employment was terminated. For the last 2 years of his 3 1/2 year tenure, he received poor performance ratings. After he left Palabora, he attempted to dispute the performance ratings. Mr. Asubonten claimed only three accomplishments. All were rejected due lack of support (“the most sketchy evidence”) despite the bar being relatively low by virtue of Rio Tinto/PMC’s inability to provide anything other than verbal backup for its personal performance grades for Mr. Asubonten (55 out of a possible 150 in 2009, and “not much better” in 2008). 2. Mr. Asubonten did not play the lead in developing strategy, was not “co-responsible for day to day operations” with the MD, nor did he lead a turnaround. The turnaround started in 2005 and was due to a change in the mining operations from open pit to underground mining, which required considerable investment and was initiated at and approved by Rio Tinto. Former executives say Mr. Asubonten “had nothing to do with it.”

The turnaround was already underway before Mr. Asubonten arrived as the underground mining operations were coming on line and copper prices surged. Palabora went from an operating loss in 2004 to an operating profit in 2005, and even more important, cash flow rose sharply in 2005. Increases in commodity prices and higher production levels in 2006 and 2007 led to further improvements in profits. 3. Mr. Asubtonen claims he was responsible for investor relations and boosting the stock price “from the 20s to over 100 rand in three years”. Mr. Asubonten was not responsible for investor relations. This was a team effort, with the involvement of Rio Tinto and the Palabora Mining Company Managing Director having the lead responsibility. And even of the local team, former executives say that Mr. Asubonten’s role was less important than that of a South African employee who had the day-to-day financial media/investor contact role. They depict Mr. Asubonten’s involvement as minor. The stock price closed at 47.50 rand on his first day at Palabora and never closed below 34.50 rand his entire time there. The stock price trading range in 2007, too early by Mr. Asubonten’s own claims for him to have had any impact, was virtually identical to that of 2009, which was the end of the three years for which he attempted to take credit (July 2006 to July 2009). And as is implied above, it strains credulity that Mr. Asubonten could have had any net positive impact on the company in the last half of this three-year time frame, given that his personal performance ratings were markedly lower than that of the business unit (Palabora). 4. Mr. Asubonten did not supervise or have responsibility for the corporate secretary. That was an independent role and it did not report to Mr. Asubonten. 5. Mr. Asubonten did not run the hedge book. It was managed by Rio Tinto. 6. Mr. Asubonten was never the chairman of the Palabora Foundation. Moreover, his performance as a member of that team was depicted as poor: “He did not do a good job. If I were him, I would not be proud of that.” CalPERS has described Mr. Asubonten as a “managing director in a private equity firm,” apparently reflecting how he presented his background to CalPERS: https://www.calpers.ca.gov/page/newsroom/calpers-news/2017/charles-asubonten-named-cfo. However: 1. As Mr. Ausbonten and CalPERS surely know, a “private equity executive” is someone in a senior level of a firm that has discretionary investment authority over other peoples’ money and is overseeing the process of buying and selling controlling interests in companies. While it is possible for an individual even with very little money to act as a private equity investor by, say, taking a stake in a shoe repair store, that is completely different than being a “private equity executive” or “managing director” in a “private equity firm” which implies that the firm’s principals support their overheads and compensation from recurring fees and profit participation from committed third-party capital. Mere self-assignment of a role, or the use of a self-assigned title on a business card or LinkedIn profile, is not proof of career accomplishments. In addition, Mr. Asubonten’s description of his activities at “Transmax-Maximum Transformation” is inconsistent with his description of himself as a “private equity executive.“ It is consistent with being a consultant to individuals and companies making investments. McKinsey, KKR’s Capstone unit, Houlihan Lokey, and many other individual and small firm consultants play that role. They are service providers and do not hold themselves out as being in the private equity business, any more than other service providers, such as lawyers or accountants, would. Mr. Asubonten may have received stakes in investee companies as part of his consideration for providing services. That would not make him a private equity executive or principal. Employees of KKR Capstone participate in KKR’s carry pool, and some law firms and independent consultants to private equity firms receive small equity participations. 2. Due to the long time frame of private equity investing, as again a private equity professional would understand, a critically important criterion in evaluating a firm is the cohesiveness of its management team and the stability of its operations. Mr. Asubonten’s history from 2010-2012 and then from 2013 to present is inconsistent with such cohesiveness and stability because: Generally, there is no identification of a firm whatsoever, and when used, they are inconsistent and dissimilar (including e.g., “Private Equity Inc.” and “Global Finance” and “Charles Asubonten & Associates”) to such a degree that he does not appear to have used a specific firm name more than once, including on documents. Particularly troublingly, Mr. Asubonten has done business in Ghana under a different name (Asubonteng as opposed to Asubonten). While this could conceivably be a mere mistake, the fact that it has occurred more than once in settings where Mr. Asubonten almost certainly could have had the misspelling corrected but did not do so is troubling. Financial institutions experts point out that the use of a mild variation in spelling leads to “no realistic possibility of detection” that the variant spelling name is connected with another person. Note that Ghana is on the GFSC Sensitive Sources Notice where financial institutions are required to engage in enhanced due diligence measures and give special attention to “all existing and new business relationships and transactions connected with such countries or territories.” https://www.gfsc.gg/sites/default/files/20160322%20%20Instruction%20Number%2001_2016%20-%20FSBs%20-%20March%202016_0.pdf 3. Mr. Asubonten’s use of different company names or DBAs makes it difficult to find where those claimed businesses exist. There are no Transmax corporate entities registered in Delaware, Maryland, or Michigan. The apparent absence of any registered corporation is significant because private equity firms use them as part of their legal structures to limit liability; it is unheard of to do otherwise. I have contacted all RSA Capitals, included in the variant of Mr. Asubonten’s business name on his Form 700, that are in the private equity business to ascertain if any might have a relationship with Mr. Asubonten or a “Transmax”. All either stated they had never heard of him or did not reply, when you would expect them to if they had worked together. The only listings of Mr. Asubonten’s name in connection with specific companies (aside from previous employers or educational/accreditation institutions) is one of a business in which he may have invested (Tragik Koncepts & Design, a tiny computer repair store in Ontario that has closed) and two later ones where Mr. Asubonten is only on the advisory board. Private equity investors do not act as advisors to non-investee companies save perhaps as a charitable activity or because the position is influential (being on the board of one of the Federal Reserve Banks; those boards are advisory boards). An investor would have board seats. However, consultants and other business advisors to private equity firms often do serve on advisory boards. 4. Absence of a website and an office: Mr. Asubonten has in the past registered two internet domain names: transmax.biz and totusfinancial.com. Both websites are not active and appear to never have been built. Mr. Asubonten pointedly avoided providing a location for his “Transmax-Maximum Transformation” entry by placing “Maximum Transformation” in the position used for all of this other resume entries to show job location. The only physical address provided by Mr. Asubonten is on his Form 700: Transmax/RSA Capital, 8480 Baltimore National Pike, Ellicott City, Maryland. After extensive inquiry, the only connection identified between that address and Mr. Asubonten or the business name listed is a letterbox in Mr. Asubonten’s name (as opposed to a business name) at a UPS Store located in a strip mall at 8480 Baltimore National Pike, Ellicott City, Maryland, whose lease expired on October 1, 2017. The UPS Store confirms that mail sent to the address listed on the Form 700 would have been rejected even if it had a UPS mailbox number. UPS requires that mail must show both the letterbox lessee name and the letterbox number. Furthermore, the Fair Political Practices Commission help line has confirmed that a business address that is not valid for mail delivery is not complaint with the requirements of Form 700. 5. While Mr. Asubonten may have had an inheritance or other personal funds he invested, this would fall short of being considered a “private equity firm” in which Mr. Asubonten could hold himself out as an executive unless his personal/family monies were of such a scale that he hired full-time employees. But even then, as again both Mr. Asubonten and CalPERS staff surely must know, that type of investment operation is called a “family office.” I look forward to your response addressing these matters. Thank you. Sincerely,

Susan Webber

Mr Asubonten replied early in the day Sacramento time:

Dear Susan, Thanks for reaching out to me. Your report is nothing short of character assassination. I have been utilizing my skills at CalPERS to ensure that we deliver on our sacred mission of delivering retirement benefits and healthcare to those who serve California! I would like to know what your purpose or objective is so that I can point you to the appropriate sources. If you find capitalism naked, let me assure you that I have been doing my bit to clothe it; to wit, find an article I wrote years ago. Let me end by quoting Edmund Burke: “When bad men (or women) combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle.” Sincerely,

Charles

We replied to Asubonten, stating that we were asking him to correct errors in what we had sent him, with any supporting evidence. We have not received a response.

We’ve embedded his attachments at the end of this post. As lawyers like to say, res ipsa loquitur. Asubonten did not address any of the information presented, and instead made a personal attack and also attempted to make an emotional appeal. He also seemed not to recognize that calling a letter to the editor an article was not helpful to his case.

We e-mailed back, telling him that we had contacted him to assure the accuracy of our reporting and asked for him to correct errors and provide any supporting material.

We have not received a reply.