The Virginia legislature's audit commission is investigating a $263,000 severance payment to the former chief of the state's public pension system and is looking into how the $43 billion plan is being governed.
The Joint Legislative Audit and Review Commission has interviewed officials from the Virginia Retirement System about the payment, which was made to its former director, W. Forrest Matthews Jr., and was the equivalent of about two years' salary.
Members of the commission are to present their findings at a meeting in Richmond on Monday, a day before the retirement system's Board of Trustees will take up the matter.
Among the key questions are whether the board followed proper procedures in making the payment, how large the payment should have been and whether Matthews should have received a payment at all, state officials said.
"The issue here is the severance package is not usually given to state employees who are agency directors," said Philip A. Leone, staff director of the commission.
Severance payments, when they are made under the state's Workforce Transition Act, typically are limited to the equivalent of 36 weeks' pay, said Leone, who added that the maximum could come only after 15 years of service. Matthews had been on the job for about three years. The investigation was first reported by the Richmond Times-Dispatch.
Kevin Hall, a spokesman for Gov. Mark R. Warner (D), who appoints some retirement system trustees, said Matthews's package seemed excessive.
"It would appear to be remarkably generous in light of the individual's brief tenure," Hall said. "This is a retirement system with a responsibility to wisely expend retirement dollars contributed by teachers, law enforcement personnel and state employees. And certainly none of those public servants would reasonably expect to receive a lump sum equal to two years' salary."
Matthews, a former finance director for Henrico County, said that he accepted the severance offer he was given and that he acted properly. As director, he was in charge of day-to-day operations, not investment decisions.
"I'm just a regular citizen trying to get on with my life," Matthews said. "I have not done anything inappropriate or unethical or anything."
He said the controversy over the package "doesn't make you feel good. You work hard all your life to build up a good name, and something like that comes."
Matthews said Alfonso I. Samper, then the chairman of the Board of Trustees, told him trustees wanted a change in leadership. Matthews said he had a number of years left in his employment contract but also was considering retirement.
"I was looking to retire sometime, and I hadn't set a specific time frame, and . . . the board was considering making a change, and I said, 'Good. Then I'll retire,' " Matthews said. "The chairman of the board came back to me with a package, and I agreed with what was offered, and I retired."
Samper's role in the payment, and whether he had the authority to make the deal with Matthews, is a focus of the inquiry, state officials said. Samper, an executive at Wachovia Securities, did not return a call seeking comment.
Board of Trustees Chairman Paul Timmreck said he expressed "serious misgivings" about the severance deal in a closed session last year.
"I didn't like it. There was no vote taken," said Timmreck, a former Virginia secretary of finance. "I think the process by which the payment was approved, or not approved, is likely going to be an issue in terms of board governance."
State officials said the legislative inquiry also will shed light on whether there are proper procedures in place to prevent a potential conflict of interest in the process for selecting a new chief investment officer.