Treasurer Alexi Giannoulias on Monday proposed consolidating the investments of Illinois’ five pension funds in order to save money and curb ethics abuses.

The legislation would put investment activities currently managed by three boards in the hands of one board, as well as impose new ethics rules and restrictions. He said such actions could save $82 million in administrative and management costs.

Giannoulias’ proposal comes while the federal government’s Operation Board Games investigation of state corruption has revealed pay-to-play tactics were used in the awarding of investment contracts.

A similar proposal was floated in 2003 but was quashed by several of the political power brokers who have since been charged with shaking down firms interested in investment contracts for their personal benefit and for contributions to Gov. Rod Blagojevich.

“The cost of corruption is real,” Giannoulias said. “If these corrupt insiders had not been successful in thwarting this worthwhile proposal, the state retirement systems would have saved substantial amounts of money over the last five years.”

The Civic Federation of Illinois praised the proposal.

The governor said in a statement: “We support increasing efficiency and transparency of state government and the state pension systems, provided that all efforts are made to ensure the diversity among investment managers and protect the interests of annuitants.”

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