Gov. John Lynch says he won’t reappoint the embattled chairman of the state retirement system trustees, who is in hot water for not disclosing that he was offered stock in a company that wanted the system to invest in it.
Edward Theobald was offered stock in Hermes Technology LLC while the system was considering investing $10 million in the company.
“Governor Lynch has told Mr. Theobald he will not be reappointing him to the retirement system board. He looks forward to nominating a replacement in the very near future,” Lynch spokeswoman Kate Whitegiver said Wednesday.
On a 6-4 vote last month, the trustees concluded that Theobald violated the board’s ethics code by not disclosing the offer. Theobald’s attorney, Richard Molan, disagreed and said Theobald, of Portsmouth, is being targeted by foes who want him off the board.
“I think there are a couple of people who would like to see Ed out of there,” Molan said, without naming names.
The board also concluded that Theobald should not have used state stationery to write a letter asking a retirement system vendor to donate to a charity golf tournament, the Telegraph of Nashua reported Thursday.
Theobald urged Evaluation Associates of Norwalk, Conn., to contribute either $2,500 or $5,000 to the tournament. The company, the lead adviser for the fund’s investments, donated $2,500.
Last month, the trustees voted to expressly make such charity solicitations by the system’s employees or trustees a violation of its ethical code.
Theobald is a prominent Democrat and past political fundraiser who has been on the board since 1997. The Executive Council will meet privately with Lynch on Aug. 31 to review the situation.
“If what is going on over there is a little bit of infighting between two people or whether you feel he has done something wrong, I don’t know,” Councilor Ruth Griffin, a Theobald supporter, said Wednesday.
Theobald said he entertained investing in Hermes, which makes equipment to detect construction defects in bridges, but declined after the system’s legal counsel advised such a “side-by-side investment would be a blatant conflict of interest.”
“I did not seek any special accommodation, stock or anything of that kind from Hermes,” Theobald wrote in a June letter asserting he did nothing wrong.
But Theobald said an investment manager identifying himself as a Hermes principal, Joseph Scanlon, did offer him 2 percent of the company for $500,000. When Theobald said he didn’t have that kind of money, Scanlon said he could get a seat on the board and free stock, Theobald said.
“I immediately indicated to him that was impossible and that trustees are never placed on the board of advisory committees or any of the corporations in which they invest,” he said.
The board found out about Scanlon’s contacts with Theobald in a letter in May from Ark Asset Management, which manages investments for the system. Ark Chairman Henry Breck said his company had learned that Scanlon, while working for Ark, had solicited funds from the retirement board on behalf of Hermes without Ark’s knowledge.
“This would have been a conflict of interest that we would never have approved,” Breck wrote.
“Our internal document review indicates that it also was contemplated at some point in time by Hermes that Mr. Theobald would have an opportunity to purchase an equity interest (stock) in Hermes,” Breck continued.
The retirement system uses income from its $4.6 billion in investments to pay pensions to 18,000 retired state, county and municipal workers, including teachers, police officers and firefighters. More than 50,000 current public employees contribute to the system.