Audit: Arizona Public Safety Pension System had unreported conflicts of interest



(The Center Square)– A report from the Arizona Auditor General is making five recommendations for the Public Safety Personnel Retirement System after finding a business deal between an administrator and former board members could have jeopardized fiduciary obligations.

The report found that the former system administrator and two board members had business-related conflicts of interest that they failed to properly disclose.

“In 2018, the System’s former Administrator entered into a business relationship with 2 former Board members, and all 3 individuals failed to disclose these relationships, such as in a conflict-of-interest disclosure form or at a public Board meeting,” the report states. “Specifically, in March 2018, the former System Administrator purchased a $550,000 home and used 1 Board member as the real estate agent and the other Board member as the loan officer for the home purchase.”

As a result, the Auditor General is asking the entity to crack down on their conflict-of-interest processes.

For example, they’re recommending that they “[store] and [track] all substantial interest disclosures in a special file available for public inspection” and remind “employees at least annually to update their disclosure form if/when their circumstances change.”

They are also asking them to have “periodic training” on conflict-of-interest policies, as well as continuing to provide detailed data to the Arizona Department of Administration.

Lastly, the Auditor General is asking them to make sure that “meeting minutes, or digital recordings” can be made available to the public by request “within 3 days” after a public meeting takes place.

Auditor General Lindsey A. Perry wrote in a letter to the state legislature, Gov. Katie Hobbs, and Public Safety Personnel Retirement System current administrator Michael Townsend that the pension system has agreed to what they’ve asked.

“As outlined in its response, the Public Safety Personnel Retirement System agrees with all the findings and plans to implement all the recommendations,” she wrote. “My Office will follow up with the Public Safety Personnel Retirement System in 6 months to assess its progress in implementing the recommendations. I express my appreciation to Administrator Townsend and System staff for their cooperation and assistance throughout the audit.”

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