MBTA retirement board split over opening up files

Chair and two others voted for transparency on the panel’s pension fund records, but their colleagues did not

Andrew Whittle and Janice Loux consulted at a hearing of the Massachusetts Department of Transportation board of directors.
Andrew Whittle and Janice Loux consulted at a hearing of the Massachusetts Department of Transportation board of directors.

Janice Loux has a long record of speaking up for the little guy. A fiery union organizer, she has spent much of her career fighting for Boston’s hospitality workers. As a director at the state Department of Transportation, she sides with MBTA riders who complain at public meetings and badgers officials to clear snow from bus stops.

But Loux has another, lesser-known role. She is the leader of the secretive Massachusetts Bay Transportation Authority retirement fund board, its longest-serving member, a trustee since 1997, appointed under five governors dating back to William Weld.

The board, which Loux has chaired since 2001, is in the midst of a long-running fight with the governor and the Legislature to open more of the pension fund’s records, a stance that has drawn more attention after a $25 million investment loss came to light last year. Attorney General Martha Coakley pressed the trustees in a letter Monday to adopt new disclosure and ethics rules.


Loux (pronounced Lox) and her board colleagues have all been asked to appear Tuesday at a hearing of the Legislature’s Joint Committee on Public Service. The fund’s executive director, Michael Mulhern, also is among the 18 people invited to attend, as is MBTA general manager Beverly Scott and the state’s Department of Transportation secretary, Richard Davey.

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Loux last month voted with the two other “management” appointees on the six-member board to disclose records, after Governor Deval Patrick in July signed a measure intended to subject the fund to public records law.

That board vote ended in a deadlock. Three other directors, all of whom represent MBTA union members, opposed release of the records related to the hedge fund loss. An “honorary” board member, who votes in the case of ties, cast the deciding vote against disclosure of the records.

“Underscoring my desire for full transparency, I was among the three trustees who voted to support the new law,’’ Loux said in a written statement handed to a reporter earlier this month after she refused numerous Globe requests for an interview.

She declined to comment on the investment loss with Fletcher Asset Management, saying, “because it’s under legal review, it is inappropriate to comment on any aspects of it at this time.’’


In shielding its records from public disclosure, the board relies on its historic status as a private trust — not a public pension fund overseen by the government. But taxpayer support for the T and, indirectly, for its $1.6 billion pension fund has soared over time. Now, taxpayers contribute more than $1 billion a year to the debt-strapped MBTA, whose perpetual budget squeeze has led to fare hikes and service cutbacks for riders.

The T, in turn, sends about $55 million a year to the pension fund for its employees, a figure that is rising annually to bridge a growing gap between the generous pensions promised to transit system employees and the money available to pay them.

New questions about governance of the MBTA fund surfaced when the loss of the $25 million on a hedge fund recommended by the pension fund’s former executive director became known.

Michael Widmer, president of the Massachusetts Taxpayers Foundation, said the board and staff of the fund should feel compelled to open their records, or to explain why they will not.

“There is an ethical responsibility on the part of the T, and the T pension fund’s board, to follow the same rules that other public entities do,’’ Widmer said. “There may be some legal nicety here, in terms of them being a ‘private’ fund, but that ignores the fundamental reality that this is a publicly supported, taxpayer-supported fund.’’


Jonathan Davis, the deputy general manager of the T who is one of the authority’s appointees to the pension board, said he favors full public disclosure of retirement fund information. He declined to say why the other half of the board opposes it.

‘There is an ethical responsibility on the part of the T . . . ’

“The members should be comfortable that their assets and their pensions are being well managed by the executive director and being watched over by the trustees,’’ said Davis, the only board member who agreed to an interview. “Everything that we do is in the best interest of the members.’’

Carl Valvo, a lawyer for the pension fund, maintains that a 1993 Supreme Judicial Court ruling exempts the fund from public disclosure, because it was organized as a private trust. The state’s supervisor of records has agreed with that interpretation, saying the law passed last summer does not change the SJC ruling. The Globe has asked the supervisor to reconsider that decision.

A spokesman for the T pension fund has said taxpayers would not be on the hook legally should the fund fail to meet its obligations. But a recent report by the Pioneer Institute, a Boston think tank critical of the T, says the pension fund would be insolvent by as early as 2024 without taxpayer support.

The board’s pension fund, and its losses, have in turn brought more attention to Loux, 55, a politically wired friend of Patrick and Boston’s former mayor, Thomas Menino. She has rarely shied away from a fight, taking on Hyatt Hotels Corp. when it fired 98 nonunion housekeepers in Boston and threatening a strike in Harvard University’s dining halls if workers had failed to secure a pay raise.

She is the daughter of a hotel waitress and an MBTA track laborer who died on the job at age 53, and Loux’s family lived on her father’s pension benefits, said MBTA spokesman Joe Pesaturo.

Today, Loux receives no pay as a retirement board member, nor as a MassDOT director. She earns $176,000 as executive vice president of UNITE HERE International, a union covering 270,000 restaurant and gaming employees, as well as textile workers.

Despite her standing in the labor movement, she was not joined by any of the three union representatives on the T pension board in the vote to open up more information on a fund that oversees retirement benefits for 12,000 current and former transit workers.

The board members who voted last month not to disclose records were James M. O’Brien, president of the Boston Carmen’s Union, Local 589; James Evers, the union’s treasurer; and James M. O’Connell of the International Brotherhood of Electrical Workers, Local 103, according to spokesmen for the Department of Transportation and the T.

None of the board’s union representatives returned calls or e-mails requesting interviews. When a reporter visited the Carmen’s local downtown on Feb. 14, officials declined to comment. An assistant to O’Brien told a Globe reporter to call for an appointment; no one has responded to follow-up requests.

The sixth trustee, Darnell Williams, chief executive of the nonprofit Urban League of Eastern Massachusetts, voted in favor of disclosure, according to transportation officials, but declined to be interviewed.

Davis defended Loux, saying she has taken steps to improve pension management.

“That is something that the chair is always very vocal about — making sure that how the fund operates is [with] best practices and in the best interest of the members.’’

According to a Globe report from 2000, Loux had been a defender of the fund’s then-executive director, John J. Gallahue Jr., who was eventually ousted from the job. An investigation found he had persuaded the board to loan $7 million to a convicted racketeer, Francis K. Fraine, an alleged associate of James “Whitey” Bulger. Also at that time, in her role on the transit authority board, Loux voted against new ethics rules for the pension fund, according to the Globe report.

Karl White, the executive director brought in after the Gallahue scandal, left in 2006. Just seven months later, he sold the board on an investment with his new employer, Fletcher Asset Management.

As a private trust, the board was not bound by state ethics rules and so was free to do business with a former colleague. Had it been like other state entities, White would have been barred from selling to directors for at least a year. The fund did not disclose the White relationship in its 2007 annual report.

By 2011, the fund’s managers had evidence that Fletcher was in trouble. They tried to cash out some of their money but did not receive a dime. Yet the problems were not disclosed in the fund’s 2011 or 2012 annual reports. In fact, the investment in the Fletcher Alpha fund is simply omitted from the 2012 report.

The pension fund finally made note of the loss in a footnote to an online newsletter published this month, as the bankrupt Fletcher funds faced investigations by federal authorities, and Coakley probed the investment locally.

Davis said the trustees carefully consider all investments with the help of a dozen staff members, a consultant, and an adviser. “It’s not rocket science,’’ he said.

Beth Healy can be reached at