ANCHORAGE (AP) -- The Alaska Permanent Fund Corp. has blasted a major New York financial services company for concealing what the fund's board says was a serious conflict of interest.
''The board asked me to inform you as plainly as possible of its displeasure and unhappiness with Deutsche Bank,'' says a Nov. 18 letter to the bank from Robert Storer, executive director of the Permanent Fund.
Storer says the problem occurred in the spring when electronics giant Hewlett-Packard acquired computer maker Compaq.
The Permanent Fund board had no opinion on whether the hotly contested deal should go through, and had given Deutsche Bank permission to vote by proxy the fund's 634,000 shares of Hewlett-Packard stock, worth about $12 million at the time, Storer said Tuesday.
A Deutsche division, Deutsche Asset Management, is one of several money management firms that handle the $23.3 billion state oil-wealth saving account's stock and other investments.
The fund's board didn't know -- and Deutsche Bank didn't disclose -- that its investment banking division was working for Hewlett-Packard to win approval of the deal, Storer said.
Deutsche's work for Hewlett-Packard ''clearly raised the possibility of a conflict of interest,'' and the Permanent Fund should have been told so it could have decided whether to vote its shares itself rather than delegate voting authority to Deutsche Asset Management, Storer said.
''I emphasize, we're not sure they're guilty of infractions,'' he said. ''But they clearly are guilty of poor judgment as it relates to the Permanent Fund.''
Numerous media reports, as well as Storer's letter, make reference to an investigation by the U.S. Securities and Exchange Commission into whether Deutsche coerced its investment division into voting shares in favor of the deal to avoid losing future Hewlett-Packard investment banking business.
The Permanent Fund was not the only concerned investor. In fact, a Delaware federal judge chastised Deutsche for ethical concerns in maintaining the wall between its investment and banking divisions.
John Heine, SEC spokesman in Washington, D.C., declined to comment Tuesday on the status or even the existence of any investigation.
Missy DeAngelis, spokeswoman for Deutsche Asset Management in New York City, also had no comment after being faxed a copy of Storer's letter.
''We normally don't comment on client matters,'' she said.
Eric Wohlforth, the fund's board chairman, said Tuesday he felt the Deutsche affair was serious, particularly in light of the string of corporate scandals and ''low ethical standards'' that have rocked Wall Street in the last year or so.
As a result of the incident, the fund has revised its policy on proxies, Wohlforth said. Investors like the Permanent Fund let firms like Deutsche vote shares because those firms supposedly have market expertise. But that power should be granted only if the investor knows the firm is voting in the client's best interest and not someone else's, Wohlforth said.
''Now our whole attitude is going to be strict surveillance of how proxies are voted,'' he said.
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