State Treasurer Faces Criticism For Private Sector Appointments

May 6, 2016

State Treasurer Janet Cowell faces criticism for recent appointments to two private sector boards.
Credit nctreasurer.com

State Treasurer Janet Cowell has come under fire for her role as a public official working in the private sector.

Cowell, a Democrat, was elected as treasurer in 2008 and again in 2012. In that position, she has broad authority over the state’s nearly $90 billion state pension fund.

Critics say Cowell’s appointment to two boards of directors this year is problematic since she fills one of eight positions that make up the Council of State.

"I think if you stopped the average person on the street and said ‘Hey does this pass the sniff test?’ I think almost everyone would say no," former North Carolina Treasurer Richard Moore said.

Cowell declined to comment, but her office referred WUNC to a document in which she pledges to recuse herself in the event of any conflict of interest.

In February, Cowell was named to the board of Channel Advisor, an e-commerce technology company based in Morrisville. She's also since joined the board for James River Group Holdings, a specialty insurance agency based in Bermuda.

This year Cowell will receive a $125,000 state salary. She will also receive $75,000 from the private insurance company, as well as a $50,000 retainer and $150,000 in restricted stock for her work on the board of Channel Advisor.

"You can’t serve two masters here, in this particular area,” Moore said. ““With all due respect to her, I just don’t think you can keep these things separate.”

The questions about serving on boards and running for office have centered on when to step down, or how long to wait before  leaving office to accept a position. A decade ago, Moore took some criticism for accepting a board position too soon after leaving office.

Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said he’s not aware of any states or municipalities where elected officials sit on private boards.

"For-profit board service by a full-time public official is highly problematic and I think should be avoided period," Elson said. "It’s a problem on both sides. It’s a problem for the full-time public office holder. And it’s a problem for the company.”

Still, Cowell’s appointment to the two boards is not against the law. She received approval from the state ethics commission before joining the first board this winter. She is not seeking a third term and is scheduled to leave office in about eight months.

At the legislature this week, lawmakers in both parties conceded the question of serving on boards is a gray area. House Rules Chairman David Lewis recalled discussions in previous years about limiting outside employment of Council of State members.

"I think most of the time that was Democrats trying to poke fun or poke holes at Republicans,” Lewis said. “I think this is a serious matter of public policy, and to the extent that I believe there will be some new ethics bills rolling out in the near future. This may be an area the General Assembly wants to look into, but it won’t be as a knee-jerk reaction."

Lewis added that this has now become a campaign issue for those seeking to replace Cowell.

Republican Dale Folwell quickly criticized Cowell and pledged to not join any board if elected. Democrat Dan Blue III initially skirted the issue, before echoing the same vow.

As state treasurer, Cowell manages the 26th largest pension fund in the world. More than 900,000 people in North Carolina have a state pension. That’s about one in eight working people in the state.

North Carolina is one of only three states where an individual serves as the sole trustee of such a massive fund.