N 2001, after the Progressive Labour Party Government hired US pension fund consultant Tina Byers Poitevien to advise on the management of the Government pension funds, there was an almost complete change in the roster of Bermuda's pension fund managers.

And the Cabinet, apparently at the suggestion of then-Minister Ren?e Webb, brought in a policy which required that all investment fund managers transact 30 per cent of pension fund trades through Bermuda-based brokerage companies.

Although this policy has been variously described as a means of ensuring that Bermuda companies benefited from the investment of public pension funds by overseas fund managers, or as an affirmative action policy, the Public Funds Investment Committee (PFIC) did not see fit to exempt the sole Bermudian investment manager, Bermuda Asset Management, from the need to follow the same rules as the overseas managers.

United Bermuda Party backbencher Trevor Moniz's told the last week that Ms Webb had opened up the possibility of access to the minutes of the relevant Cabinet meeting in 2001 by revealing that Cabinet had discussed the policy of directing 30 per cent of pension fund managers' trades to Bermuda-based brokers.

However, Cabinet Secretary John Drinkwater insisted that, despite Ms Webb's apparent breach of Cabinet protocol, all Cabinet minutes remain secret for a period of 30 years.

"With respect, Mr. Moniz is quite wrong," said Mr. Drinkwater. "Cabinet documents are secret and remain so for 30 years. I don't know what Act he is quoting, but that's what the Archives Act provides for.

"I have been around in Government for 20 years, and I have never had a request of this nature before. The same rules apply in the UK, and in most jurisdictions. Only now have the first-ever Bermuda Cabinet minutes become open for scrutiny."

"The rules are such that even when a new Minister joins the Cabinet, that Minister is not by right entitled to see the minutes of meetings that took place prior to his or her appointment, even within the same Administration."

Asked whether Ministers would therefore be expected never to reveal Cabinet discussions, Mr. Drinkwater replied: "Absolutely, although I didn't hear what Ms Webb said, so I can't comment on that."

Meanwhile, Calvin White, chairman of the PFIC, confirmed that any registered Bermuda broking company could have benefited from the 30 per cent policy, but was not able to provide a schedule of the amount of such trades transacted with each Bermuda entity.

It is understood that each investment manager is required to inform the PFIC and the Ministry of Finance each year of the dollar amount of trades transacted with Bermuda brokers, and which brokers were used.

"The Bermuda Monetary Authority can provide a list of all of the brokers authorised to do business in Bermuda, and all of those brokers can participate (in the directed brokerage arrangement)," said Mr. White. "The BMA would not know which company received brokerage; that information may be available from the Ministry of Finance."

Of the13 pension fund managers approved by the previous Public Funds Investment Committee, headed by chartered accountant Richard Butterfield, only four survived the sweeping changes made as a result of Ms Poitevien's advice in 2000, and only Credit Suisse appeared to be managing a similar amount of funds through 2003; Edinburgh Fund Managers managed about 30 per cent of 2000 funds, Security Asset Management about 15 per cent, and Bermuda Asset Management was replaced.

However, the new committee, chaired by Mr. White, who is also administrator of the Hotel and Construction pension funds, has expanded the roster of pension fund managers to 20, and although it includes household names like American Express, Chase Fleming, Janus Capital and Loomis Sayles, it also includes companies that have been the subject of US media reports of close links to Fiduciary Investment Services (FIS), owned and managed by Ms Poitevien.

These companies include Columbia Partners, based in Washington, DC, and Cooke & Bieler, a long-established Philadelphia-based manager.

The reported last year that federal investigators were "scrutinising the records of at least 11 companies that won deals with Philadelphia's pension fund", and "at least nine have links to lawyer Ronald White, the fund-raiser for Mayor (John) Street, who has become a central figure in the ongoing probe into city corruption.

"Among them: Columbia Partners, handed $10 million in August 2000 after board trustees were told that Columbia's investments had a poor track record. At the time, a close associate of White's was a principal. Within two years, Columbia lost $4.5 million and was fired."

It is understood that the principal to whom the referred was Thaddeus Fletcher, who was with Columbia in 2000 but joined Cooke & Bieler in 2002. It is also understood that Mr. Fletcher introduced Ms Poitevien and FIS to the Bermuda Government.

Mr. Fletcher joined Cooke & Bieler as a principal in 2002, the same year his firm was selected as a Bermuda pension fund manager. Fees paid to Cooke & Bieler were $26,000 in 2002 and $219,000 in 2003.

"Fletcher said he could not discuss his relationship with White or anything about Columbia because the firm's records had been subpoenaed by the FBI," reported the Fletcher now works for Cooke & Bieler, which successfully manages $90 million for the (Philadelphia) pension fund. An executive said the firm was turning over records in response to an FBI subpoena."

The also reported that the "pay to play" situation, where "firms in the scrum for these lucrative (pension) contracts are a rich source of campaign money for the politicians who control pension funds", is not unique to Philadelphia.

"Companies that get government bond work are prohibited from giving to political campaigns, but there's no such rule in the pension industry. When former SEC Chairman Arthur Levitt proposed such a ban in 1999, he used Pennsylvania as an example, noting how officials in one county were getting contributions from their investment adviser ? who lived 300 miles away.

"If that doesn't sound suspicious, I don't know what does," said Levitt.

Philadelphia state law forbids corporate contributions, but executives with eight of Bermuda's 20 pension fund managers gave to Mayor Street's re-election campaigns: Columbia Partners' partners gave $15,000, MDL Capital Management executives $11,500, and there were smaller contributions from Loomis Sayles, Credit Suisse, American Express, Harbor Capital, Davis Hamilton Jackson, and Janus Capital executives. Ms Poitevien gave $7,000.

The reported that last year "FIS chief executive officer Tina Byles Poitevien recently became the main consultant for the city's pension fund, where she'll earn $285,000 per year".

According to the Mr. Levitt's idea of banning "pay-to-play" contributions "died amid a barrage of flak from the industry and Congress."

The Ministry of Finance was unable to respond to questions by press time.