Harvard Business Review Slams Cullen Super Fund
ACT Finance Spokesman Rodney Hide today said that the prestigious Harvard Business Review was quite right in slamming
the Cullen Super Fund for its sloppy accountability.
The article appears in the November Harvard Business Review pp. 52-62 and is titled "Arm yourself for the Coming Battle
Over Social Security". The article is by Robert Pozen who is the John Olin Visiting Professor at Harvard Law School, a
member of President Bush's Commission to Strengthen Social Security.
Mr Pozen writes (p.62):
More systematically, the World Bank has done a comparative analysis of countries investing pension assets directly
through a government agency versus countries that allow citizens to invest through personal accounts. Its analysis,
published in 2001, shows that returns from government investing have been significantly lower than returns from personal
investing. The culprit is politics.
New Zealand, for example, recently established an independent board to invest its Social Security assets in a manner
consistent with "maximising return without undue risk to the Fund as a whole". However, because of legislative
pressures, the board was simultaneously directed to invest these assets according to another standard that no one can
define: "avoiding prejudice to New Zealand's reputation as a responsible member of the world community".
This nebulous second standard will make it impossible to hold the board accountable for inferior financial returns; it
can always attribute its underperformance to protecting New Zealand's reputation.
"Mr Pozen is quite right - as was pointed out to Mr Cullen at the time. New Zealanders should be most concerned at the
sloppy accountability inherent in the management of the Super Fund. They would do far better if Michael Cullen simply
trusted New Zealanders with their own money," Mr Hide said.