Detroit's emergency manager orders probe of city pension funds

Jun 20, 2013

Detroit Emergency Manager Kevyn Orr is turning his focus to the city’s pension system.

This morning, Orr directed Detroit’s Inspector General and Auditor General to begin an investigation into the city’s pension funds.

The order specifically directs investigators to look for evidence of “possible waste, abuse, fraud and corruption”.

A spokesman says Detroit’s emergency manager has been looking into the city’s pension system, and what’s been found so far suggests further investigation is needed.

The probe is expected to take 60 days.

The investigation may lead to the emergency manager asking for the appointment of a sole trustee to run the city's pension system.

Also today, Detroit union leaders met with members of Detroit emergency manager Kevyn Orr's team to hear plans to cut into health care benefits and pensions as part of city debt restructuring.

The meeting at City Hall follows a session Orr held last week where he asked Detroit's creditors and debt holders for deep concessions.

Orr has warned that without millions of dollars in concessions on bond and pension debt the city risks going into municipal bankruptcy.

Orr is a bankruptcy expert, and Michigan hired him in March to fix Detroit's finances. The city's budget deficit is approaching $380 million. Orr has said long-term debt could top $17 billion.