Former California State Fund Executive Fined for Conflict of Interest

By | February 21, 2014

A former top executive at California’s State Compensation Insurance Fund has admitted to charges of a conflict of interest in awarding contacts to a software firm while he was at State Fund, it was made public on Friday by the commission.

Shaun Coyne, former chief information officer of the state’s largest workers’ compensation provider, was fined $7,000 by the California Fair Political Practices Commission for failing to timely report gifts of $50 or more, receiving gifts from a single source that exceeded the gift limit and participating in making governmental decisions in which he had a financial interest.

Coyne held the CIO post at quasi-private State Fund between 2009 and 2012. According to the commission, during that time he violated the Political Reform Act by failing to disclose gifts he received from Tibco Software Inc., a publicly traded company based in Palo Alto, Calif. He also received gifts over the limit from Tibco.

According to the commission, Coyne also approved change orders and statements of work related to a contract between Tibco and State Fund.

State Fund spokeswoman Jennifer Vargen said the commission’s actions resulted from an investigation that State Fund launched itself.

“This arose out of an in internal investigation State Fund conducted,” she said, adding that State Fund has been cooperating with the commission throughout the investigation.

The sudden resignation in November of State Fund CEO Tom Rowe and Chief Financial Officer Dan Sevilla “is completely unrelated” to the investigation of Coyne, Vargen said.

A spokeswoman for Tibco wasn’t immediately available for comment.

Coyne has more than 30 years of experience in IT. Before State Fund he served for six years as vice president and CIO of Toyota Financial Services in Torrance, California. Prior to Toyota, Coyne worked as a vice president and chief technology officer of General Electric.

The charges state that in January 2009, State Fund and Tibco entered into an agreement under which Tibco would provide software and related services to State Fund. The agreement was structured so that over time the two parties would agree on future statements of work as needed by State Fund. Each statement of work would call for Tibco to provide additional services and for State Fund to make additional payments.

Additionally, the parties also could agree to modify an existing statement of work by agreeing to a change order.

According to the commission, Coyne attended a conference in Las Vegas held in 2011 called TUCON that was put on by Tibco.

Tibco paid for Coyne’s airfare, hotel room and admittance to TUCON. The airfare cost $468.70, and the hotel room cost $338, according to the charges.

The charges state Coyne didn’t report the airfare and hotel room as gifts on his 2011 Statement of Economic Interest, a requirement for many government employees.

Later in the summer of 2011 he approved new statements of work and change orders to existing statements of work related to the master agreement from Tibco.

The contract modifications were for extensions of work and were for amounts ranging from $540,816 to more than $2.1 million.

On Aug. 31, 2012 Coyne left State Fund and filed an amendment to his 2011 Statement of Economic Interest and paid back Tibco for the cost of the airfare, hotel and conference, according to the commission.

Following the exit of Rowe and Sevilla, who have still not publicly explained their reasons for leaving, State Fund’s board placed general counsel Carol Newman at the acting CEO while a search is being conducted for a new top executive.

Board Chair Lawrence E. Mulryan said Friday during an open board session that a decision could be made on a new CEO by late May, according to people attending the meeting.

The board has retained executive search consulting firm Spencer Stuart to help find a replacement for Rowe.

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