Copyright 2004, Long Beach Press-Telegram

One down at CalPERS. Pension fund needs a thorough shaking-out.

(Long Beach Press-Telegram 11/30/04) -- It looks like the president of the California Public Employees' Retirement System is about to be swept from his post. We wouldn't call this a housecleaning, which is what's needed, but it should take care of at least one dust bunny.

The intended target, Sean Harrigan, says he doesn't expect to be in the CalPERS position much longer. His appointment came from the State Personnel Board, and he says he has been told that a majority on that board would vote today to replace him.

If the issue wasn't politicized before, it is now. The Personnel Board has received a letter from several union presidents and others lobbying on behalf of Harrigan. They characterize him as a champion of corporate reform, which is accurate. But there is another part to the story. Take the Safeway crusade, for example.
CalPERS campaigned hard, without success, to get rid of the CEO of Safeway in the middle of a major labor dispute between Safeway and its unions. Harrigan is a former employee of Safeway who now is international vice president and executive director of the Food and Commercial Workers International Union (UFCW) Region & States Council.

How's that for a conflict of interest on the part of a crusader against conflict of interest? Allan Zaremberg, president of the California Chamber of Commerce, puts it this way: CalPERS board members tried inappropriately to influence negotiations and good-faith bargaining between unions and their employers.

Harrigan during his five-year term on the CalPERS board has argued for stricter standards of corporate governance and against excessive corporate pay. That's fine, but he and other board members should have been just as strict about their own behavior.

As the Wall Street Journal said a month ago in an editorial, "CalPERS and Cronyism," the pension fund itself has been notably lacking in transparency. The California First Amendment Coalition, a group of news organizations, had to sue CalPERS to win disclosure of management and advisory fees paid to private equity and hedge funds. Earlier, the San Jose Mercury News had to sue to get CalPERS to disclose performance results of its more than 300 private equity funds.

The Journal also pointed out several cozy relationships between CalPERS and organizations it's invested in, as well as the political tone of its 13 board members, most of them representatives of organized labor and the Democratic Party.

Discerning voters might wonder why they should care about the politicization of CalPERS. Here's why. This is the board that assured lawmakers statewide they could pass out vastly overinflated state and local public pension increases because the CalPERS investments would pay for them all. What bunk. The plan now is to stick taxpayers with this multibillion-dollar fiasco.

Replacing Harrigan should be the first of several dust-ups at CalPERS.