Commentary: Pension fund, politics don't mix

Between 2000 and 2004, as a member of the California Public Employees' Retirement System board of directors, Sean Harrigan was in a position to steer billions of retirement fund dollars to all kinds of business ventures. Corporations, private companies, real estate investors, hedge funds and private equity firms vied for CalPERS investments.

As The Bee's Andrew McIntosh reported on Sunday, Harrigan solicited political contributions from many of those companies at the same time he was voting on CalPERS investment decisions involving them. The practice, as Harrigan points out, was and remains legal. Still, it raises important ethical questions.

While he was on the CalPERS board, Harrigan also served as an officer with the United Food and Commercial Workers Union. As a union officer, Harrigan regularly solicited donors to contribute to a union political fund he controlled. In the five years he served at CalPERS he raised more than $300,000 in union fund contributions from companies that benefited from CalPERS investments he voted to approve.

According to CalPERS spokeswoman Pat Macht, each one of the investments Harrigan voted for made money for the pension fund. But that doesn't mean those investments did better than other options that were competing for the board's attention. Nor does it erase the taint, the questions that linger about what motivated investment decisions.

Harrigan was not alone. Elected officials who serve on the CalPERS board are free to and frequently do solicit campaign contributions from business interests seeking retirement fund investments. While the practice is legal, it's suspect nonetheless.

In 1998, the CalPERS board voted to bar its publicly elected board members from voting on investments involving companies that had contributed to their campaigns. But then- Controller Kathleen Connell sued over the issue, and the courts threw out the ban.

To read the complete editorial, visit The Sacramento Bee.