The ouster Wednesday of one of the nation's strongest voices for corporate reform may signal a turning point in the post-Enron era, as business groups push more aggressively to thwart activist shareholders.
Sean Harrigan, who as president of the California Public Employees' Retirement System led efforts to impose more accountability on big business, will lose his job after the state Personnel Board voted 3 to 2 to replace him as its representative to the pension fund. The move was expected.
Harrigan's departure was cheered by the U.S. Chamber of Commerce in Washington, which in a statement said it hoped "the change would lead to broader reforms at CalPERS and other public pension boards across the country."
Some of Harrigan's allies at other large investment funds expressed concern that his removal marked a significant victory for business interests in their campaign to stymie shareholders seeking more clout in the executive suite.
"Things are moving more in the corporate side's direction," said Ann Yerger, acting executive director of the Council of Institutional Investors, a Washington-based advocacy group for large pension funds.
But she and other fund representatives also said Harrigan's sacking could spur shareholders to ramp up their attempts to rein in executive pay and confront company directors on other issues of corporate performance.
"There is a risk that this could have a chilling effect, but I think it actually will strengthen shareholders' backbone," said Michael Garland, an officer in the AFL-CIO's investment division.
Yerger added that New York Atty. Gen. Eliot Spitzer's recent allegations of widespread bid rigging and other illegal practices by insurance companies should serve to boost public support for more corporate accountability.
"From our standpoint, there is a lot more to do," she said.
For their part, business groups and the California Republican Party insisted that they had not lobbied the Personnel Board to reject Harrigan. But they repeated previous attacks on Harrigan, a supermarket union official who critics say has used his post at the $177-billion CalPERS fund to advance the cause of organized labor.
"The nation's largest pension fund has been managed by people with a real political agenda," said Karen Hanretty, a spokeswoman for the state Republican Party in Sacramento.
