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Allies Seek to Restore CalPERS President

Union leaders are asking state lawmakers to appoint Sean Harrigan to another open seat on the pension fund's board, sources say.

December 04, 2004|Marc Lifsher | Times Staff Writer

SACRAMENTO — Sean Harrigan, whose ouster this week as president of the California Public Employees' Retirement System made headlines around the world, may soon be back on the board of the $177-billion pension fund.

Harrigan lost his seat when the state Personnel Board voted 3 to 2 on Wednesday to replace him as its CalPERS representative. However, national union leaders have asked top Democrats in the state Legislature to appoint Harrigan to another open seat on the 13-member board, people familiar with the talks told The Times.

And lawmakers appear to be willing to listen. State Assembly Speaker Fabian Nunez (D-Los Angeles) met with Harrigan for more than an hour Thursday to discuss the situation.

Nunez has made no commitment, sources said, but he has encouraged Harrigan to drum up as much support as possible in his bid to get back on the CalPERS board.

Harrigan and Nunez declined to comment.

If the effort succeeds, it will be a stunning reversal of fortune for Harrigan, an outspoken supermarket-union official who has made enemies throughout the business community with his attacks on what he sees as outsize executive paychecks and corporate conflicts of interest.

The behind-the-scenes maneuvering demonstrates the high stakes involved for control of the nation's largest public pension fund. Harrigan's forced departure from the CalPERS board, which he blamed on a conspiracy between business interests and Republican Gov. Arnold Schwarzenegger, has been the buzz of the capital.

It also has generated intense interest on Wall Street and has attracted extensive media coverage in other global financial centers such as London and Tokyo, as well as in Moscow and Madrid.

According to sources, Harrigan and his backers in the labor and corporate governance movements have asked Nunez, himself a former union official, and Senate President Pro Tem Don Perata (D-Oakland) to appoint the deposed CalPERS president to a board seat that the lawmakers control.

The term of the current occupant, Mike Quevedo Jr., expired in January, but he has remained on the board pending his reappointment or replacement by Nunez and Perata.

At least two influential labor groups, the AFL-CIO and the Service Employees International Union, phoned Nunez's office, urging that Harrigan be restored to the CalPERS board before his term ends Dec. 31, sources said.

If Harrigan gets Quevedo's board seat, insiders say, he probably will have the votes to be elected president again.

"It ain't a pipe dream," said a knowledgeable observer. "There are a lot of big guns linked to this."

Still, the plan faces hurdles. Sources said some Southern California labor leaders were insisting that Quevedo, a business manager with the Laborers Union, be replaced by another Latino.

Harrigan also could face opposition from CalPERS board member Willie Brown, the retired mayor of San Francisco and longtime speaker of the state Assembly.

Brown, who lost a duel with Harrigan for the CalPERS presidency in 2003, said this week that he would run again if asked to do so by a majority of the board, which will elect a new leader in February.

CalPERS Vice President Rob Feckner, a close Harrigan ally, is serving as interim president. A school union official from Napa Valley, Feckner is unlikely to seek the presidency if Harrigan wants the post.

Harrigan began his campaign to continue on the CalPERS board when it became clear that he was unlikely to be reelected to a fifth one-year term as the Personnel Board's representative.

His fate was sealed by fellow Democrat Maeley Tom, a former political fundraiser and onetime Brown aide. Tom cast the deciding vote Wednesday to replace Harrigan on the CalPERS board with Republican real estate executive Ronald Alvarado.

Tom, who had supported Harrigan in the past, said she voted for a Republican this time around because she wanted to give other Personnel Board members, including herself, a chance to hold a coveted seat at the CalPERS table.

Harrigan, however, alleged that her action was part of a cabal led by the governor's office. He said Schwarzenegger was trying to punish him for pushing to have several high-profile corporate chief executives sacked, including Michael Eisner at Walt Disney Co. and Steven Burd at Safeway Inc. A Schwarzenegger spokesman has called the charge baseless.

Some also have speculated that Brown, a friend and advisor to the governor, may have played a role in Harrigan's removal. Brown has denied that.

CalPERS' performance in recent years has largely tracked that of other large pension funds.

But Harrigan raised hackles even among fellow corporate governance advocates when CalPERS waded this year into a bitter dispute between supermarket chains and their workers in Southern and Central California. Business organizations and the state Republican Party denounced the move as blatantly political and a conflict of interest on the part of what should be a nonpolitical public pension fund.

Under Harrigan's watch, CalPERS unsuccessfully tried to stop the acquisition of Thousand Oaks-based WellPoint Health Networks Inc. by Anthem Inc. It also had sharp words for CACI International Inc., which supplies interrogators to the U.S. Army, because of the prisoner abuse scandal in Iraq.

Even with Harrigan's future uncertain, CalPERS' crusading continues: On Friday, the pension fund announced that it had sent letters to Merck & Co. and six other pharmaceutical companies about product safety.

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