CALPERS Bans Campaign Donations From Contractors

Trustees of the California Public Employees’ Retirement System voted Thursday to prohibit its contractors and investment firms from making campaign contributions to board members and to require monthly disclosure of all gifts from those who do business with the system.

Officials of the $128-billion system, the largest public pension fund in the country, said the changes will remove any perception that CALPERS board members or employees might be benefiting from their official actions.

Board President William Dale Crist, who proposed the reforms, said there “has been no evidence or even suspicion of corruption” at the system. “Nevertheless, we have taken the extreme measure of banning political contributions and requiring the fullest disclosure possible,” he said.

The board’s actions, which go beyond state law, were approved after a Times series this month that raised questions about the independence of board members, several of whom have accepted gifts from private interests that stood to make millions from pension fund business.

Representatives of state Treasurer Matt Fong and state Controller Kathleen Connell abstained from voting on the campaign contribution ban. As reported earlier, the two have collected more than $500,000 from contractors doing business with CALPERS and the State Teachers’ Retirement System. Crist has also gathered substantial contributions from CALPERS contractors.

Fong, in a letter to his colleagues, dismissed the board’s action as “window dressing” because it would not prohibit CALPERS contractors from arranging contributions from their accountants or cleaning services. Fong opposes any limits on contributions but backs full disclosure. His proposal for disclosing contributions and gifts was not adopted.

The new rules could affect the chairman of the board’s investment committee, Charles P. Valdes, who heads a charity that has solicited funds from those doing business with pension systems. Depending on how the rules are implemented, he might be stopped from signing the charity’s solicitation letters.

The board delayed action on a proposal requiring disclosure of outside contacts with potential investment partners--private meetings often held over lunch or dinner. A 1991 statute bars such contacts, according to the measure’s author, former Assemblyman Dave Elder (D-Long Beach). But CALPERS lawyers say the law applies only to competitive contracts, not specific investment decisions.

This week, state Sens. Adam Schiff (D-Burbank) and Tom Hayden (D-Los Angeles) introduced reform measures to clarify that the law applies to investments and to provide penalties for violations--disqualification of contractors or, in Hayden’s bill, a fine of up to $7,500 for board members.