Ousted CalPERS Leader Fails in Bid to Regain Board Seat

The reports of Sean Harrigan’s demise weren’t premature after all.

The activist’s effort to regain a seat on the California Public Employees’ Retirement System board ended Monday when Assembly Speaker Fabian Nunez reappointed a veteran Los Angeles labor leader to the influential pension board.

National labor leaders had asked Democrats in the Legislature to tap Harrigan for another term and Harrigan himself lobbied Nunez. But Nunez (D-Los Angeles) named Mike Quevedo Jr., a vice president of the Laborers International Union, to another three-year term on the 13-member panel that runs the world’s largest public pension fund.

Harrigan lost both the CalPERS presidency and his board seat Dec. 1 when the State Personnel Board voted to replace him as its representative to CalPERS. He blamed his downfall on a conspiracy among business leaders, the California Republican Party and the administration of Gov. Arnold Schwarzenegger. Vince Sollitto, a spokesman for the governor, dismissed Harrigan’s claims as paranoia.

On Monday, Harrigan said he didn’t expect his rebuff to slow CalPERS’ penchant for using its portfolio power to effect corporate change. “CalPERS will continue to be the most powerful voice in this country and maybe around the world on corporate governance,” he said after Quevedo’s reappointment.

For his part, Quevedo said the board would “continue to do as we have always done” on the corporate governance issue.

As if to underscore that promise, the CalPERS Investment Committee on Monday approved a series of high-profile actions aimed at cleaning up the environment, saving government jobs, curbing excessive executive pay and fostering auditor independence.

Acting on a request from state Controller Steve Westly, a member of the board, the panel told CalPERS’ staff to invite executives from the world’s top automobile manufacturers to come to Sacramento to explain why they were suing the state to stop implementation of a law requiring cars to cut greenhouse gas emissions 30% by 2016.

The decision to call automakers on the carpet was typical of the CalPERS board during the last two years under Harrigan.

A regional executive for the United Food and Commercial Workers Union, he gained a worldwide reputation for pushing the board to pressure companies whose stock is held by CalPERS to take steps that he said would make them better corporate citizens.

While supporters praised Harrigan for being a pioneer in the burgeoning corporate governance movement, critics accused him of using CalPERS’ tremendous clout to play union politics, particularly during a bruising Southern California supermarket strike last winter.

Business leaders claimed that Harrigan and the board wrote a letter that threatened supermarket owners to settle the strike. In May, Harrigan and CalPERS led a failed effort to unseat Safeway Inc. Chief Executive Steven Burd.

Nunez’s decision to reappoint Quevedo was endorsed by Senate President Pro Tem Don Perata (D-Oakland). It sets the stage for a potential power struggle between two main contenders vying for the presidency of the $177-billion CalPERS.

The two are CalPERS Vice President Rob Feckner, a Napa Valley school district employee and a close Harrigan ally, and Willie Brown, the retired mayor of San Francisco and long-time Democratic speaker of the state Assembly. Brown lost a bid for the board’s presidency in 2003 when national and state union officials weighed in on Harrigan’s behalf.

Robert F. Carlson, a retired state Department of Transportation general counsel with 33 years of board service, also has indicated he might run if he gets the backing of at least six colleagues. On Monday, Feckner said he remained “fairly confident” that he would have the seven votes needed to win the CalPERS presidency when the board meets in February.

Schwarzenegger, while not publicly supporting any particular candidate for the CalPERS presidency, is a friend of Brown, who served on the governor’s transition council, Sollitto said.

Brown has his own record of corporate governance activism, having successfully urged CalPERS to pull its investments from companies that did business with South Africa’s apartheid regime in the 1980s. Brown is currently backing a similar effort to force the government of Sudan to stop committing genocide in the Darfur region.