Finance Law Is Virtually Ignored

A 7-year-old state law meant to expose “pay-to-play” politics at California’s public pension systems has had virtually no impact.

The law has significant loopholes. Its shortcomings have come into focus as Treasurer Phil Angelides and Controller Steve Westly -- both members of the pension boards -- vie for the Democratic nomination for governor.

Current law requires Angelides, Westly and all other candidates to file statements with the secretary of state listing their contributors. However, those filings don’t give details on donors’ interests in state affairs. So Rep. Adam B. Schiff (D-Burbank) pushed in 1998, when he was a state senator, to create a parallel filing system that would do so.

Schiff wanted anyone seeking pension fund business to disclose to the pension boards any donations to board members of $250 or more.

The disclosures would make clear what the donors’ interests were in the board’s actions.

“Anyone seeking to get that business who is contributing to members should make those contributions in the light of day, so the board knows, so the public knows and so there is accountability,” Schiff said in an interview.

That hasn’t happened, though the law he sponsored took effect in 1999.

The California Public Employees Retirement System, or CalPERS, could find only two such disclosures since then, totaling $11,250, one to Angelides and one to Westly. The California State Teachers Retirement System, known as CalSTRS, found none.

Yet a Times analysis of other public records shows that Angelides and Westly have raised hefty sums from contributors with business before those boards: $4.5 million for Angelides, who took office in 1999, and $1.86 million for Westly, who took office in 2003.

Burlingame attorney Joseph Cotchett’s law firm made one of the two donations disclosed under Schiff’s measure. It reported giving $10,250 to Angelides in 2002.

“The law is absolutely clear. I can’t understand why it isn’t being enforced,” Cotchett said.

The other disclosed donation was $1,000 to Westly from money-management firm Rogge Global Partners.

Schiff pushed the “sunshine” measure as part of a national movement in the 1990s to crack down on influence peddling at pension funds.

But there is no disclosure requirement if the staff, as opposed to the board, decides to make an investment. And in most instances, pension fund boards delegate such decisions to the staff.

One major Angelides contributor and beneficiary of pension fund money is Beacon Capital Partners, a Boston real estate investment firm.

The teachers fund committed $350 million to Beacon starting in 2002.

Beacon, its partners and their family members have donated $277,000 to Angelides since 2001. However, CalSTRS attorney Robert S. Van Der Volgen Jr. said that the staff, rather than the board, made the investment, thus exempting Beacon from the disclosure requirement.