CA: Things that make you go 'hmmm' - (CalPERS-Yucaipa-Burkle links beg question)

OC Register ^ | 1/5/05 | Bruce Crawford

[NormsRevenge]

In a Nov. 12 Orange Grove column ["Beware of stealth socialism"], I discussed the problems created when government pension funds are invested in private companies. The Register has since highlighted a heretofore-unconsidered problem - political patronage.

A media group sued CalPERS to force it to divulge money-management fees it paid to financial companies. CalPERS stonewalled, and for good reason. The information it finally released showed it paid Yucaipa Cos. $8.6 million to manage a reported $50 million. If these numbers are correct, that's a whopping 17 percent fee, or about 17 times higher than what reputable mutual finds charge.

The exorbitant fee is the least of the problem. CalPERS provided $35 million to Yucaipa to start a merchant bank holding company, Yucaipa American Funds (YAF). It also holds an option to "invest" another $275 million in YAF.

YAF's business plan includes providing home loans and credit-card services to union members in an effort to make YAF a "national worker-friendly merchant bank." Thus taxpayer dollars which have been deposited into CalPERS will go to fund mortgages and provide revolving credit to union workers, an apparent discrimination against non-union workers.

How did Yucaipa American Funds attract so much attention and capital from CalPERS? The question demands an answer. Consider this hypothesis.

Ron Burkle, the owner of Yucaipa, has donated nearly $100,000 to state Treasurer Phil Angelides since 1994. As treasurer, Angelides is automatically on the CalPERS board. Sean Harrigan was appointed as CalPERS' board president in early 2003. Burkle and Harrigan are former members of the United Food and Commercial Workers (UFCW) union. With Harrigan as president, Burkle had an ally in a key position. CalPERS then inked a deal worth a potential $560 million to Burkle's company. (The board terminated Harrigan last month.)

Voila!

[NormsRevenge]

Burkle ping

[calcowgirl]

This guy spins it pretty good: Pointing out that Burkle gave $100,000 to Angelides over a 10 year period; ignoring that Burkle has given that much in a single year to, ...um, another certain politician.

I hate all these connections, they stink! But, to me, Crawford failed to make any case in the specific connections (prior ownership or being a member of the same multi-member union hardly proves wrongdoing or that they are allies in everything). I'd like to see all of the resumes of Calpers 'leadership', their voting records, and Calpers investments lined up. I'm sure there are more compelling cases. His presentation of all the general connections of Yucaipa does look pretty smelly, however. Of course, one has to only look at the board of directors of Yucaipa and find Jesse Jackson to know that it stinks, lol.

One cannot argue with his conclusion:

Harrigan denies wrongdoing. Burkle denies a role in the anti- Safeway campaign. But given that Safeway spurned Yucaipa's offer for Dominick's, and given that Safeway has held a tough line on union demands, and given that Burkle and Harrigan came out of that union, and given that CalPERS "invested" heavily in Yucaipa so it could invest in union-friendly companies and establish a union-friendly lending institution, and given that most of the pensioners covered by CalPERS belong to unions, these events don't seem like mere coincidence. It suggests Yucaipa, the unions and CalPERS have interlocking relationships and are acting in concert.

One of the reasons the founding fathers believed in limited government was they understood its potential for abuse and corruption. The bigger the government, the greater the potential. When CalPERS is in a position to use its investments to do the dirty work for its political friends, that's corruption. Its $177 billion in assets is potential for colossal corruption.

It's time to divest government of its stock in private companies. Stealth socialism is a threat to our free markets, prosperity and liberty.