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Apr 12, 2005 - 11:40 AM
Arnold Donors Could Cost Cal Retirees $400 Millionby Doug Heller
The most recent bout of corporate corruption may cost taxpayers millions of dollars. Revelations about apparent fraud at mega-insurer American International Group (AIG) has led to $400 million in losses to the California employees' and teachers' pension funds, according to Cal Treasurer Phil Angelides and leaders of the retirement systems, known as CalPERS and CalSTRS. They also note that PERS and STRS opposed the use of PriceWaterhouseCoopers as AIG's auditors last year, for fear that conflicts of interest could cloud their auditing vision.
The AIG scandal shows that the real danger to the state's pension system is not the retirement benefits we pay to public servants like firefighters and teachers; the real threat comes from the liars and cheaters in which we have invested billions of taxpayer dollars. If Arnold really wants to help the state pensions he should join with PERS and STRS in the fight to get that $400 million back for our retirees. But to do that, he'll have to take on a couple of big donors: AIG has given Arnold $122,300, including $22,300 just last month, presumably when the gov. was soliciting campaign cash on Wall Street (to help him weaken the pension systems). And Pricewaterhouse gave Arnold $53,700.
Arnold has said he wouldn't let his contributors' interests interfere with the people's business. As the AIG fraud wreaks disaster on pension and 401k plans of Californians, Arnold's conflict couldn't be clearer. Arnold should return the $176,000 and then go for the $400 million. Or, better, he should put the $176K down as start-up cash for the legal fight that will ensue if AIG and Pricewaterhouse don't come clean and repay Californians for the fraud.
AIG's longtime chief Hank Greenberg is "taking the fifth" so as not to incriminate himself in regulators' investigations. If Arnold doesn't give back Hank's handout, it's pretty incriminating.
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