Calif pension fund chief quits, cites New York scandal
By Jim Christie
NEW YORK, May 7 (Reuters) - The president of the board of the Los Angeles Fire and Police Pensions fund resigned on Thursday, citing the U.S. Securities and Exchange Commission's delving into his ties to a firm swept up in a probe of alleged kickbacks at New York state's pension fund.
Sean Harrigan resigned after the board of the $11 billion pension fund voted unanimously to fire Dallas-based Aldus Equity Partners due to concerns raised by New York state's investigation of improper fees to acquire business from its pension fund.
Harrigan said intense scrutiny arising from the New York's pension fund scandal is tainting the work of public pension funds in general and that he would likely end his public pension fund career.
"I just came to the conclusion that this passion I have for public service and working on public pension fund boards wasn't worth it," Harrigan told Reuters in a telephone interview.
Harrigan joined the board of the Los Angeles pension fund after serving on the board of the biggest U.S. public pension fund, the California Public Employees' Retirement System, which is best known as Calpers.
There he made a name as a crusading shareholder activist. Critics said Harrigan went too far and he was ousted in 2004. Calpers under the leadership of Rob Feckner has toned down its activist rhetoric while maintaining activist initiatives.
Los Angeles Mayor Antonio Villaraigosa backed Harrigan's resignation from the board of the Los Angeles Fire and Police Pensions fund.
"Both the mayor and Mr. Harrigan mutually agreed that this was the best course of action at this time," said Matt Szabo, a spokesman for Villaraigosa.
NEW YORK PROBE WIDENS
Harrigan was swept into New York's pension fund scandal because he had served as a consultant to Los Angeles-based Wetherly Capital Group, a placement agent referenced in New York state's indictment of Henry Morris, a onetime advisor to former New York Comptroller Alan Hevesi.
Morris is accused of taking kickbacks to help investment firms win business with New York state's pension fund. Morris and Wetherly had done some business together, catching the attention of investigators. Charges have not been brought against Wetherly.
Private equity companies often use placement agents to open the doors of public pension funds, including New York state's fund, one of the nation's biggest at $122 billion.
Harrigan's resignation was "completely unexpected," said Tom Lopez, chief investment officer of the Los Angeles pension fund. "We had no inkling this was going to happen."
By contrast, Aldus' fate at the Los Angeles fund was not in doubt, Harrigan said.
Aldus was one of a number of private equity firms named in New York's probe. Last week, the SEC said it filed civil charges against Aldus and founder Saul Meyer for their alleged participation in the kickback scheme involving New York state's pension fund.
The SEC's lawsuit accuses Aldus and Meyer of paying sham finder fees to get the New York State Common Retirement Fund to invest $375 million in 2004-06. Meyer was also charged last Thursday with a securities felony under New York's Martin Act. His lawyer Paul Shechtman said Meyer is innocent.
In addition to the Los Angeles fund, New Mexico and Connecticut are cutting ties to Aldus, which helped to sway the board of the Los Angeles fund.
"There wasn't really any debate about what to do with Aldus," Harrigan said. (Reporting by Jim Christie; Additional reporting by Joan Gralla in New York; Editing by Jan Paschal, Richard Chang and Kim Coghill)
