"Socially responsible" investing a loser for pension funds

Peter Schweizer:

BILL Clinton has made corporate reform one of his top causes since leaving the White House. He calls for more "socially responsible" investing, better protection of workers and greater diversity in corporate management. At the same time, he condemns cronyism, excessive pay for top management and an alleged emphasis on short-term profits at the expense of workers.

Sen. Hillary Rodham Clinton — a member of the Senate Health, Education, Labor & Pensions Committee — has bashed corporations for their failure to live up to their pension obligations.

Yet, as the senior adviser to two investment funds managing public pension funds, Bill Clinton has himself promoted an investment fund that promises to put money into "lower-income urban and rural communities" — but instead devotes its cash to Al Gore's upstart cable channel and his wife's financial supporters.

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But a venture that was supposed to help minority businesses and secure the future of pensioners in two of America's biggest states seems to have done anything but.

The Yucaipa Corporate Initiatives Fund has already poured millions into Al Gore's new cable channel, Current Television. Gore's venture is headquartered in a tony neighborhood of San Francisco, which certainly doesn't seem to fit the definition of a "lower-income urban" community. Nor is it minority-owned — indeed, all the major investors are white males. (Indeed, by a who's who of major Democratic Party money people — including Joel Hyatt, former Democratic National Committee finance chairman, Rob Glaser of Realnetworks and Bill Joy of Sun Microsystems.)

Yucaipa told the San Francisco Weekly that Gore's enterprise "has a strong commitment to increase the representation of women and people of color." But the upper management of the network is completely white.

INDEED, one of the few signif icant minority-owned busi nesses that the funds have invested in is Sean John, the clothing enterprise run by that struggling representative of the "lower-income urban community," rap mogul Sean "Puffy" Combs. (A contributor to Hillary Clinton's campaigns with the potential of raising enormous sums for Democrats, Combs is likely to play a prominent role in supporting a Hillary run for the White House in '08.)

The funds' real emphasis, in short, seems to be Democratic cronyism. Another example: The Yucaipa Corporate Initiatives Fund recently backed up a bid by Diversified Investment Management Group to take over Piccadilly Restaurants. DIMG is described by Fashion Week Daily "as a front for Ron Burkle," close friend and financial supporter of Bill and Hillary Clinton. He's also the chairman of Yucaipa.

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Meanwhile, the workers whose pensions have been invested in Yucaipa are getting a terrible deal. According to CALSTARS, California teachers have already committed $61.9 million of the $150 million that they promised Yucaipa. As of last March 31, three years after the venture started, they'd seen a grand total of $837 come back to them. Overall, the rate of return since the funds launched have been a loss of 12.1 percent.

CALPERS has not done much better. After pouring more than $116 million into various Yucaipa ventures since 2002, it's seen a return of $55,963.

AT the same time, Yucaipa is also collecting hefty fees for managing the pension funds' investments — more than $3 million a year from CALPERS, and $3.5 million a year from the New York Common Retirement Fund. How much of this ends up in Bill Clinton's pocket is anybody's guess. He's not disclosing his fees. And why is Sen. Hillary Clinton, who appears to be so concerned about the state of our pension systems, silent about this?

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There is more about this Democrat hypocracy.