Tags: California's | Pension | System | Backing | Puffy | Gore | Liberal

California's Pension System Backing Puffy, Gore, Liberal Causes

Monday, 11 October 2004 12:00 AM

The answer: Both are being funded by California’s state pension system – better known as CalPERS (the California Public Employees’ Retirement System).

The business weekly reports that the California pension system is forking over as much as $760 million to Ronald W. Burkle, a billionaire liberal Democrat, to invest in causes and companies that “will benefit minorities, women and blue collar workers.”

One of those “minorities” benefiting from the novel investment strategy is none other than rapper Puffy Combs.

Last year, Burkle reportedly invested $100 million in Sean John, the urban-sportswear company founded by Combs.

Burkle has other ties to Combs. Burkle, as one of the biggest billionaire backers of the Democratic Party, has been working hard to elect John Kerry.

This year Combs suddenly took an interest in politics and formed a new group called Citizen Change with the intent of encouraging younger voters of the MTV generation to vote. The group’s slogan, coined by Combs, is “Vote or Die.”

Combs has said the purpose of his group is non-partisan – but Republican pundits say that such voter efforts are thinly veiled efforts to register and encourage Democratic voters.

Evidence of Combs’ political leanings is Burkle’s involvement in backing Combs’ Citizen Change.

"We were thinking we should do something on the political side with Puffy," a Burkle insider told Fox News’ Roger Friedman, explaining the hip-hop star’s abrupt interest in politics.

Last May, Burkle chose to back another capital-starved celebrity, Al Gore – funding the former vice president’s planned $75 million cable TV station, INdTV, which aims to provide news and entertainment for 18- to 34-year-olds.

Gore’s wannabe network was viewed as the former vice president’s attempt to create a new cable network to challenge Fox News, which he believes is too influential and conservative.

Apparently other social concerns are being met with California pension money. In August, Burkle paid $300 million – some of it CalPERS money – to buy TDS Logistics Inc., a Canadian auto parts concern that had been hit by a strike.

Burkle maintains that the Combs and Gore arrangements not only reflect his social mission but also are good commercial investments.

Furthermore, he says, both companies employ minorities and women and are creating jobs in urban areas.

With TDS Logistics, Burkle not only fronted the cash but also brought in a labor-relations specialist to help settle the strike. "We've gotten great returns by treating people well," Burkle says.

BusinessWeek says that Burkle's deals illustrate how the line between business, social connections and politics can be blurred as pension funds come under increasing pressure from labor unions, politicians and activists to pursue goals other than simply making money.

But some suggest that such arrangements are too cozy for comfort.

"We should be concerned as taxpayers," says Stephen M. Bainbridge, a professor of law at the University of California at Los Angeles. "I don't want them making investment decisions so they can get invited to Puff Daddy's next party or advance their political agendas."

In defense, Gore claims that his new network will not espouse any particular political beliefs.

But the Gore deal was brought to Burkle by San Francisco venture capitalist Richard Blum, whose wife is Democratic Sen. Dianne Feinstein.

For his own part, Burkle told BusinessWeek he will no longer contribute to the campaigns of the California governor, state treasurer or controller while he pursues new business with CalPERS.

Since 1999, Burkle has contributed more than $600,000 to campaigns for state office. Furthermore, he has given millions of dollars to political causes, most of them connected with the Democratic Party.

Despite Burkle ostensibly turning over a new leaf, former President Bill Clinton remains on his team, serving as a senior adviser to Burkle's investment firm, Yucaipa Cos., in return for a cut of the profits.

Meanwhile, CalPERS has been singing Burkle’s praises, noting how the investment guru had earned an average annual return of 45 percent over the preceding 13 years.

But just how much CalPERS makes from its peculiar stable of Burkle investments won't be known until the investments are sold in a few years.

Pensioners keep their fingers crossed as Burkle repeats his mantra that his focus is entirely on making money for California's pension system and bettering life for those less fortunate than he.


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The answer: Both are being funded by California's state pension system - better known as CalPERS (the California Public Employees' Retirement System). The business weekly reports that the California pension system is forking over as much as $760 million to Ronald W....
Monday, 11 October 2004 12:00 AM
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