Pensions Fight Back Against Culture of Corruption

We often forget that huge amounts of stock - and thus power - are held by the public in employee pension funds. And now, according to the Financial Times, that power is finally being deployed to fight back against the culture of corruption plaguing America's political process.

The newspaper reports that the scandals rocking Washington are "giving new impetus to governance activists, who are increasingly demanding that big business do a better job of disclosing - and justifying - political donations." Specifically, "a group of pension funds led by William Thompson, the New York City comptroller, is stepping up demands that six companies, including Wal-Mart and Chevron, disclose all direct and indirect political contributions to lawmakers and political parties. The pension funds argue that incomplete disclosure may encourage executives to use company assets for objectives that are not necessarily shared by the entire company or its shareholders."

This is all about disclosure - and who could be against that? The pension funds want the companies they own "to disclose all funds used for political contributions, the identity of the individuals who authorise contributions and the company's internal guidelines on political giving." This follows "an agreement last month by PepsiCo, Coca-Cola and Eli Lilly to disclose and have their directors review less direct or"soft money" contributions." And it comes just as "The Council of Institutional Investors, which includes 140 of the largest US pension funds, said yesterday that its members would vote in March on a policy calling on companies to increase the transparency of their political and charitable donations."

This will be a very interesting battle - and one that corporate executives aren't going to take kindly to. Remember, the Financial Times reported a few weeks ago that executives are using company money to do surveillance on shareholders they fear are trying to reform corporate governance.

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