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Warner to VRS: Use influence
BY JEFF E. SCHAPIRO
TIMES-DISPATCH STAFF WRITER
Jul 03, 2002
Gov. Mark R. Warner is suggesting the state pension fund consider throwing its weight around in response to the spate of corporate scandals - something the plan has avoided, by law and history.
However, the governor's appeal to the Virginia Retirement System triggered fears of renewed politicization of the $34 billion fund after nearly a decade of relative calm.
VRS losses from the unfolding WorldCom Inc. debacle are approaching $50 million. That's atop another $60 million drained from the system by the collapse of Enron.
Those losses represent only a sliver of the billions in value erased from VRS by the two-year decline in the stock market. At the market's peak, in March 2000, the fund was worth nearly $42 billion.
Still, the politically charged WorldCom case and others yesterday drove Warner to urge VRS, which provides pensions for 100,000 retired state and local workers, to consider abandoning its neutrality and becoming active in corporate governance and accounting matters.
Warner asked VRS Chairman Alfonso I. Samper to convene a special meeting of the fund's nine-member board of trustees to discuss ways to better shield the system's vast assets.
Within a month, Warner said, he wants Samper, whom he recently appointed to the chairmanship, to report on such possible steps as working with other major retirement funds on ways to force greater accountability by corporate management.
"It is time for public pension plans to engage more in the corporations where their money is invested," Warner said.
Samper said the trustees could meet as early as next week.
A spokeswoman for a Virginia public employee organization could not be reached for comment on Warner's statement.
With one notable exception, VRS has avoided direct involvement in the management and operations of the corporations in which it invests.
Starting in 1990, with the apparent support of Democratic Gov. L. Douglas Wilder, VRS moved to acquire RF&P Corp., spinning off its railroad to CSX Corp. and setting up a new company to operate RF&P's extensive real estate holdings.
The takeover led to several years of legal, financial and political turmoil at VRS. Later, lawmakers enacted sweeping reforms of the fund and voters approved a constitutional amendment designating VRS an independent trust to insulate it from politics and discourage such investments forays as that made in RF&P.
With Warner's pitch to VRS, some of the fund's staunchest supporters expressed fears it might be headed toward another round of trouble.
"This is the very thing we thought we were getting rid of," said former Senate Democratic Floor Leader Hunter B. Andrews of Hampton, author of the VRS reform package.
Former VRS Chairman Edwin T. Burton III, a Republican, said state pension funds with traditions of using their stock holdings to force changes at corporations, such as the California teacher and state worker systems, have had little success.
Contact Jeff E. Schapiro at (804) 649-6814 or jschapiro@timesdispatch.com