AIG’s Stock Decline in Wake of Investigation Hits State Retirement Systems Hard
Santa Monica, CA — Governor Arnold Schwarzenegger should return $176,000 in campaign contributions from donors involved in a massive accounting scandal that could cost Californians hundreds of millions of dollars, the nonprofit Foundation for Taxpayer and Consumer Rights (FTCR) said today. The alleged fraud at insurance giant AIG may cost California taxpayers $400 million in investment losses, according to California Treasure Phil Angelides and the leader of the state’s major pension fund, CalPERS. They also noted the possible liability of AIG auditor PricewaterhouseCoopers for losses incurred as a result of the scandal, citing the state pension funds’ opposition to Pricewaterhouse as the firm’s auditor last year because the accounting company also provided consulting services to AIG.
FTCR, which publishes the weblog at: http://ArnoldWatch.org, reports that California Governor Arnold Schwarzenegger has received $122,300 from AIG and $53,700 from Pricewaterhouse in campaign donations. The group is highlighting $22,300 from AIG that the governor accepted in March during a New York fundraiser, in which Schwarzenegger was promoting a series of initiatives including the privatization of the state’s pension fund.
“Schwarzenegger has said he wouldn’t let his contributors’ interests interfere with the people’s business,” said FTCR’s Executive Director Douglas Heller. “As the AIG fraud wreaks disaster on Californians’ pension and 401k plans, the governor’s conflict could not be more evident. He should return the $176,000 in campaign contributions and then fight to get back the $400 million that has been lost.”
According to FTCR, the AIG scandal shows that the real danger to the state’s pension system is not, as Schwarznegger has suggested, the scope of retirement benefits paid to public servants like firefighters and teachers; the real threat comes from corporate malefactors in which the state has invested billions of taxpayer dollars. Governor Schwarzenegger, who withdrew his proposal to privatize pensions last week, has said he would continue efforts to reform the state’s pension system. He should focus on working with the pension funds to take on corporate wrongdoing and fraudulent accounting schemes, FTCR said.
“If Schwarzenegger is serious about protecting taxpayers and retirees’ pensions, he’d focus some of his anger on the crooked corporations that have robbed the citizens of California,” said Heller.
In recent years FTCR has sponsored bills to hold executives liable for corporate fraud, called for a three strikes for corporate criminals and led the successful effort to expand California’s whistleblower protection statutes.
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FTCR is a nonprofit, nonpartisan organization. For more information, visit: http://ArnoldWatch.org