Calpers Activism Hits Even Healthy Firms; Some analysts wonder whether politics drive pension fund's actions.(A)

Byline: KEN HOOVER

California's public employees pension fund is stepping up attacks on what it considers poor corporate governance, putting backsliding firms under publicity's glare and withholding votes for directors.

The California Public Employees' Retirement System, or Calpers, launched its latest broadside in April against 11 companies whose auditors also do consulting work for them.

Calpers made a name for itself going after corporate laggards. But many of the firms it attacks now are above-average performers. For example, one of the 11, Cigna, has outperformed 69% of stocks in the market the past year.

Critics say politics is behind the attacks.

The Sarbanes-Oxley Act outlawed most of the cozy relationships between companies and their auditors. But Calpers wants to go further, arm-twisting corporate boards into severing arrangements with auditors for such services as tax planning, which was not outlawed by Congress.

The theory is that the fear of losing lucrative consulting fees might make an auditor hesitate to get tough with a client.