In a speech before the Council of Institutional Investors, Hevesi gave the call to arms for institutional and individual investors, labor leaders, corporate CEOs, elected officials, and community leaders to rise up and demand an end to corporate corruption scandals that have cost them and taxpayers billions of dollars through the formation of National Coalition for Corporate Reform (NCCR). If all goes well in the formation of the coalition, Hevesi said an organizational meeting could be held as early as October, according to news sources.
The impetus for action, according to Hevesi, was the wave of corporate scandals that emerged in 2001 and 2002 and the apparent short memory of the US investor. “The history of scandals in America … is so vast that a scandal fades out of the public mind very quickly,” Hevesi said. “We cannot afford to allow that to happen when it comes to corporate misbehavior because the costs are too high.”
Hevesi, the sole overseer of New York state’s $106 billion in pension funds, said primary concerns of the group should include:
- shareholder resolutions
- corporate governance
- independence of directors
- independence of audit committees
- regulatory reforms
- executive compensation that is tied to performance.
In addition to building a large force of shareholder clout to force an end to corporate corruption, Hevesi also said he hoped the coalition could keep up the pressure on government regulators to enact and enforce ethical standards on companies, and to pursue litigation on behalf of investors against fraudulent corporate practices. A coalition could also be a persuasive lobbying voice before Congress for laws to shore up ethical behavior by corporations, Hevesi said.
Hevesi is not alone on his proposal. Among his backers on the creation of the corporate reform collation are:
- California Treasurer Phil Angelides
- North Carolina Treasurer Richard Moore
- AFL-CIO President John Sweeney
- American Federation of State, County and Municipal Employees (AFSCME) President Gerald McEntee
- Pennsylvania Treasurer Barbara Hafer
- California State Controller Steve Westly
- New York State Attorney General Eliot Spitzer
- New York City Comptroller William Thompson Jr
- President of the Board of the California Public Employees’ Retirement System (CalPERS) Sean Harrigan.
Hevesi has been hot on the trail of corporate deviants in recent months. In August, citing a Brookings Institute study, he said scandals on Wall Street and in the accounting and energy industries over the last two years were responsible for a $2.9-billion hit to the state's economy and ate into state tax revenues by $1 billion (See Corporate Scandals' New York Price Tag: $13 Billion ). Breaking it down even further, Hevesi said New York City bank accounts also suffered a hard slam, as the Big Apple lost an estimated $260 million in tax revenue and $7 billion from the city public pension system's value - mostly because of lost jobs and stock value.
"This was not just injury to companies that went bankrupt, their employees who lost their jobs and their retirees who lost their retirement savings, this hurt every taxpayer in America," Hevesi said. "The first challenge is to have everybody understand how damaging these scandals were."
On an individual basis, Hevesi estimated that the scandals cost a New Yorker in his or her 50s or 60s more than $10,000 in investments in 401(k) programs or other savings plans . New Yorkers in their 40s lost an average of $8,000. "New York was hurt particularly hard," said Hevesi. "When the stock market declines, that hurts the financial markets, a key industry. And every unit of government, the state and every single county, town and village, faced reduced revenues and higher costs."
Additionally,Hevesi has joined in shareholder lawsuits against big companies and has sought activism on other levels as well. Earlier this week, Hevesi and California state Treasurer Phil Angelides, citing possible human rights violations in the country of Myanmar, asked Unocal Corp. to either justify their investments in the country or get out (See Hevesi, Angelides Ask Unocal To Justify Myanmar Investments ).