Calpers Asked to Mull Risks Yukos Bid Could Pose to Chevron By William Selway March 26 (Bloomberg) — The California Public Employees’ Retirement System should examine whether the value of its Chevron Corp. shares would be hurt should the oil company buy assets of bankrupt OAO Yukos Oil Co., a board member said. California Controller John Chiang sent a letter last week to Russell Read, the fund’s chief investment officer, asking it to study the risk of a Chevron bid for the Russian company’s assets. Calpers owns 9.03 million Chevron shares worth about $670 million, according to a U.S. regulatory filing. Russia’s government took control of Yukos, once the country’s largest oil exporter, because of unpaid taxes. Former Yukos owner Mikhail Khodorkovsky, who is serving eight years in a Siberian penal colony for tax evasion and fraud, says he is being punished for opposing President Vladimir Putin, and the U.S. has raised concerns about the takeover. “Considering the legal, financial and geopolitical controversy that has been associated with Yukos’ recent history, I am concerned that, should Chevron participate in the auction and succeed in acquiring assets, the transaction may pose risks to Calpers’ investment portfolio,” Chiang wrote. “To protect our investment in Chevron, and the overall health of our portfolio for state retirees, we should engage in immediate due diligence to assess the risks and, if warranted, take appropriate mitigation steps,” the controller wrote. … Chiang is one of 13 members of Calpers’ board of directors, which oversees the fund. Garin Casaleggio, a spokesman for Chiang, said any decision on whether Calpers should sell shares of Chevron would be made after the fund’s staff has studied the matter and made their own recommendation. The fund has a history of using its $230 billion of assets to press for changes in corporate behavior. Every year it targets as many as a dozen public companies among its holdings to seek policy changes and better financial results.
And the New York Times:
Last Thursday, John Chiang, the California state comptroller, sent a letter to Calpers, the retirement fund, asking it to review investments in Chevron in light of that company’s reported intention to bid in the Yukos auctions. Calpers, with billions invested in equities, has in the past swayed boards with its criticisms of corporate behavior. Mr. Chiang cited the risk of lawsuits and divestment campaigns against Western companies for “complicity in illegal and unethical activities by the Russian government.” Russian authorities say they are obeying their own laws. Chevron, of San Ramon, Calif., has not announced a bid for Yukos assets but has not contradicted statements by the bankruptcy receiver in Moscow that it sent a letter of intent late last year. Chevron is among the top 20 companies in the Calpers portfolio. Mr. Chiang has not commented on BP’s role, but his spokeswoman, Hallye Jordan, said in a telephone interview that “he will soon.”