12 Democratic members of the California’s delegation to the U.S. House of Representatives have warned trustees of the California Public Employees Retirement System (CalPERS) that they may risk violating their fiduciary duty unless they divest themselves of assets associated with the President Trump.
CalPERS trustees who manage $307 billion in pension assets are regularly harassed by liberals demanding that they engage in “socially responsible investing” by divesting from fossil fuels, firearms, and other politically volatile goods and services. Despite political pressure, trustees are often reluctant to divest because of their “fiduciary duty,” defined by the IRS as “duty of care and trust to another and must act primarily for the benefit of the other in a particular activity.”
But in a new twist on fiduciary duty, U.S. Rep. Ted W. Lieu of Los Angeles sent a letter cosigned by 11 colleagues warning that CalPERS “has not divested its interest” or made sure that President Trump does not receive any fees regarding the purchase of a property called Trump SoHo by one of CalPERS private equity investments.
Lieu, as a Congressman and attorney, claims that CalPERS’ trustees are “perpetuating continuing violations” of the “Domestic Emoluments Clause of the U.S. Constitution through its investment” in the CIM III private equity fund. He demanded that CalPERS “meet its legal and ethical obligations when investing in private equity” by divesting from CIM III so that Trump SoHo does not pay millions of dollars to the Trump Organization.
The U.S. Constitution’s Emolument Clause is contained in Article I, Section 9, Clause 8:
No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.
The novel legal theory to expand the interpretation of the words in the Emolument Clause’s prohibition against the president being corrupted by foreign kings, princes and states to cover alleged fees as emoluments from public pensions was originated by the Constitutional Accountancy Center. The public interest law firm believes that the Constitution’s history is inherently progressive, and sees its mission as accelerating that progressive drift by radically redefining the definitions of its terms through a “New Textualism.”
Congressman Lieu and his Democrat House caucus members claim that socially responsible investing is in the best interest of CalPERS.