State Controller, Treasurer Question Investments in CACI

By Leon Worden
Signal City Editor

Saturday, July 10, 2004

*MEDIA—MANDATORY CREDIT: The Signal newspaper of Santa Clarita, Calif.

orget the "f" word. It might as well have been the "n" word. "T" is for "torture," and when state Controller Steve Westly invoked it this week in the same press release where he mentioned Arlington, Va.-based CACI International Inc., he probably could see the response coming from 3,000 miles away.
    "Vile," CACI said. "Unsubstantiated." "Malicious." "While posing as a protector of common decency and corporate ethics, Mr. Westly appears, in fact, to be chasing headlines for his own political benefit."
    Westly's intent was to call on CalPERS, the state teachers' retirement system, to draft a new policy to "restrict investments in companies engaged in torture."
    "Companies looking to profit from the torture of human beings don't belong in our portfolio," said Westly, noting that a CalSTRS subcommittee was scheduled Wednesday to discuss CACI's role in the Iraq prisoner abuse scandal.
    CACI hasn't been accused by the federal government of misconduct, and no CACI employee has been charged with a crime.
    A $1 billion information technology company, CACI supplied the Army with interrogators at Abu Ghraib prison last fall. An Army report identified two officers and two civilian CACI employees as "either directly or indirectly responsible" for the abuse of prisoners.
    In fact, only one of the two civilians, Steve Stefanowicz, is a CACI employee. The other, Canyon Country resident John B. Israel, worked through Titan Corp., an unrelated defense contractor.
    But when the Army report was leaked in late April and CACI's name showed up, California's two senior officials in charge of finances started asking questions.
    State Treasurer Phil Angelides discovered that California's teachers and other public employees own about 1 percent of CACI through their retirement system portfolios. Collectively, as of June 8, they owned 286,982 of CACI's 29.14 million outstanding shares.
    CalSTRS' $114.4 billion portfolio includes $3.27 million worth of CACI stock, while CalPERS' $162 billion portfolio includes $8.62 million worth, based on Friday's closing prices. (CACI stock represents 3 to 5 one-thousandths of 1 percent of either fund's total portfolio.)
    Angelides — who, like Westly, serves on the board of CalPERS and CalSTRS — recommended that the two agencies question senior CACI officials to find out what they knew, when they knew it, and whether they properly communicated relevant information to shareholders.
    CACI said it would comply with the request, and that the company had already answered similar questions from other investors.
    But a CalSTRS subcommittee that is chaired by Angelides found CACI's initial response inadequate Wednesday and voted to question the company further. CalPERS is expected to take similar action next month.
    For his part, Westly informed the CalSTRS subcommittee Wednesday of his proposal for a new "anti-torture investment policy" to "(weed) out the bad guys" from the retirement portfolios. It will likely be put to a vote when the subcommittee reconvenes in August, agency spokeswoman Kirsten Macintyre said.
    She said there has been no talk of taking similar action with Titan Corp.