Without additional transparency and tighter enforcement of proxy-voting requirements, publicly-held companies could be pressured into accommodating political agendas that are detached from the economic interests of retirement funds, according to a U.S. Department of Labor Inspector General audit released in March.

Since average Americans are reliant upon retirement plans that invest in corporate stock, they are entitled to know whether or not shareholder recommendations are made with an eye toward potential financial gain, or if public policy motives have worked their way into the process.

Proxy advisory firms, which make shareholder recommendations to investors and research proxy issues, are an integral part of this equation and deserve more scrutiny. Institutional Shareholder Services (ISS), formerly RiskMetrics, is widely viewed as the most influential of the advisory firms. It also appears to be joining forces with organized labor. That’s bad news for investors and bad news for the economy.

Bradford Campbell, who oversaw EBSA as the Assistant Secretary of Labor during the Bush Administration warns that, “The law protects workers by prohibiting pension plan officials and others in charge of the plan’s assets from using their positions to benefit themselves or to pursue a political agenda. Proxy voting is a fiduciary duty, and the economic interests of the plan cannot be subordinated to the personal, union or corporate interests of the person casting the vote on the plan’s behalf.”

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From Americans for Limited Government:

October 7th, 2009, Fairfax, VA—Americans for Limited Government President Bill Wilson today condemned members of the House for voting to refer a resolution that would have removed Congressman Charlie Rangel as Chairman of the powerful House Ways and Means Committee.

“Once again, the Democrat-controlled House has voted to sweep outright corruption under the rug on behalf of a fellow party member who failed to report more than $1 million in outside income as required by House rules,” Wilson said.

“The least Congress can do is not have Rangel serving as Chairman of a committee that deals with taxes while an ‘ongoing’ ethics probe into his undisclosed income is taking place,” Wilson added.

The Resolution, proposed by Congressman John Carter, called for Rangel to be removed as Ways and Means Chairman until the Ethics Committee concludes its probe.

Instead, the House voted 246 to 153 to refer the resolution to the Ethics Committee. “A vote to refer the Rangel resolution to the Ethics Committee was a vote against the resolution, plain and simple,” said Wilson. (more…)