When California's teachers joined the anti-apartheid divestment campaign a decade ago, they learned an important lesson about the political leverage of pension funds. Today they are seeking to use the power of their multi-million dollar pension fund investments to help prevent the logging of one of California's last remaining old-growth redwood forests. PNS associate editor David Bacon is a Bay Area writer specializing in labor and immigration issues.

SAN FRANCISCO -- Organized labor is increasingly finding common cause with those who want to protect the environment. Now the California Federation of Teachers has decided to take action designed to stop logging in one of the state's last remaining old-growth redwood forests.

A decade ago teachers worked out the strategy for this action in the movement against apartheid, when San Francisco City College instructors helped spearhead efforts to get their pension fund to divest holdings in firms doing business with South Africa. After apartheid fell, the new governing party, the African National Congress, paid tribute to divestment efforts worldwide for putting enormous economic pressure on the racist regime.

Teachers didn't forget the lesson. For some months, they have been trying to make their pension fund use its multi-million dollar weight for a socially responsible goal. This time, the target is Maxxam Corp., owner of Pacific Lumber Co., near Eureka, which in turn owns and is now logging in the Headwaters Forest, one of the last remaining old-growth redwood stands in private hands.

Last fall, thousands of environmental activists converged on the forest to protest Maxxam's efforts to log these majestic trees. When City College teachers discovered some of their pension funds were invested in Maxxam, they were shocked -- but this was not the only thing that offended them. After buying Pacific Lumber in 1986, Maxxam's CEO Charles Hurwitz raided $60 million from the pension fund of Pacific Lumber Loggers. He replaced the pension fund with an annuity from Executive Life Insurance Co., later placed into receivership by the California Insurance Commissioner.

Maxxam spokesperson Bob Ireland protests that the deal was legal, and that the company made up the 30% loss it caused to retirees' pensions. "No one was hurtm" he said.

Hurwitz moved on the fund because he financed his takeover of Pacific Lumber with high-interest "junk" bonds, leaving him with a large debt burden. When these funds proved inadequate, he turned to the forest, and stepped up the logging rate.

"Hurwitz should be in jail," says Nancy Husari, a City College teacher and member of the American Federation of Teachers (AFT). "We should be concerned when our own pension money is being used to support these kinds of actions."

The State Teachers' Retirement System (STRS) holds 71,400 shares of stock in Maxxam, valued at over $3 million. The pension fund for other public employees, including school employees other than teachers, owns even more -- 318,400 shares, worth over $13 million.

"We should get out," says California Federation of Teachers President Mary Bergan. And at its recent convention, the CFT called on both state systems to use their leverage to help save Headwaters.

But the idea is being resisted in much the same way as the early anti-apartheid proposals. Fund managers say their first responsibility is to consider the safety of their investments. As James Mosman, CEO of the STRS wrote, the fund does not "actively select stocks on the basis of fundamental events or news."

City College teachers have heard it all before. In fact, their effort is part of a much larger movement as many union members seek a voice in how pension and welfare funds are invested. The funds are enormous -- they come to a significant portion of all investment capital in the U.S. -- and many union members think that money should be used to require more responsible corporate policies.

Maxxam may not be a very sound investment from a financial point of view. The company has been accused of liability for the failure of a Texas-based savings -and-loan, and could be held responsible for over $4 billion by the federal government.

One proposed solution, from the Rose Foundation for Communities and the Environment, and adopted by the CFT, is a "debt-for-nature" swap. This would call on Maxxam to give up all of Headwaters -- a total of 60,000 acres -- halt logging and surrender the entire forest to the federal government in return for canceling the savings and loan debt. Maxxam denies the debt, and calls the idea a "non-starter."

Teachers say that if Hurwitz refuses this deal, they want the retirement funds to sell their Maxxam stock.