THE tenure of the president of America’s biggest pension fund was terminated yesterday, amid accusations of a plan by Arnold Schwarzenegger to force him from office.

Sean Harrigan, a union leader and champion of shareholder rights, was put in charge of the California Public Employees’ Retirement System, known as Calpers, last year.

But last night he was voted out of office by the State Personnel Board, the California Government organisation that elects one member of the Calpers board to oversee its operations. He will step down in January, when his term expires.

Mr Harrigan was appointed as the State Personnel Board representative to the Calpers board in 1998, when Gray Davis, a Democrat, was Governor of California.

But Mr Schwarzenegger, a Republican, is now Governor.

During Mr Harrigan’s tenure on the Calpers board, the organisation has grown by more than 20 per cent a year and has troubled many of America’s biggest corporations, especially some that are thought to overpay their executives or appear to tolerate conflicts of interest.

But it is alleged that influential directors of those companies, and Mr Schwarzenegger, have tired of Mr Harrigan’s activism, despite his success in making a return on the $178 billion (£92 billion) in Calpers’ coffers.

It has been suggested that California businessmen such as Michael Eisner, the chief executive of Disney, have complained to Mr Schwarzenegger about Mr Harrigan’s efforts to change company policies.

Mr Harrigan campaigned through Calpers to oust Mr Eisner from Disney. Later, 43 per cent of Disney shareholders withheld their votes when asked to re-elect Mr Eisner, who then resigned as chairman and agreed to step down as chief executive in 2006.

Mr Harrigan also helped to force the resignation of Dick Grasso, the former chief executive of the New York Stock Exchange, who was paid $180 million in salary and bonuses.

“He made a lot of very powerful enemies,” a source close to Calpers said. “Those type of people are not just going to roll over and play dead for you.”

A spokesman for Mr Schwarzenegger said any suggestion that the Governor had anything to do with Mr Harrigan’s removal was “ridiculous”.

“Mr Harrigan is appointed by a vote of his peers on the State Personnel Board,” he said. “That has nothing to do with Governor Schwarzenegger.”

Last December Mr Schwarzenegger appointed a Republican to the state board, creating a three-to-two majority against Mr Harrigan.

The board voted last night to replace Mr Harrigan with Ron Alvarado, a Rebublican. Mr Alvarado was one of the board members who voted against Mr Harrigan’s reappointment.

Phil Angelides, the California State Treasurer, said the vote to oust Mr Harrigan was a “slap in the face to shareholders”.

“It is unfortunate that the Schwarzenegger administration and the State Personnel Board took the side of corporate interests and against taxpayers, pension fund members, and ordinary American investors,” he said.

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