By Jon Ortiz
jortiz@sacbee.com
Published: Thursday, Dec. 20, 2012 – 12:00 am | Page 3A

We expect government transparency. Wall Street loves the backroom deal.

On ever-shifting ground between them you’ll find public pension funds, unique government organs that pump hundreds of billions of taxpayer dollars into private investments.

That dual nature creates a tension graphically illustrated with Monday’s news that the California teachers’ retirement system’s portfolio included a stake in Freedom Group. The global firearms manufacturer’s subsidiaries include the company that made the rifle used to kill 20 children and six adults at a Newtown, Conn., school on Friday.

CalSTRS investment partner Cerberus Capital Management said Tuesday the company is up for sale.

“They’re doing what we want them to do,” a CalSTRS spokesman told The Bee’s Dale Kasler.

Public pension funds must invest wisely, pay promised benefits and operate transparently. That often smacks squarely into how their business partners operate.

CalPERS, for example, has heard complaints about its interests in companies that do everything from manufacturing equipment to building settlements on Israel’s West Bank to making and pricing AIDS drugs.

Sometimes pension funds become hostage to politics. After private contractors at Abu Ghraib prison abused Iraqi prisoners, CalSTRS considered a 2004 ban on investing in firms that sell “technologies or services designed for use in the torture of human beings.”

To read entire column, click here.