The corporate scandals have kicked off a new era of shareholder activism, and sometimes the results have been useful (such as waking up the Disney board). On the other hand, we have the California Public Employees' Retirement System, which is running in its own strange ethical and political direction.

Calpers matters because of its size ($144 billion in assets) and its traditional role as a trend-setter in corporate governance. Thus the giant pension fund declared last month that it will withhold support for the re-election of certain directors at no fewer than 2,700 companies, or 90% of its U.S. investments. It's hard to find a company that Calpers isn't upset with -- from Coca-Cola to Sprint to Citigroup.

The ostensible reason is a campaign against "conflicts of interest" regarding directors and auditors. This certainly sounds virtuous, and rooting out genuine conflicts is a good thing. Only two years ago, the New York Stock Exchange demanded that the major board committees of its member companies be composed of independent directors -- and we supported the idea.

Calpers, however, is taking this to absurd new lengths. Consider its recent campaign against Warren Buffett, the legendary stock-picker and something of a corporate-governance scold himself. Calpers wants him off the Coca-Cola board because he sat on the committee that voted to allow the company's outside auditor (Ernst & Young) to also perform some non-audit services for Coke.

Now, most companies would be thrilled to have Mr. Buffett as a director. He knows something about business, for one thing. His investment company is also a major owner of Coke, to the tune of some 10% of its shares. Over the years he's driven Coke management hard, but suddenly under the Calpers standard he's unfit to serve on the board. There's an i-word for this, but it isn't independent.

We can sympathize with Calpers's vote against Sandy Weill for the Citigroup board, because the former CEO was responsible for some large management lapses. But Calpers also opposed current CEO Charles Prince, not for anything he did, but because his wife is a partner in a law firm that does business with Citigroup. Calpers also opposed former Democratic Senator San Nunn for a spot on the Coke board because he used to work for a law firm that does business with the company. Mr. Nunn retired from Atlanta's King & Spalding last year. This is making a fetish of the conflict standard, so much so that it threatens to reduce the already too small pool of willing and knowledgeable directors.

More troubling still is the Calpers jihad against Safeway, which last week bounced three of its board members in response. Ostensibly Calpers is upset about underperformance, but the real problem seems to be the tough stance the grocery chain took against labor during a recent strike.

Eleven of the 13 Calpers board members are either union members, union officials or politicians who take union money. And last year amid the strike, Calpers board member Rob Feckner blasted Safeway (in a letter written on Calpers stationery) for its "blatant disregard for quality of life issues for your long term employees." Mr. Feckner sits on the board of California's school employees' union.

As long as we're talking about "conflicts," let's not forget that Calpers Chairman Sean Harrigan is also the executive director of the union that battled Safeway, the United Food and Commercial Workers. Mr. Harrigan was involved in union rallies against Safeway even as Calpers attacked the company's board.

He was joined in this anti-Safeway lobbying by another Calpers board member, State Treasurer Phil Angelides, who is well known for his plans to run as a Democratic candidate for governor in 2006. Could Mr. Angelides perhaps be angling for labor's endorsement? If Calpers lived by the same conflict standard that it applies to the rest of corporate America, nearly its entire board would be disqualified from voting on anything having to do with Safeway.

Performance-wise, by the way, Calpers would be lucky to have the likes of Mr. Buffett on its board. In the booming 1990s when it was swimming in a surplus, the pension fund convinced the legislature to pump up benefits. California's state employees can now retire at age 55 (the national average is 65) and receive 70% of their salary. Yet Calpers has poorly managed its investments in recent years; its assets dropped $27 billion from 1999 to mid-2003 and its performance lagged behind peers by a full percentage point on average in 2001 and 2002.

Taxpayers in the state are having to make up the shortfall. The state's annual payment to the system, which was just $160 million in 1999-20000, will hit $2.6 billion this year. A cynic, or even a taxpayer, might wonder that the real motive behind the current Calpers campaign against corporate America is to draw attention away from its own underperformance.

We're all for shareholders exercising their muscle as owners on behalf of stronger performance and more transparent corporate governance. But it won't help anyone, and certainly not other shareholders, if labor activists start to hijack this cause for their own political agendas.