US – Marsh & McLennan has hit back at CalPERS’ claims that the market timing problems at its Putnam Investments arm are Enron-like, saying the claim is “outrageous”.

The war of words comes as CalPERS and three other large US pension funds – the New York State Common Retirement Fund, CalSTRS and the AFSCME Employees Pension Plan - said they plan to nominate their own candidate to Marsh’s board via a proxy. The funds say they own around 1.3% of Marsh’s stock.

CalPERS’ president Sean Harrigan said: "Shareholders do not have any interest in using the proxy statement process to nominate a director unless the problems are so severe they are Enron-esque. Putnam and Marsh & McLennan's problems are in that category."

Marsh’s senior vice president and general counsel William Rosoff responded: “We were surprised and disappointed that serious investors concerned with corporate governance would communicate their opinions through a press release and not directly to our management and board.”

“Moreover, any sense of objectivity is undermined by your outrageous reference to Enron in your characterization of what has occurred at our Putnam Investments subsidiary.”

Harrigan drew attention to the “excessive” compensation paid to former Putnam chief executive Lawrence Lasser, who was fired in early November when the market timing scandal began to bite. The funds say he may collect around 89 million dollars in severance.

"This tells all of us that this board is more concerned about its friends than its owners," Harrigan said.

"Investors have pulled more than 32 billion dollars in assets out of Marsh's Putnam subsidiary due to its involvement in this terrible mutual fund scandal, and Marsh's stock price is down about 10%," said Alan Hevesi, New York State Comptroller and sole trustee of the New York State Common Retirement Fund.

"I can't think of a stronger case worthy of shareholder involvement, and I have no doubt, that given the chance, shareholders will respond favorably to our initiative."

Marsh’s Rosoff said: “We believe strongly that the premise of your press release is flawed and not supported by the facts.” He said most of Marsh’s board is independent “by any definition of the term” and that key company committees are made up of independent directors.

And he pointed out that new managers have taken “decisive actions” to rectify any problems. Marsh is also the parent of pension consulting firm Mercer.