California state Controller Steve Westly, a Democratic candidate for governor, admits that he talked to the California Public Employees Retirement System in 2003 and 2004 about investing in venture capital start-up Healthpoint Partners. However, that some partners of that New York-based venture capital firm helped Westly raise campaign money has raised a couple of eyebrows, the Los Angeles Times reports. Two former managing directors at Healthpoint – Chicago attorney Joseph Cari and H. Carl McCall, former New York comptroller and himself a former Democratic gubernatorial candidate – say they did nothing wrong. For its part, a CalPERS spokeswoman has chimed in that there was nothing unusual about VC firms making a pitch to the pension plan. Still, the Times reports that the pension giant, with $200 billion AUM, once nixed an investment in Healthpoint as not fitting with its investments strategy. The second time around, CalPERS, on whose board Westly sits, invested $5 million in Healthpoint. Meanwhile, Westly told the paper he would return $15,000 in donations contributed by Healthpoint employees and their families "out of abundance of caution." According to a recent Zogby poll, Westly has a nine-point lead over Republican Gov. Arnold Schwarzenegger, though he must first get by state Treasurer Phil Angelides in the Democratic primary.