AGA Today
State Pension
Divestment Bill Signed
The law
requires the teachers and public employees retirement systems to
withdraw funds from firms aiding Sudan's government.
By Nancy Vogel
Los Angeles
Times Staff Writer
September 26, 2006
SACRAMENTO —
California's giant public pension systems must rid themselves of
investments in companies that help the Sudanese government, under a
measure that Gov. Arnold Schwarzenegger signed into law Monday.
University of
California students and others who led a campaign for divestment said
they hoped that it would persuade other states to do the same.
Ultimately, they want to pressure the Arab-dominated government of
Sudan, which is blamed for the deaths of at least 200,000 non-Arabs
since 2003 and the displacement of more than 2.5 million people in the
nation's western Darfur region.
"Divestment
will show our defiance against the murderers and their inhumanity,"
Schwarzenegger said at a bill-signing ceremony at the Hilton Burbank
Airport and Convention Center, recalling that a similar divestment
movement two decades ago helped end apartheid in South Africa.
Joining him at
the ceremony were actors Don Cheadle and George Clooney, and UC student
activist Adam Sterling. "State by state, pension fund by pension fund,
your genocide will not occur on our watch and it will not occur on our
dime," Sterling vowed.
When the law
takes effect in January, it will require the California Public
Employees' Retirement System and the California Teachers' Retirement
System to liquidate their holdings in certain companies that operate in
Sudan if, after 90 days' warning, the companies fail to halt business
activities there.
About two dozen
oil, energy and telecommunications firms — most of them Chinese,
Russian, Malaysian, Indian or French — are the targets of the
divestment, said Jason Miller, a UC San Francisco medical student who,
with Sterling, helped create the Sudan Divestment Task Force.
The bill, AB
2941 by Assemblyman Paul Koretz (D-West Hollywood), is narrowly tailored
to force divestment of only those companies that provide revenue or
weapons to the Sudanese government and refuse to change their practices.
No American
companies are on the list for potential divestment, Miller said, and
American companies must get U.S. permission to do business in Sudan
because the nation is considered a state sponsor of terrorism.
Miller conceded
that divestment of the two state pension systems won't be enough to
change the stock price of any potential divestment targets.
But he and
others see the Koretz bill as model legislation that may spur enough
divestment nationwide to pressure the companies and thus Sudan.
Said Clooney:
"As more states begin to adopt it, and they just might, then perhaps we
can take a giant step in making sure that a government that
systematically eliminates its citizens at the very least doesn't profit
from it."
Four other
states — Illinois, Maine, Oregon and New Jersey — also have ordered
pension funds to divest from companies operating in Sudan. Legislation
that is modeled on the Koretz bill is pending in 15 other states, Miller
said.
"It's a more
sophisticated route than a couple of other states have tried," Koretz
said. "If it's too broad of a brush, you wind up picking up companies
that are there and doing good."
The
legislation, which passed with the opposition of 13 Republicans in the
Assembly and seven Republicans in the Senate, hastens a movement already
underway at the teachers and public employees pension systems and the
University of California.
In March,
pressured by student activists, UC regents voted to liquidate holdings,
worth tens of millions of dollars, in nine foreign companies that do
business with Sudan. The governor signed another, related bill, AB 2179
by Assemblyman Tim Leslie (R-Tahoe City), that indemnifies UC regents,
employees and investment managers from litigation that may arise out of
the Sudanese divestment.
The teachers
pension system on Monday reported holding $12 million worth of stock in
10 companies operating in Sudan, including Sinopec Corp., PetroChina
Co., Bharat Heavy Electrical of India and Sudan Telecom Co. Those
companies are targeted for divestment under a policy the teachers
pension board adopted in April.
"They have gone
through quite an extensive back-and-forth with a number of these
companies," teachers pension system spokeswoman Brenna Neuharth said.
"The bill just speeds the process along."
Public
employees pension system spokesman Brad Pacheco said the fund, with $207
billion in assets, has invested in 39 companies doing business in Sudan,
none of them the nine companies from which UC has divested. He said he
could not estimate how much the system may need to divest under the
legislation because system officials are still trying to determine the
nature of the firms' Sudanese operations.
Last December,
the public employees pension system warned three European companies that
it would sell its hundreds of millions of dollars worth of shares if
they did not sever ties with the Sudanese government. "We're still
working with those companies" to achieve change, Pacheco said.
Phil Angelides,
the Democratic candidate for governor, who as state treasurer sits on
the public employees pension system board, has pushed for several years
for divestment in firms complicit in what the U.S. Congress has declared
genocide.
He praised the
signing of the Koretz bill, saying, "Californians have a moral
responsibility to help end the genocide in Sudan."
On Monday,
Schwarzenegger also signed a bill that would allow any Californian who
was a victim of the Armenian genocide or an heir or beneficiary of a
victim to sue financial institutions to recover assets stolen or lost
between 1890 and 1923. Under SB 1524 by Sen. Jackie Speier
(D-Hillsborough), Californians of Armenian descent would have through
2016 to file claims.
Schwarzenegger
signed another bill that would require insurance companies to disclose
how much money they are investing in low- and middle-income communities.
Some insurers had opposed the bill, as had the governor's insurance
advisor, Kathleen Webb, a former State Farm official. In May, Webb sent
a letter to the author, Assemblyman Mark Ridley-Thomas (D-Los Angeles),
stating her office's opposition.
"The question
is, what is there to hide?" Ridley-Thomas said. "Disclose what you're
doing: the good, the bad and the ugly."
nancy.vogel@latimes.com
Copyright 2006
Los Angeles Times