Call for Nevada PERS to Disclose Iranian Investments

May 18, 2009 ( - A Nevada state legislator is pressing a plan that would track the state pension fund's investments in Iran.

Assembly Speaker Barbara Buckley (D-Las Vegas), the Nevada Assembly’s top Democrat, according to the Associated Press, told Senate Finance Committee members that her AB493 would require reports from the PERS board about its investments in oil companies that conduct business in Iran.

Buckley listed federal objections to official Iran behavior including the country’s support for international terrorism, efforts to acquire nuclear weapons and “a dismal human rights record,” according to the AP.   “Iran remains an active state sponsor of terrorism, with the Islamic Revolutionary Guard and Ministry of Intelligence and Security directly involved in the planning of various terrorist acts,” Buckley said, according to the report.

The Nevada Constitution prevents the Legislature from interfering with PERS investments, but Buckley said her measure is about transparency.  “While this Legislature cannot interfere with investments undertaken by PERS, this does not mean PERS can’t be held to public account on the amount it invests in and profits from companies who actively do business with a country engaged in undermining military efforts and whose anti-American public statements are intended to incite anti-Americanism and derail the Middle East peace process,” Buckley said, according to the AP report.

Exclusive Benefit

PERS executive officer Dana Bilyeu told committee members that the constitution “requires the PERS board to invest for the exclusive financial benefit of the members and beneficiaries of the fund.”

“That prevents the consideration of any social issues in the investment process itself. We must only, only look to the financial interests of members,” Bilyeu said, adding that PERS will provide what information it can on Iran-related oil investments, but that such information isn’t always readily available.   The AP reported that Bilyeu said after the hearing that it would cost the PERS retirement system $21 million to divest from such companies.

PERS investment officer Ken Lambert said oil companies linked to Iran make up less than 1%, or $167 million, of the system’s $18 billion retirement portfolio, according to the report. He called the measure a “worthy issue, but difficult” because of the difficulty in identifying Iran-linked activities within each corporation.

Other Legislatures

The U. S. House Financial Services Committee last month approved legislation enabling state and local governments to divest their public pension funds from companies with ties to Iran’s energy sector.   H.R. 1327, the Iran Sanctions Enabling Act of 2009, removes legal barriers to allow mutual fund and corporate pension fund managers to cut ties with these companies, according to a press release (see  House Committee Approves Iran Divestment Measure ).  In December, Texas Teacher Retirement System trustees approved an Iran/Sudan-linked divestiture policy that calls for dropping investments only if “comparable investments offering similar quality, return and safety are available.” (SeeTexas Fund Divestiture Policy Includes Caveat).

Similar measures in other states have faced opposition from those saying pension funds should not get into politics and must invest for the sole purpose of generating good returns (SeeID Governor Opposes Pension Fund’s Sudan Divestmentand TX Gov’s Iran Divestment Plan Encounters Political Headwinds ).

In July 2007, the board that manages Idaho’s public pension funds said it will keep its investments in six companies that do business with Sudan, saying it chooses investments based on financial success, not politics (See Idaho’s Pension System Refuses to Divest $23M in Sudan-Linked Cos. ).