On Thursday Governor Jim Gibbons sent a letter to the Public Employees’ Retirement System (PERS) of Nevada administrators requesting that PERS divest itself of funds held in companies that provide economic support to the government of Sudan in its genocide campaign against the people of Darfur.
The $19.5 billion system has already seen a significant reduction in those investments, according to the letter. The governor cited an April 2007 report in the Las Vegas Review-Journal that listed PERS investments of $54 million in Schlumberger, $3 million in Rolls Royce, $1.1 million in Alstom, and $214,000 in Lundin Petroleum. While this represented less than one-quarter of 1% of the PERS portfolio, since that time the governor notes that Rolls Royce has pulled out of Sudan, and Schlumberger has been removed by the “worst offenders” list because they have taken a strong humanitarian role in the region. Both moves were attributed by the governor to the economic pressures of the divestment move.
As a consequence, Nevada PERS now has less than $1.5 million invested in two companies identified as ”worst offenders” by two anti-genocide groups; Alstom, a French engineering and construction company, and Lundin Petroleum, a Swedish company involved in exploratory oil drilling in Sudan, according to the Associated Press.
”These economic benefits help fund the genocide in Africa, which is why the United States government prohibits U.S. companies from operating in the Sudan,” Gibbons wrote in the letter, which was co-signed by Senate Majority Leader Bill Raggio, R-Reno, and Assembly Speaker Barbara Buckley, D-Las Vegas.
American companies have for some time now been prohibited by law from operating in the Sudan (see Doing the Right Thing? ). In 1997, Congress passed sanctions that prevented U.S. companies from doing business in Sudan because of its support of terrorism. However, while federal law prohibits U.S. firms from doing business in Sudan, no such restrictions apply to foreign firms. State pension funds are permitted to invest in foreign firms, subject only to limits set by state legislatures.
A Complicated Affair
In April, Nevada PERS director Dana Bilyeu said that divesting from Sudan would be a complicated affair, since there were competing lists of which companies should be divested from, according to the AP (the list cited by the governor in his letter were drawn up by the Sudan Divestment Task Force and Genocide Intervention Network). The Sudan Divestment Task Force, in addition to compiling lists of firms that ostensibly warrant scrutiny, has actively worked with state legislatures to develop divestiture legislation (the organization has developed a ” Task Force Model for Targeted Divestment “, and is also tracking their progress online via their Targeted Sudan Divestment Legislative Chart). They have also developed a templated proposal for divestment that can be customized.
Generally speaking, public funds have resisted such legislative meddling, warning of the impact on investment returns and the costs of a forced divestment (see CalSTRS Opposes Broad Investment Bans , Public Pension Fund Divestment: A Fiduciary Risk? ), and many question whether such undertakings have any impact (see Doing the Right Thing?: Assessing Current Risks ).
Resistance is Futile?
That resistance, however, doesn't appear to be slowing the legislative fervor behind promoting such initiatives, which have lately broadened to include concerns about investments tied to Iran. On Friday, Florida Governor Charlie Crist signed a bill Friday ordering that state's pension fund to end all investment in Sudan and Iran's energy sector (see FL Pension Funds Join the Divestment Bandwagon ), and on Thursday Ohio's five public pension funds took steps to undertake divestment of investments with business links in the Sudan and Iran - just ahead of legislation that, if passed, would have made that action mandatory (see Ohio Pension Funds to Dump Shares in Iran and Sudan-linked Companies ). This week the California Assembly passed a measure that would force the state's pension funds to divest their holdings in Iran-linked companies, pushing along legislation that has been criticized by the California Public Employees' Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) as too sweeping (see Calif. Assembly Gives Full Nod to Iran Divestment Bill ).
Illinois was the first state to pass legislation requiring public pension funds to divest from Sudan (See Illinois Measure Bars Sudan Investments ), with Maine, Connecticut, Oregon, and New Jersey later following suit. Additionally, California, Massachusetts, New York, Vermont, Indiana, Maryland, Colorado, Rhode Island, and Los Angeles either have passed or are considering divestiture legislation.