Schwarzenegger Backs Iran Divestment Bill

September 26, 2007 ( - California Governor Arnold Schwarzenegger vowed Tuesday at a United Nations meeting to sign a measure forcing the state's largest pension funds to drop investments in companies with energy or defense links to Iran.

In doing this, Schwarzenegger threw his weight behind a bill being propelled by Assemblyman Joel Anderson who serves on the legislative committee that reviews pension funds. The bill initially applied to all firms that do business in Iran, but was amended to avoid hurting companies that promote health, welfare and education.

According to a news report from the San Diego Union-Tribune, Schwarzenegger will allow the state to take a “powerful stand against terrorism.” The Governor’s promise comes four months after the Californian Assembly voted 68-0 to approve a bill requiring divestment (See  CA Assembly Gives Full Nod to Divestment Bill ).  

The California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) have warned they will resist a bill to dump holdings in foreign companies doing business in Iran. CalPERS said such legislation would limit the decisionmaking authority of the pension fund’s Board by prohibiting investments in Iran, and the CalSTRS board said that a broad divestment ban could hurt investment returns (See CalPERS Balks at Iran Bans and CalSTRS Opposes Broad Investment Bans).

CalPERS estimates it will cost $17 million in transaction fees to divest $2 billion from the 10 companies that do defense and energy business in Iran, according to the news report.