Texas funds ID Sudan-linked holdings
01/08/2008
Though they are a tiny percentage, new law requires their divestment
By Peggy Fikac
The multibillion-dollar state pension funds for teachers and public employees have just a tiny percentage of their holdings -- albeit one amounting to millions of dollars -- invested in companies identified as doing business in Sudan.
The $114.8 billion Teacher Retirement System on Tuesday identified $62 million in six such companies. The $25 billion Employees Retirement System identified $3.5 million in one company.
Identification of the investments is a key step under a new state law on divestment of the pension funds from companies that do business in Sudan, a measure meant to exert pressure to stop atrocities in Darfur.
"The intent is to put public pressure on these companies, and I hope that it serves as a deterrent to any other companies that are inclined to do business in Sudan," said Sen. Rodney Ellis, D-Houston, author of the law.
'I'll continue to pray for him'
Although the percentage may be small, Ellis said, "It is significant in terms of the impact that it may have on the discussion in Sudan and around the globe. Because Texas is a major state and the home of the sitting president of the United States, I think it makes a very profound statement."
Debate continues, however, over the law and a similar push by Perry for the pension funds to divest from companies that do business in Iran.
"I think the bigger question is, what impact does it have on anything? Somebody else is buying the stock. If we got to the point where we are selling that stock, there's going to be a seller and a buyer. It's just symbolic, I guess, more than anything else," said ERS Chairman Bill Ceverha of Dallas.
"In general, I'm opposed to this whole divestment thing," Ceverha said. "It runs counter to our ... responsibility as trustees. It's kind of an open door. What's next?"
Ellis responded, "If Bill Ceverha wants to be on the wrong side of a battle to end an instance of genocide, I'll continue to pray for him. But in the meantime, I'm glad that the board decided to obey the law."
The retirement systems identified their holdings after state Comptroller Susan Combs last week, as required by law, identified companies with business operations in Sudan. The 27 she identified include a number of energy-related companies, such as oil companies.
Combs' list was compiled from lists prepared by the two entities: the Sudan Divestment Taskforce, a nonprofit organization that's a project of the Genocide intervention Network; and Institutional Shareholder Services, a for-profit research firm.
The Employees Retirement System identified an investment in Alstom, a power generation and rail transport company. The Teacher Retirement System identified investments in Alstom, Bharat Heavy Electricals Ltd.; Oil & Natural Gas Corp. Ltd; Petrochina Co. Ltd.; Sinopec Shanghai Petrochemical Co., and Wartsila Oyj.
Law allows for delay
The next step under the law is for the pension funds to notify the companies that they may become subject to divestment. The companies would have a chance to clarify their activities and would be encouraged to cease any active operations in Sudan. If they continued doing business, they could be subject to divestment. A delay is allowed in the law if the pension funds determine divestment would result in a specified loss in value.
The Teacher Retirement System has an investment policy that says if companies don't "remedy their ties to Iran and Sudan," divestment could occur if comparable investments offering similar quality, return and safety are available.
The Employees Retirement System board in November began planning to develop a divestment program and has another meeting in February.
"The law covers a long period of time. There's nothing that requires immediate action," Ceverha said.
Ellis said, "This is a first step, and it's a good step, because I plan to hold hearings as chair of the Senate Government Organization Committee if they don't move forward in a timely fashion."
Perry spokesman Robert Black said, "I think the will of the Legislature, and certainly the governor with his signature, is made clear: Divest."
