PERSI Sudan divestiture legislation planned

Idaho’s public-employee retirement plan would be restricted from investing in companies that do business in Sudan under a law to be proposed next year in the Idaho Legislature.

The Idaho Sudan Divestment Task Force in a Sept. 28 news conference announced plans to propose legislation similar to that passed in 13 states. The group includes church, human rights and community organizations.

The planned Idaho legislation – similar to a proposal presented in February during the 2007 Idaho Legislature session – would restrict the Public Employee Retirement System of Idaho from investing in “the highest-offending companies that are fueling Sudan’s genocide,” according to a statement issued by the task force, United Vision for Idaho, Trillium Asset Management and the National Sudan Divestment Task Force.

The offenders are about two dozen foreign companies that refuse to change their practices, the groups said.
Trillium does not hold companies doing business in Sudan, and has a policy saying the firm will not invest in companies that have strategic interests in Sudan or that are targeted for divestment, Lisa Leff, vice president and portfolio manager in Boise, said in an interview.
Lauren McLean, assistant portfolio manager with Trillium in Boise, said in the statement that the mutual funds PERSI holds in its defined-benefit plans are invested in some of the highest-offending companies doing business in Sudan.
She commended PERSI’s plan to offer Sudan-free funds to a smaller group of beneficiaries who have defined-contribution – 401(k) – plans starting Oct. 12. But the task force believes all beneficiaries should be protected from the offending companies even though PERSI officials have said they cannot divest unless the Idaho Legislature directs the organization to do so, she said.
PERSI, in its release announcing the new Sudan-free 401(k) option, said all eight reports submitted to its board of directors since February show PERSI cannot divest its members’ retirement money for legal and fiduciary reasons.
“PERSI’s only mission is to provide a secure retirement for its members, the public employees of Idaho,” Board Chairman Jody Olson said in a statement.
“As individuals we feel deeply sympathetic for the people of Darfur, but as an organization with legal mandates and fiduciary responsibilities, we must stay true to our mission. The new 401(k) option will allow individuals to invest in a Sudan-free vehicle if they so choose.”
The Idaho Sudan Divestment Task Force said 13 states passed the model legislation and 20 states divested - producing positive responses from some corporations.
PERSI Executive Director Alan Winkle said divestment legislation varies. Oregon only allows divestment if returns are affected positively, and some states have customized model legislation to meet their own needs, he said.
“We would have to see what the legislation really entails or contemplates,” he said. The PERSI board may have to adjust the fund’s bylaws depending on the complexity of legislation passed, he said.
At the start of its fiscal year July 1, PERSI had just over $25 million invested in six companies on the list of heaviest violators, Winkle said.
PERSI investment managers view the six as strong performers, so divesting them and buying others could affect earnings, he said.
The entire fund on July 1 contained about $11.5 billion, and served nearly 115,000 covered individuals and 700 employers, Winkle said.
Leff said paying trading costs, finding buyers for the divested stock, and finding different emerging-market companies to replace them with are much smaller challenges than determining which companies have strategic involvement with the Sudanese government where profits are flowing to the weapons trade.
“About 75 percent of the money the Sudanese government spends on weapons comes from oil profits,” she contended, “the majority of that coming from Chinese buyers.”
Six European companies were on the list of offenders when the divestment movement took off in January, Leff said.