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State retirement systems are going to have to get rid of any investments they have in some companies that do business in Sudan unless it costs too much.
Legislation signed Monday by Gov. Janet Napolitano requires divestment within 18 months of any interests in companies that are involved in petroleum, minerals extraction or power production in the country. Also forbidden would be investments in firms that provide military equipment unless it cannot be used for offensive purposes.
The aim is to withdraw any sort of funding for the Sudanese government for its actions against the residents of the Darfur region.
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But HB 2705 has a failsafe provision: The managers of the various funds do not have to comply if selling off the interests would harm the account by more than one-quarter of one percent.
Computing what that means in actual dollars is not that simple. Paul Matson, director of the Arizona State Retirement System, the largest of the four state programs, said the $28 billion is divided up among 35 different accounts, only eight of which have international holdings.
The largest of these, he said, has about $1.6 billion, which would set the cutoff for the maximum loss at $4 million; the smallest account of $150 million could sustain losses of $375,000.
Aside from being limited to the four types of business, a company would also have to be judged to be “complicit in the Darfur genocide.”
That is defined in the statute as including “preventing Darfur’s victimized population from communicating with each other,” “encouraging Sudanese citizens to speak out against an internationally approved security force for Darfur” or actively working to cover up human rights abuses.
Sinema also pointed out that the legislation first requires the fund managers to contact the affected companies, telling them to change their policies if they want to keep the state from dumping their stock.
“We want to reward good behavior,” she said.
A fact sheet prepared by legislative staffers said 22 companies have been specifically identified as “scrutinized companies” whose have the kind of investments which would force divestment.
All of the 89 other legislators signed on as cosponsors of the legislation.
In a prepared statement, Adam Sterling, director of the Sudan Divestment Task Force, said Arizona’s action will ‘send a strong message to the Sudanese government’s war machine and the foreign companies that fund it.”
Winston Smith wrote on Mar 12, 2008 7:21 AM:
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