Lawmakers in Florida push to divest from Sudan, Iran
In an effort lawmakers are comparing to the boycott that helped end apartheid in South Africa, Florida could shed billions in state investments in companies that do business with Iran and Sudan.
Bills moving in both chambers of the Legislature would require the state board that administers pension plans for state workers to sell stock in companies that support the governments of either nation. The proposal is part of a national movement to divert U.S. dollars away from regimes that threaten the United States or, in Sudan's case, its own people.
''We owe it to our service men and women to make sure they have a supportive nation at home,'' said bill sponsor Rep. Ari Porth, a Coral Springs Democrat. ``No Florida worker's retirement should be supported by terrorists.''
The legislation would affect two funds whose holdings total $130 billion: the state pension plan, which offers defined benefits to workers, and the investment plan, which allows employees to choose where they put their money. The bills would rid the funds of a few dozen foreign companies that pump money, mostly from oil, into the Sudanese and Iranian governments. A legisalative report mentions, among the targeted companies, Korean giant LG, Royal Dutch Shell, Rolls Royce and Schlumberger.
President Bush has called the ethnic conflict in the Darfur region of Sudan genocide. It has left hundreds of thousands dead and [has] created 2.5 million refugees. Iran is considered a state sponsor of terrorism by the U.S. State Department [as is Sudan - EJM], and has said [that] it is developing nuclear weapons.
The socially responsible investing movement aims to improve on tactics used in the 1980s and '90s against South Africa, by honing in on businesses that directly aid the government and avoiding companies that improve citizens' lives. Supported by national anti-genocide groups, similar legislation has passed in eight states.
Sen. Ted Deutch, a Boca Raton Democrat, said [that] he has worked to limit the bill's impact on the state pension by establishing strict criteria for companies and countries. The legislation has brought together efforts to fight terrorism and further humanitarianism.
''These two countries fall into a special category of evil,'' Deutch said. ``There is an opportunity to do something here that is absolutely good for this state and good for America.''
But the State Board of Administration, which runs the funds, said [that] the proposal could cause them to sell off up to $9.5 billion in holdings, and predicted [that] it would cost millions for the transactions and manpower.
The last time [that] Florida ventured into socially conscious investing was under former Gov. Lawton Chiles, who banished tobacco companies from the state's holdings in 1997. The state board estimated [that] that effort cost $482 million in lost investment and transaction charges.
Board spokesman Michael McCauley would not comment on the bills. He said [that] it's against board policy to discuss pending legislation.
Supporters of the bills said [that] the board has overestimated their effect on the pension fund. Rep. Elaine Schwartz, who worked on the Sudan measure in the House bill, said [that] divestiture won't hurt the pension because of the national movement against companies that do business with U.S. enemies.
''The key is [that] this will make pretty bad investments if everyone's divesting of them,'' Schwartz said.
Deutch said [that] he has worked to assure the board his bill would not open the floodgates to meddling lawmakers who worry about a host of political and social concerns.
Sen. Steve Oelrich, a Cross Creek Republican, questioned the legislation's selectivity when it went before a Senate committee on Wednesday. He asked why the bill didn't target other dictatorial regimes and offered an amendment to include North Korea, Syria, Venezuela and Cuba.
''I think [that] if we're going to get into this business, we ought to really get into this business,'' Oelrich said. Senators convinced him to withdraw the amendment to keep the bill from failing.
The legislation would work like this: The board would have to identify companies that meet the bill's criteria for supporting Iran or Sudan within 90 days, and inform them that the state may sell their stock, if they don't change business practices. If they stick to the status quo, the board must sell off the stock within a year. For mutual and hedge funds that hold the targeted companies, the board would only be required to urge the funds to divest themselves of those firms.
The proposal would also require the state board to report its holdings publicly every quarter.
Rep. Joe Gibbons, a Hallandale Beach Democrat, said [that] the move reminded him of the sanctions that helped bring down apartheid, and [that] he wasn't worried about social causes dictating the state's finances.
''If it's OK, why hide it?'' Gibbons asked. ``We know now how economics plays such a big part in politics.''
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