[Vision2020] PERSI Stays Invested in Sudan

[Tim Lohrmann]

July 24, 2007  Idaho pension fund won't divest from Sudan-related investments    By Rebecca Boone-AP
  
  Idaho's public pension fund managers will keep investing in companies that do business in Sudan, despite concerns from critics who fear the companies may be supporting genocide in the war-torn African country. 
   
  Idaho law requires that the Public Employee Retirement System of Idaho (PERSI) manages its money for financial, not political reasons, said Jody Olson, the fund's board chairman.   The fund has about $23 million invested in six companies that do business in Sudan, and if those companies were doing poorly, it could drop them from its portfolio, Olson said. Those holdings represent about 0.2 percent of the fund's total assets.      In the fiscal year ended June 30, PERSI's assets rose 20 percent to $11.46 billion from $9.59 billion a year ago. The funds including the Sudan companies are performing well.   Equity funds based in the United States showed a 19.4 percent gain, but the largest increases were in global equity funds - at more than 30 percent - and foreign equity - at more than 34 percent, PERSI board members learned Tuesday.      The pension fund managers can't simply eliminate the six companies from the funds, Olson said. Instead, they would have to select
 different, so-called Sudan-free funds that may not perform as well.      "Really it's a policy issue for us," Olson said. "We have been asked before to divest from companies that sell tobacco or liquor or that do business in North Korea, and as a policy we don't limit our managers on those guidelines. We give them financial benchmarks. I'm not sure that legally, we have any choice."      The PERSI board of directors reviewed a 648-report on the proposed divestiture before making the decision Tuesday. But the board denied a request from Dan Millenson, president of the Washington D.C.-based Sudan Divestment Task Force, who had asked to make a presentation before the final decision was made.      "It's a very, very sad decision and one that is out of step with what is happening in the rest of the country," said John Sullivan, a retired Boise attorney who represents the task force in Idaho. "We asked that they poll their membership on the matter, and they refused to do that as
 well. I'm hoping that they are going to reconsider their decision on this."      About 18 other state funds have decided to divest in some way from Sudan-related companies, Sullivan said, and 19 more are considering divestiture. The state's legal argument against divestiture is shaky, he said.      "Idaho is no different from the 18 other states that have crossed the same threshold in deciding whether or not it's legally and ethically and morally responsible to invest in a company that is documented to be supporting genocide in some way," Sullivan said.   There are roughly 115,000 public employees and 700 employers covered by the $11.5 billion PERSI public pension fund. Of those, only about a dozen people have written or called PERSI managers to urge divestiture of companies that do business in Sudan. Another six or so wrote or called to tell PERSI officials not to divest, Olson said.      Investment funds are somewhat self-policing by the analysts that create them, Olson
 said, because companies that make bad political decisions often perform poorly on the market, prompting fund managers to eliminate them from their portfolios. Besides, Olson said, divesting Idaho's relatively small investment in the companies may not make much difference.      "Take Petrochina - we own $19 million worth of stock in Petrochina and we're less than one-hundredth of one percent of the stockholders," Olson said. "If we decided to sell, that stock would be sold in five minutes."      However, PERSI officials are adjusting the state's 401(k) retirement plan to allow employees to select a special, Sudan-free investment fund, he said. The money that is available to cover trading fees and hire a fund manager will depend on how many people sign up for the new option, Olson said.      Critics say they don't want their money invested in companies whose payments to the Sudanese government may be financing the Darfur violence, which President George Bush has called
 genocide. U.S. sanctions on Sudan have kept out American companies since 1997.      If PERSI had divested, it would have had to sell shares in Petrochina; China Petroleum and Chemical; Mitsui Engineering and Ship Building; French turbine maker Alstom; Swedish energy exploration company Lundin and Malaysian oil and gas company Petronas. 

       
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