The state Senate”™s deputy minority leader is leading a push in Albany to divest New York state pension fund investments in companies that do business in terrorism-sponsoring nations.
“We”™re sending men and women overseas to fight the war on terror,” said Sen. Jeffrey D. Klein of the 34th District. “We”™re not using the most important weapon, I think, in our arsenal, which is financial resources.”
“This is something that”™s got to be done quickly,” he said in an interview.
The Democrat was referring to a bill, adopted by the Senate and introduced in the Assembly in June, requiring the state comptroller, as sole trustee of New York”™s $140.45 billion pension fund, to refrain from investing in or divest from companies that do business in or with nations identified as state sponsors of international terrorism. The State Department lists those as Iran, Sudan, Syria, North Korea and Cuba.
“I hope that that”™s something that will be taken up in September,” when the state Legislature is back in session in Albany, Klein said. “I think we should be moving a little quicker on this issue.”
Klein in June released a report, Terrorist Treasury: How New York”™s Public Pension Fund Invests in Our Enemies, that helped spur lawmakers to action. With assistance from Global Securities Advisory Group Inc., a research and consulting firm in Washington, D.C., that specializes in assessing and managing risk associated with corporate ties to countries of security concern, terrorism or weapons proliferation, Klein”™s staff analyzed the comptroller”™s 2006 comprehensive final annual report on the state”™s Common Retirement Fund. One of the three largest public pension funds in the country, it has 995,536 members, including 653,291 active members and 342,245 beneficiaries and retirees, according to Klein.
Analysts found that $12 billion of the state”™s total $75 billion in equity assets, or 16 percent, are invested in companies that do business with nations that sponsor terrorism.  They identified 235 state pension fund holdings in those companies.
Klein said the state should use its shareholder power “to demand a fiduciary and moral obligation from our corporate partners.”
In a survey update in late July, Klein gave a breakdown of the state”™s holdings for the four chief terror-supporting nations:
Ӣ Iran Р204 investments that amount to approximately $10.4 billion, or 14 percent of the total portfolio
”¢ North Korea ”“ 30 holdings amounting to approximately $934 million, or 1 percent of the total
”¢ Sudan ”“ 11 investments amounting to about $8.4 billion, or 11 percent
”¢ Syria ”“ 133 holdings that amount to approximately $9 billion, or 12 percent of the state portfolio.
Â
Klein noted the breakdown exceeded the number of holdings and the $12 billion in equity assets cited in his original report because some companies in which the state has invested are active in more than one terrorism-sponsoring nation.
“The federal government actually bans U.S. companies from doing business in those four nations,” he said. “A lot of them have gotten around that by doing that investment through foreign subsidiaries.”
Of the corporations headquartered in the metropolitan area, “I don”™t think we were able to find anyone directly” from this region linked to financial dealings in the blacklisted countries.
Jim Fuchs, a spokesman for state Comptroller Thomas P. DiNapoli the comptroller, said, “Our general policy is engagement” with companies to point out the bad investment risk of doing business in countries such as Sudan, “rather than straight divestment.”
Klein said he wants the comptroller to “use his discretion” in attempting to convince companies to change their business practices and in determining which investments should be divested.
“Selling soda (in Iran) is a little different than developing oil and gas resources” there, Klein said. “I understand that any manager of a pension fund has a fiduciary duty to the pensioners. I”™m not expecting these pension funds to bankrupt themselves.”
Klein said he has asked New York labor unions to let him analyze their pension fund investments too for links to terrorism-sponsoring nations.
“I think you”™ll see a cottage industry that develops of terror-free investments,” he said.
Â
Â
