Pension divestment effort gets complicated
Governor Deval Patrick's attempt to pull state pension investments out of companies that do business in Sudan, which has won support from the state Senate, is being complicated by legislative initiatives to broaden the list of countries included in an investment ban.
A bill filed by Representative Kevin J. Murphy, chairman of the Joint Committee on Higher Education, would require Massachusetts to divest from companies doing business with or operating in "state sponsors of terrorism," specifically Iran, North Korea, Syria, and Sudan. It has the support of 25 legislators.
"These countries are economically unstable . . . and if we invest in them, their economy could fall apart," he said. "Therefore, our pension investment would be gone."
Another bill backed by 50 lawmakers in both the House and Senate would require that pension money be pulled out of companies that are doing business in Iran.
The new bills have solidified opposition to all divestment initiatives by the state's pension manager, Michael Travaglini, because they would dramatically expand the amount of money that would have to be shifted. Divesting from Sudan would affect only about $80 million to $100 million, but pulling money out of Iran-related firms alone would affect $1.1 billion in state investments, Travaglini said. There is $50 billion in the pension fund
"The rule of thumb for investments is you sell the stocks that aren't performing well and run with the funds that are," said Travaglini, executive director of the Pensions Reserves Investment Management Board, a panel chaired by Treasurer Timothy P. Cahill. "This type of legislation runs counter to that. There's a very real potential to negatively impact the investment returns of the pension funds."
When the governor publicly urged lawmakers in March to get behind Sudan divestment, Travaglini struck a less forceful tone because the amount of money involved was small, although he did warn that it would set a bad precedent. The Senate passed the Sudan bill that Patrick supported this summer. The House has yet to pass the measure.
A spokesman for Patrick's office said the governor has not seen Murphy's bill and declined to comment.
Patrick has a personal interest in the humanitarian crisis in Sudan. He spent a year working on a United Nations youth training project in the country's Darfur region, which the United States has said is the scene of a genocidal campaign against local villagers that has taken hundreds of thousands of lives.
Daniel Millenson, national advocacy director for the Sudan Divestment Task Force, said his organization opposes any attempt to broaden the bill beyond Sudan. In Sudan, foreign investment pays for genocide, he said.
The other divestment bills broaden the agenda beyond genocide to target other countries that the United States has branded as sponsors of terror, especially Iran. Similar measures have been filed in California, New Jersey, Pennsylvania, Oklahoma, and Georgia. Last year, the Missouri Investment Trust, which contains money from a special tax on the earnings of entertainers and athletes, adopted a terror-free strategy for $8 million of its $32 million fund, which has outperformed the fund's benchmark by 4.14 percent.
Christopher Holton - director of a terror states divestment initiative at the Center for Security Policy, a conservative organization headquartered in Washington - praised Murphy's bill.
"I think this is the most thorough piece of legislation that I've come across in doing this," said Holton, who said he is working on similar efforts in 18 states. "This is a moral issue. This is not a foreign policy issue. Whether you're opposed to the Iraq war or for the Iraq war . . . the fact is, we have no reason to be sending our money to the countries that are killing our troops every day."
April Simpson can be reached at asimpson@globe.com.
