Cuba Sponsors Terrorism:

The U.S. Secretary of State, in a new screening resource for investors, identifies Cuba as one of five countries presently sponsoring terrorism. The list is completed by Iran, North Korea, Sudan and Syria, which are witnessing the divestment of companies doing business within their borders. Recently the Securities Exchange Commission published a list of 22 international companies with ties to Cuba. Several are the usual suspects (energy companies) that appear on Sudan and Iran divestment lists. Lists of companies with business activities in Iran, North Korea, Sudan and Syria, were also made publicly available.

But Cuba?

Preemptive Divestment Attack

New York state Comptroller, Thomas DiNapoli, has begun a mission to rid the state's pension plans of companies with ties to Sudan. While most trustees have preferred to wait for state legislation requiring divestiture, Thomas DiNapoli has taken a different route. His plan involves working alongside the Sudan Divestment Task Force and state legislators to determine portfolio companies with "harmful" Sudanese ties. Before divesting from Sudan-linked companies, the companies will be asked to suspend business activity in Sudan or increase humanitarian aid and relief funding. Failing to do so will result in divestment. DiNapoli's unconventional strategy allows him to work alongside lawmakers giving him an uncommon level of control not available to most trustees facing divestment requirements.

Chain Reaction

Recent weeks have brought a flurry of divestiture activity. State legislators from across the nation have frantically constructed divestiture proposals. Last week the California Assembly voted unanimously to restrict investment in Iran-linked companies. The proposal requires California Senate approval before being enacted. This proposal comes shortly after the Board of California's largest pension fund, CalPERS, voted to oppose state legislation aimed at forced divestiture.

Trustees of the Arkansas Teachers' Fund have also recently taken a strong stance in the face of targeted divestiture. A push for Sudan divestiture was unsuccessful with trustees of the Fund. Although the Fund holds only one company with ties to Sudan, divestment will not be carried out.

It appears state legislators are locked in a foot race, unwilling to be the last to propose statewide divestiture plans.

Half Measure?

A few brief comments before the link:

1. Why are the votes on Iran and Sudan so frequently linked together? Is it purely convenience? They are two completely separate issues which should be addressed individually.

2. If one of the countries begins to act "properly", does the legislation have to be completely rewritten and re-passed?

3. What sense does it make to "half-divest"? What point does that make? It would seem this approach would dilute the message/punishment by more than half?

Ohio Pension Funds to Dump Shares in Iran and Sudan-linked Companies

June 9, 2007 (PLANSPONSOR.com) - Ohio’s five public pension funds will drop half of their investments in companies that have business links to Sudan and Iran, making it the next in swelling list of states adopting such measures, the Associated Press reported.

The bill passed on Thursday, the deadline for the pension systems to respond to one lawmaker's offer to kill legislation that would make such divestment mandatory if the systems agreed to give up half of their investments in such companies. The five systems will divest half of their investments by the end of the year, the AP reported.

Pressing From a Different Angle

A group named Social(k) is applying pressure on Fidelity to divest itself of investments linked to Sudan. They are encouraging individual investors, and those whose 401(k) plans invest in Fidelity funds, to contact the mutual fund giant and demand they divest from any company whose activities might support the Sudanese government. In addition to that, Social(k) will publish the names of companies whose 401(k) plans have substantial assets invested by Fidelity. Verizon, Ford Motor and Eastman Kodak count themselves among the twenty-nine "major" companies on the list.

It will be interesting to see how the various targets of the pressure will react to this novel approach. Fidelity has declared their opposition to blanket divestitures. Individual participants are unlikely to have an immediate impact, leaving Plan Sponsors as the logical target of this approach.

News Articles [PLANSPONSOR.com] - Social(k) Calling for Retirement Plan Pressure on Fidelity: "Social(k) Calling for Retirement Plan Pressure on Fidelity
May 17, 2007 (PLANSPONSOR.com) – If your retirement plan has investments at Fidelity, you may soon be asked to help prod the mutual fund giant to divest itself of investments linked to Sudan.

Up till now, the call to pull pension fund investments has largely been limited to public pension plans, and at the instigation of lawmakers. However, Springfield, Massachusetts-based Social(k) - a socially-responsive 401(k) platform provider - has teamed up with an organization calling itself Fidelity Out of Sudan to…well, to help prod the mutual fund giant to divest itself of those investments."

Anti Terror Divestment - Fortune Magazine

This seems like a good post to start with. It gives an idea of the scope of the divestiture movement and a hint into its complexity.

(Fortune Magazine) -- On its face, a drive to force public pension funds to halt investment in companies operating in countries believed to be sponsors of terrorism - primarily Iran - is in full swing. Presidential candidates John McCain and Mitt Romney support it. Legislation is being introduced in Congress and five states, including California. And on March 12, the American Israel Public Affairs Committee, the powerful pro-Israel lobby known as AIPAC, launched similar campaigns in ten states.

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