State pension fund backs Iran divestment

DENVER c Colorado’s largest public pension fund will divest itself of investments in companies that have invested at least $20 million in Iran’s energy sector, Gov. Bill Ritter said Tuesday.

The board of the Public Employees Retirement Association approved the new policy unanimously Friday, and Ritter announced it Tuesday at a news conference with Republican lawmakers who had planned to require the divestment through legislation this year.

The Public Employees’ Retirement Association, or PERA, handles the retirement funds for more than 400,000 current and former state and municipal workers.

With the announcement, Colorado joins at least 10 other states that have introduced or passed legislation to divest state funds from companies doing business with Iran. PERA Director Meredith Williams estimated the state has several hundred million dollars invested in foreign companies that have energy investments in Iran.

The agreement is not as restrictive as a bill that passed last year that requires PERA to divest from all companies doing business in Sudan, where genocide has occurred.

While Friday’s agreement puts a moratorium on any new investments in Iranian businesses, the existing investments it targets are just those by large investors specifically involved in the energy sector — a move that mirrors resolutions from other states, Williams said. It allows the PERA board to vote on each investment to determine whether it should be dumped.

But Ritter hinted that political pressure is likely to ensure that big holdings tied to Iran will be dispatched soon.

“We cannot continue to economically support a country that is the No. 1 supporter of terrorism worldwide and is actively smuggling (improvised explosive devices) and other weapons into Iraq, putting our troops at risk,” the Democratic governor said.

The divestiture move began in July, when Sen. Josh Penry, R-Fruita, and Rep. Frank McNulty, R-Highlands Ranch, announced they would run a bill to do so in 2008. Later last year, Ritter pulled them together with Democratic legislators, staff members from his office, Williams and the Jewish Community Relations Council and worked out a five-phase plan to allow the state to divest without hurting PERA’s investment returns.

Under that plan, PERA will identify public companies that have invested $20 million in any year of the past decade in the Iranian energy sector or are engaged in business with a terrorist organization or a company facilitating Iranian acquisition of military equipment. The staff then will question company officials on their investments and enact a 90-day moratorium on direct investments with those companies.

If those companies have not taken sufficient steps to minimize the risk that those investments will return cash to PERA, board members will look either at affecting those companies’ policies or at acquiring other investments that provide similar diversity and return expectations. Williams will report quarterly on all divestment activity, beginning March 21.

Williams acknowledged that the policy could require PERA to keep some investments if it can’t find a comparable return.

The full list of its Iranian investments is unknown at the moment, but he said that he expects Shell and Total oil companies will be the biggest companies identified by the new policy.

Penry said he believes that while Colorado’s move may not have a major financial impact on the Iranian government, collective action from across the country could have more serious repercussions for Iran.

“Public pensions are an 800-pound gorilla in the investment world, and it’s time for them to start throwing that weight around,” he said.

CONTACT THE WRITER: (303) 837-0613 or ed.sealover@gazette.com