Published: June 25, 2008 10:00 am            

Pa. House targets pension assets tied to Iran, Sudan

HARRISBURG — Pennsylvania’s massive public-sector pension funds and the state treasurer would be forced to unload investments in foreign companies tied to Iran and Sudan under legislation that passed a key vote in the state House on Tuesday.

The measure would give the Treasury Department, Public School Employees’ Retirement System and State Employees’ Retirement System about a year and a half to sell the holdings, including mutual funds that invest in such companies.

The House voted 166-to-32 to approve an amendment known as the Protecting Pennsylvania’s Investments Act, but the underlying bill awaits a final vote.

The investment restriction would expire for Iran when it is no longer considered a state sponsor of terror, and for Sudan when genocide in the country has been over for at least a year.

Supporters said the measure is similar to actions already taken by other states.

“I believe the time has come for Pennsylvania to join with the other 18 states that have taken this courageous step to say no to companies that are propping up terrorist regimes,” said Rep. Josh Shapiro, D-Montgomery.

But opponents warned the change will cost the pension funds more than $40 million in transaction fees and other short-term expenses, and that it was not fair to people enrolled in the pension systems.

Rep. Steven Nickol, R-York, said the policy first should be adopted for the Treasury Department alone as a test case.

“It just doesn’t need to be this broad,” he said. “We don’t need to rope in the pension funds and do potentially untold damage.”

The House voted more narrowly to add language that forces taxpayers to make up for any resulting investment losses.

Earlier this year, state Treasurer Robin L. Wiessmann announced she would divest the state’s $1 million stake in China Petroleum and Chemical Corp. because of its operations in Sudan.

If the bill is approved on a final vote in the House, it would still require Senate approval. Nearly a year ago, the House overwhelmingly approved a similar — but Sudan-only — divestment law that has not advanced in the Senate.

        

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