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I don’t mind that some business group wants to sue over the state’s Sudan divestment bill. It’s still a free country.
A U.S. business trade group said on Wednesday it plans to file a lawsuit on Monday challenging Illinois’ law barring state investments in companies that do business with Sudan.The National Foreign Trade Council, a group representing more than 300 companies that trade and invest overseas, said the lawsuit will be filed in U.S. District Court in Chicago along with a motion asking the court to stop the state from implementing the ban during the course of the lawsuit. […]
The law, the first to take effect in the United States, prohibits the state from investing in Sudan government bonds and bans investments of state and pension funds in companies that do business in or with Sudan. Pension funds were given 18 months to divest about $1 billion invested in such companies. The law took effect in late January.
But I’m not all that comfortable with the state’s pension boards joining the lawsuit.
Joining the council in the lawsuit will be five boards of Illinois public employee pension funds, according to a news advisory.
Today’s question is, do you think the Sudan divestment bill was a mistake or good public policy? Bonus points for commenting on the pension boards joining the lawsuit.
Divestment proponents have a website here. The Sun-Times had a good story on the issue last month.
posted by Rich Miller
Thursday, Aug 3, 06 @ 7:32 am
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Why do the Illinois public pension funds feel they need to invest in companies that partake in genocide?
Comment by Speedy Thursday, Aug 3, 06 @ 8:04 am
If Sudan is such a roaring financial success that pension funds feel the need to invest there, why is Sudan as a country such a mess? Seems there are many better places to put people’s money. Does not seem like a fight worth the legal fees.
Comment by zatoichi Thursday, Aug 3, 06 @ 8:39 am
The Illinois public pension plans are NOT investing in Sudan. They do not support genocide.They do invest in domestic and foreign corporations. The current Illinois law is written so broadly that these plans can not invest in Coca Cola; PepsiCola; Xerox; Catepilar; Boeing and dozens of other American firms.
Comment by Adam Thursday, Aug 3, 06 @ 9:03 am
Adam - if the companies you list are doing business with the Sudanese government (or internally with locals in Sudan, and are being taxed by the Sudanese government), they are underwriting genocidial governments.
Illinois taxpayers should neither be supporting not benefitting from that.
We don’t allow people to be exploited here in Illinois, why should we expect it overseas?
Comment by Speedy Thursday, Aug 3, 06 @ 9:21 am
WOW! It is like magic! All we have to do to solve world problems is just make sure we don’t spend any money so that those evil people will stop their evil ways! Then we all turn into Care Bears!
The point of the pension board is to invest our money wisely. That means earn the most for our money. Pretending that it should only be used by people we decide are “good” is niave. The state pension boards are made up of people making decisions with real consequences, not a bunch of ignorant politicians spreading conscience salve. That is why they aren’t going along.
Darfur is a real problem with real people being killed by real Muslims. They are trying to establish Sharia for Mohammed. If you want to believe they will stop killing others because there is some politicians in Illinois who want the international market not to invest in anything that might benefit them, then you are out of your freaking mind.
But I’m sure that all I’ll read throughout the day is bloggers saying that we can end evil by doing this. And some will call those who sneer at this as supporting those evil people. My advice to those people is simple; if it sounds easy, then it will probably NOT work.
Comment by VanillaMan Thursday, Aug 3, 06 @ 9:32 am
It worked in South Africa.
Comment by Greg Thursday, Aug 3, 06 @ 9:42 am
Speedy: I need to add to that list: Kodak; Verizon; Bayer; Shell oil; Marathon Oil; Toyota; Unilever; Mitsubishi; Volvo and Volkswagen. Again, no one supports genocide or Sudan. But will selling stocks of thses companies save one life?
Greg: South Africa worked. But that was during the Cold War when a pro-western government with an industrialized society was being pressured by the West. They were not about to turn to the Communists. Sudan is an agrarian society. It is not pro-western. Everything it needs can be and will be supplied by Communist China.
Comment by Adam Thursday, Aug 3, 06 @ 9:55 am
As leaders in the world we have failed to protect hundreds of thousands of people from genocide the Sudan. It is one of the biggest moral lapses in recent memory. Illinois and our country should not be supporting anything that is not directly aimed and stopping the genocide.
Comment by HANKSTER Thursday, Aug 3, 06 @ 10:08 am
The pension boards primary duty is to wisely invest the money for the greatest return. By limiting the companies in which the money can be invested, they are shirking their duty.
I do not see the connection between my pension funds and the problems in Africa.
Comment by They have My Pension Thursday, Aug 3, 06 @ 10:56 am
My understanding is that the law is written so poorly that if a pension fund owns mutual fund shares of stock, and the mutual fund owns stock in a holding company, which owns stock in a company that has a contract with, an entity that does business in Sudan, then the pension fund is in violation of the law. The problem is that this is impossible to track and monitor.
Comment by one of the 35 Thursday, Aug 3, 06 @ 11:11 am
Shouldn’t Condi Rice handle telling us how to deal with foreign countries?
Who makes foreign policy — A state pension board or the United States Sec. of State?
Face it: Bush/Cheney won [or at least were declared victors]. They get to decide foreign policy.
Don’t like it? Work harder in 2008. Or write letters. Or hold protests to get somebody’s attention. Or make individual choices on investment. But the State of Illinois has no business making that kind of decision.
Comment by Skeeter Thursday, Aug 3, 06 @ 11:13 am
Senator Collins passed through this bill with good intentions but rotten intelligence. This bill would forbid public pension funds from investing in a mutual fund if even one multinational corporation that does business in the Sudan is a holding. Realize that this wipes out virtually all mutual funds out there. Smaller municipal police and firefighter pension funds cannot directly invest in individual stocks. These same suburban pension funds cannot invest in any newly created “Sudan-Free” mutual fund because they are restricted to investments in funds that have been in existence for at least five years. Would someone please explain to me why police and firefighter pension funds are being forced to invest in inferior, lower-yield products because of the bad acts of a third-world dictator?
Corrective legislation is needed. Now.
Comment by Jake from Elwood Thursday, Aug 3, 06 @ 11:51 am
They have my pension,
Get an IRA…
Comment by Greg Thursday, Aug 3, 06 @ 12:45 pm
This is a bit of a stretch on the part of Illinois. I’m sure that there are more pressing legal needs facing the state. Unless the pensions are directly investing in companies that are based out of Sudan, then its hard not to have some ties in that nation. Its a global economy at some point by hook or crook we have all probably help support genocide in Sudan, Rawanda. We probably more responsible for bad acts in our own nation versus that of a two-bit dictator in Africa. Because several companies are going to have some shop set up there. Besides it is not in the Constitutional scope of the State of Illinois to be making foreign policy decisions. Again the intentions are noble, but where does “one” begin and end using this logic. Using some of the similar logic maybe we should pull money that may be tied to German companies because of the Holocaust, and pull money from Japanese companies as well.
Comment by SouthernILRepub Thursday, Aug 3, 06 @ 12:50 pm
I didn’t work in South Africa and it will not work in the Sudan. This is about pandering to the African-American politicians and the lakefront liberals. I didn’t hear of any effort by them tostop investing in French companies,when they did business with Iraq, while thousands were killed there. Pathetic!
Comment by Lee Thursday, Aug 3, 06 @ 2:01 pm
Lee- You really show how uneducated you are on the issue. The conflict in the Sudan has nothing to do with race, it is about religion. In the Sudan, an Arab nation, Christians are being slaughtered by Muslims. It is a human rights issue, thats why both parties have stood up against it (not enough yet though). Thats whats going on so stop with your angry political attacks and learn whats really going on.
Comment by Big Mike Thursday, Aug 3, 06 @ 3:30 pm
More than $2 million dollars (probably more) has been spent so far to comply with this law. The systems may have to sell some investments at a loss. In addition, full divestment will cost the State of Illinos millions (maybe billions) more in what they will owe the pension systems since they have to make up any losses. So underfunding of the pension systems will widen. Return on investment losses will happen as some investments to be sold return 28% and cannot be replaced. System managers have a fiduciary responsiblity to realize the best capital gain, by law. Not only will it cost the State it will cost the taxpayers more also. It may be penalizing a home state based companies like Catipillar and Boeing who just happened to being doing business in Sudan probably for years before genocide started. The pension systems do not invest directly in the government of Sudan that is the cause of the problem. Boycotting stock companies may not work like a consumer boycott. There are others that will buy the stock once sold especially Cat that is hot right now. So what is gained and how do we ever know if this scheme worked? There was no reporting requirement in the law.
Comment by Pension Nut Thursday, Aug 3, 06 @ 4:27 pm
For the record, the State-supported pension systems (it’s factually incorrect to call them State-funded in view of the fact that State funding comprises less than 25% of their revenues) are NOT involved in this litigation. The pension fund plaintiffs have not been publicly identified as of this writing.
A similar lawsuit dealing with a Burma divestiture law enacted in another state was successful.
This is a well-intentioned bad law. States don’t enact foreign policy as my friends have pointed out above. As far as the pension boards, whoever they are, kudos to them. They are bravely upholding their first and foremost fiduciary obligation, to act for the exclusive benefit of the members and retirees of their fund despite the potential for legislative retalition, by seeking to have this law overturned.
Comment by NumbersGuy Thursday, Aug 3, 06 @ 6:54 pm