Bucks Passed 

Idaho's money, Sudan's genocide

Imagine for a moment that you are the custodian of, say, $11 billion in public employee retirement funds. Someone comes to you with documentation showing that eight of the companies you hold are buttressing state-sponsored terror in western Sudan, a conflict characterized as genocide by the Bush administration.

Imagine you are an investment manager, scanning your oversized computer monitor for the best returns for state employees. Buying pesos here and selling widget conglomerates there. You come across a great prospect, a Chinese or Brazilian oil prospector with contracts in largely untapped and unregulated Sudan. What factors do you consider before shouting "buy?"

Imagine you are the governor of a state, elected by the people, or a legislator elected by some of those people, and you get the same information: Idaho has at least $41.4 million invested in a genocidal regime.

What do you do with that information?

If you are New Jersey, you drop $2.16 billion in such investments. Five other states have agreed to approach the offending companies with threats of divestment, and more than 20 state legislatures are considering action right now. Venture capitalists in the Sudan now face a sea of bad PR, downward market trends and actual economic pressure.

But in Idaho, the answer is less dramatic.

You pass the buck. To the fund administrator. To the investment technician with the weight of the world on her shoulders.

The Idaho Senate Committee on Commerce and Human Resources passed the buck on Feb. 8 when it declined to consider a bill that had support from some in Republican leadership, asking the Public Employee Retirement System of Idaho, or PERSI, to drop its $41.4 million in investments in eight companies that do business with the government of Sudan.

"It wasn't like we were going significantly outside the mainstream," said Sen. Joe Stegner, who wanted a hearing for the bill and said he would have backed it on the Senate floor.

American companies have been largely barred from doing business with Sudan since 1997, and a divestment is on the table in California, Texas and Colorado.

"We act on behalf of the beneficiaries of PERSI," said Stegner, the assistant majority leader in the Senate. "In that role, I find it appropriate for this Legislature to declare in policy that we would not support crimes against humanity that I think are evident today in the Sudan."

Stegner did not speak up at the committee meeting, but PERSI administrator Alan Winkle eagerly shared his position with the senators.

Idaho never got involved in divestment from the apartheid regime in South Africa, Winkle said, adding that there is no prudent financial reason to get involved in so-called social investing now.

"This is other people's money, and the board is the fiduciary," Winkle told me later. "So should they be using trust fund money, other people's money, to address international social issues, human rights issues in another country?"

The four senators who voted against printing the divestment bill, as well as Gov. C.L. "Butch" Otter, who does not support the bill, deferred to Winkle and the fleet of investment managers contracted by PERSI.

"The governor sees no reason to second guess Mr. Winkle," Otter spokesman Mark Warbis said.

Sen. Dean Cameron, a Rupert insurance and investment broker, thought divestment in Sudan was the beginning of a slippery slope.

"There are hundreds of other egregious situations in the world," he said. "The question is, where do we draw the line?"

In an e-mail he sent to a constituent the day after the hearing, Cameron asked: "Do you want your money invested in companies who have subsidiaries who do business with companies in Iraq, Iran, Syria, or any country who has harbored or supported terrorists, any country who has human rights violations, or how about companies who support gay rights, abortion or environmental stands?"

Sponsors of the divestment bill argued that Darfur was a special situation and that pulling the targeted investments did not open the door for 1,000 different causes.

"Abhorrence of genocide, refusal to enable it, refusal to profit from it, is not a social cause; it is a moral imperative and a fiduciary standard of the highest order," wrote John Sullivan, coordinator of the Idaho Task Force for Divestment in Sudan in a letter to lawmakers and the governor.

The campaign is strategically designed to pressure the Sudanese government to change its policies. Two large European companies, ABB and Siemens, have already reconsidered their Sudan operations in the face of divestment pressure.

But Stegner said that even if divestment in Sudan were to set a new precedent for the retirement fund in Idaho, the Legislature is perfectly capable of deciding what causes to engage in the future.

"Personally, I've never been asked to take a position like that," Stegner said, considering his personal stock portfolio. "Most people don't think of these issues."

Most people don't think about where they buy their coffee or their pants or their widgets. But some compelling capitalistic arguments are being made in other parts of the country that institutional and state investors ought to start thinking about where their money is held.

Highly profitable global corporations whose industries contribute to global warming, e.g. Exxon, may not be the safest investments anymore as Congress considers regulation, consumers choose alternatives and natural resources are depleted.

PERSI owns $56 million in Exxon shares, among its largest holdings. Idaho public employees are also benefiting from more than $38 million in Altria, the parent company to Phillip Morris, with additional holdings in at least four other tobacco firms.

Without direction from the Legislature, the new Millennium Permanent Endowment Fund, which includes Big Tobacco money now targeted for smoking prevention, will likely buy stock in the cigarette companies come April. The state treasurer is bound by the same principles that guide PERSI.

At the back of the hearing room on Feb. 8, about a dozen Sudanese immigrants to Boise watched their senators drop the ball.

It was no surprise to them that a government would put its own interests first.

"We were born in crisis, and we grew up in crisis," said Acinkoc Adak, who came to Boise in 2000 and works as a downtown bank teller.

The United Nations has been largely kept out of Sudan, and African aid workers and troops are under constant attack in Darfur.

"We have to come out with a solution," Adak said.

You can reach Nathaniel Hoffman at 208-331-8371.

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