Va. lawmakers push to limit investments in Iran

RICHMOND

The U.S. government calls Iran the world’s most active state sponsor of terrorism.

Virginia’s public retirement system calls it, indirectly, an investment.

The connection is relatively small. About 3 percent of the pension fund’s roughly $42 billion is in 30 companies that are partially invested in Iran’s oil sector.

Some state legislators say that’s too much.

One is Sen. Harry Blevins, R-Chesapeake. He is sponsoring a bill this year to require the Virginia Retirement System to divest itself of those investments. The fund, known as VRS, covers teachers and state and local government workers.

Administrators of the pension oppose the bill, saying it would be too expensive and against the best interest of its beneficiaries.

Selling and reinvesting the funds – potentially $525 million – could cost between $2.3 million and $17.8 million, according to a financial impact statement on a similar bill by Del. John O’Bannon, R-Richmond.

O’Bannon said he thinks that figure is artificially high.

“The point is, at the end of the day, we need to not be doing business with somebody that supports terrorism,” he said.

Blevins and O’Bannon’s measure continues a tradition of legislation aimed at VRS’ portfolio.

The list of past targets reads like a history of modern political and human rights outrages: apartheid in South Africa, religious strife in Northern Ireland, the Darfur atrocities in Sudan. Companies connected to rap music even came under fire once, said Bob Schultze, VRS director.

All those measures failed, except for the one on South Africa, Schultze said. That resulted in a divestment campaign in the early ’90s, he said.

Last year, a more comprehensive bill aimed at all state sponsors of terrorism failed to get out of a House committee.

That bill, like the one on Sudan, is back this session. If it passes, “companies from most of the developed economies in the world, including Fortune 500 companies in the U.S., would be placed off limits to the VRS investment program,” its impact statement said.

The VRS Board of Trustees prefers its current investment method, which is based “solely in the interests of the members and beneficiaries.”

Those words, part of a constitutional amendment, were ratified by a voters’ referendum in 1996. It made VRS an independent trust fund, which protected it from being raided to bolster other state funds.

According to the financial impact statement on the Iran bill, the language also protects the program “from political exigencies of the day and ill-considered investment schemes.”

The bills aimed at Iran say VRS is putting funds at “substantial financial risk” because of the economic uncertainty over a U.S.-sanctioned country. The legislation targets companies that have invested more than $20 million since Aug. 5, 1996, in Iran’s petroleum sector.

VRS believes the risk is minimal; staff found that the companies’ Iran investments are generally a small part of their business, according to the impact statement.

This year’s Sudan bill, sponsored by Del. Shannon Valentine, D-Lynchburg, refers to the Sudan Accountability and Divestment Act, passed unanimously in late 2007 by Congress and signed into law by  then President George W. Bush. The act supported state and local governments in divesting themselves of investments in Sudan to pressure it to end the genocide in Darfur.

Legislative attempts to direct VRS funds slowed after the state referendum in 1996, but they’re gathering steam again, said Schultze, the VRS director. Two of this year’s terrorism-related bills could get their first hearing today by a House subcommittee.

Schultze said he worried about reacting to the crisis of the day at the expense of the employees who depend on the fund for retirement.

“It won’t stop here,” he said.