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Cleveland Jewish News: Make Ohio pension funds ‘terror-free,’ Mandel urges

EXTRACT: One of the biggest targets is Royal Dutch Shell, which plans a $10 billion investment in an Iranian gas field. If enough government entities deny Shell the necessary capital, Shell’s CEO has said that the company would cancel its Iranian project, Mandel points out.

THE ARTICLE

BY: MARILYN H. KARFELD Senior Staff Reporter

Just as divestment from companies doing business in South Africa helped bring down its apartheid regime, a campaign using economic pressure to isolate Iran is now gaining traction.

Earlier this month, a Northeast Ohio legislator joined the call for state pension funds to sell their holdings in companies tied to Iran’s terror-exporting government.

State Rep. Josh Mandel will co-introduce legislation in the Ohio House next week that would force the state to divest its public-employee pension funds and workmen’s compensation fund from international corporations that do business with Iran. Fellow freshman state Rep. Shannon Jones (R-Springboro) will co-introduce the measure.

This week, the two are gathering co-sponsors to the legislation; about 25 Republican and Democratic state lawmakers have thus far signed on.

Ohio must end the practice of allowing its pension-fund assets to go to businesses with ties to Iran, Mandel (R-Lyndhurst) insisted in a press conference March 8 when he first announced the bill. “It’s wrong, it’s risky, and it must be stopped.” 
 

The day before, Rep. Ileana Ros-Lehtinen (R-Fla.) introduced a bill in Congress that would require federal pension funds to divest from any company with more than $20 million invested in Iran’s energy sector.

That same day, former Israeli prime minister and opposition leader Benjamin Netanyahu introduced similar legislation in the Knesset. In the past few months, Netanyahu has traveled throughout the U.S., meeting with state treasurers and presidential candidates to gain support for divestment from Iran, Ha’aretz reports.

Legislation targeting Iran has been introduced in California, which has the largest public pension systems in the country, and similar proposals are pending in Georgia and Maryland, Mandel says. Lawmakers in Florida, Louisiana, and Texas are expected to introduce such measures during the current legislative session.

Last July, Missouri Treasurer Sarah Steelman began divesting state-employee pension funds from companies with ties to Iran, North Korea, Syria and Sudan, all countries on the State Department’s terrorism list.

Reading about what Steelman did in Missouri led Mandel to research similar action in Ohio, he says. Data from the Center for Security Policy, a nonprofit think tank funded mainly through conservative foundations, showed that in 2004, Ohio public funds were invested in dozens of companies with ties to Iran: 
 

• The State Teachers Retirement System had invested in 121 corporations doing business in Iran;

• The Ohio Public Employees Retirement System invested in 102 such companies;

• The Ohio Police and Fire Pension Fund had invested in 63;

• The School Employees Retirement System of Ohio invested in 48. 
 

Mandel and Jones estimate that the state has invested over $80 billion in foreign companies with ties to Iran, a nation reportedly on the verge of developing nuclear-weapon capability.

The Mandel bill and its cousins elsewhere focus primarily on multinational index funds which own stock in corporations doing business with Iran. According to the Washington, D.C.-based Conflict Securities Advisory Group, an independent research company, there are 484 public companies doing business with one or more of four nations on the State Department’s terrorism list.

The companies in question are international firms because U.S. companies are already prohibited from trading with or investing in Iran. One of the biggest targets is Royal Dutch Shell, which plans a $10 billion investment in an Iranian gas field. If enough government entities deny Shell the necessary capital, Shell’s CEO has said that the company would cancel its Iranian project, Mandel points out.

Most of the companies doing business in Iran are energy and engineering corporations, according to reports in USA Today. They include Siemens AG, the German multinational electronic and engineering conglomerate and a major employer in Ohio; Total SA, the French oil company; Italy’s ENI; Russia’s Gazprom; and China’s Sinopec and China National Petroleum.  

“We have an opportunity, and I feel an obligation to send a message to Wall Street and to these foreign corporations that they can’t have their cake and eat it, too,” says Mandel. “They can either enjoy Ohio capital invested in their corporation, or they can do business in Iran. But not both.”

Since announcing the proposal, Mandel says he and Jones have been contacted by numerous fire fighters, police officers and teachers “appalled and disturbed” that their retirement dollars are being invested in a country “that wants to destroy us.”

States typically invest pension dollars through index or mutual funds, not directly in corporations. Nevertheless, funds can be screened for “terror-free” investments. In 2004, a small “terror-free” mutual fund, the $14 million Roosevelt Anti-Terror Multicap Fund, began being offered to some 401(K) plans. By July, Missouri will offer the Roosevelt fund in its tax-sheltered 529 college savings plan.

Brett Arends, mutual funds columnist for theStreet.com, called Missouri’s efforts and those of investors in the Roosevelt fund “tiny steps” involving a few tens of millions of dollars. Iran, he points out, receives $156 million a day from its oil exports. Saudi Arabia earns half a billion dollars a day.

“By contrast, the World War II bonds fund raised what would be worth nearly $1.5 trillion today,” Arends says in his online column.

Those who want to invest their savings in ways to support the war against Al Qaeda and other terrorist groups would find their options limited, Arends argues. Terrorist groups, he points out, draw support from networks linked through North Africa, the Middle East and Southern Asia. Terror-free funds, thus far, only block investments in Iran, Syria, Sudan and North Korea.

But Mandel feels any measure to block Ohio capital from reaching Iran’s coffers is well worthwhile.

“Policies across the country can and should force Wall Street to create index funds that do not include corporations doing business in Iran,” says Mandel, a Marine veteran who served in Iraq. “Our hope is to send a strong message to Wall Street that there is a demand across the country to keep American tax and retirement dollars away from countries that yearn for the destruction of America.”

The Mandel-Jones bill would first determine how state pension funds are currently invested, he says. Then, the language would require divestment from Iran within one year of the bill’s effective date.

There is currently no formal opposition to the bill, Mandel says. The two freshman legislators have met with representatives from various pension funds who did not comment “for or against” the legislation, the Lyndhurst legislator says. Rather, they were more concerned with how the process would work.

He notes that Columbus-based Nationwide Finance has promised to add in April the “terror-free” Roosevelt mutual fund as an investment option for the 25,000 401(K) plans it administers.

“With billions of dollars in state investments available to Wall Street nationwide,” Mandel says, “we are confident that Wall Street firms that want Ohio capital will work with our pension funds to invest terror-free.”

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