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Statesman.com: Teacher Retirement System to study Perry’s request to sell shares of companies with links to Iran

Selling shares can happen only ‘if it doesn’t hurt the fund,’ offical says

By Robert Elder
AMERICAN-STATESMAN STAFF
Saturday, November 10, 2007

Next year, the state’s two largest public pension funds could start selling shares they hold in companies doing business in Sudan and Iran.

Trustees of the $113 billion Teacher Retirement System said Friday that they would study Gov. Rick Perry’s request to sell shares of companies with links to Iran.

On Sept. 25, Perry called on the teacher fund and the Employees Retirement System, the pension fund for state workers, to sell their holdings to put economic pressure on Iran, which he called a terrorist state whose leaders are trying to destabilize the Middle East.

The employee fund, with $25 billion in assets, has started examining its portfolio to weed out companies with ties to Iran.

Both pension funds are also complying with a new state law that requires them to sell shares in companies that do business in Sudan, where government-backed Arab militias have carried out a campaign of genocide against residents of the country’s Darfur region.

Houston lawyer Jarvis Hollingsworth, the chairman of the teacher fund board, said that the governor can’t force the fund to sell shares of companies and that the fund will consider selling only if that is “consistent with our fiduciary duty to our retirees.”

Selling shares related to Sudan or Iran can happen only “if it doesn’t hurt the fund” financially, said Hollingsworth, whom Perry appointed as chairman. “Otherwise, I think we as trustees risk legal exposure.”

He added, “I think we all have concerns about what is going on in those countries,” and he said he would be willing to look into the effect of selling shares of companies doing business in Sudan and Iran.

Neither Texas fund has a firm estimate of its holdings in companies that do business in Iran or Sudan, nor do they have written guidelines to identify companies with operations significant enough to require selling their shares.

The state comptroller’s office is expected to release a list of companies that do business in Sudan by Jan. 1. Lists of Iran-linked companies are up to the individual pension funds.

Ronnie Jung, the executive director of the teacher fund, said the governor wants the pension funds to examine both lists and to sell shares of offending companies.

On Friday, the teacher fund released a preliminary list of 19 companies, all foreign-based, that do business in Iran. They include energy giants Royal Dutch Shell PLC and Total SA and industrial firm Samsung Heavy Industries Co. Ltd.

The teachers’ system held $778.8 million in shares of these companies, or far less than 1 percent of its portfolio, as of Oct. 24.

U.S. companies are prohibited from doing business in Sudan and Iran.

The divestment movement has been criticized by some pension experts, who say that selling shares in certain companies doesn’t have any effect on foreign governments, in part because other buyers are willing to scoop up shares that are sold. Divestment also opens the door to other requests by groups with political and social targets.

Sudan and Iran have become the main targets for activists who believe that divestiture will hurt repressive governments and bring political change.

Since 2005, 20 states have passed Sudan divestment laws, according to the Sudan Divestment Task Force.

[email protected]; 445-3671

http://www.statesman.com/business/content/business/stories/other/11/10/1110trsdivest.html

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