UP AND DOWN 17TH STREET: A gray area for divestiture

Published August 8, 2007 at midnight

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During the past legislative session, I explained to a colleague that pension funds are generally wary of buying and selling stocks for political reasons, since their first obligation is to provide for their members' retirement.

"I think we can all agree on genocide, though," he responded.

And so the Colorado legislature ordered the Colorado Public Employees Retirement Association to adopt a Sudan divestment policy in response to the bloodshed in Darfur. It will be the first time PERA makes a specific investment decision at the behest of the legislature.

But it might not be the last. We may be moving into territory short of genocide, where we all may not agree.

Sen. Josh Penry, R-Fruita, and Rep. Frank McNulty, R-Highlands Ranch, are calling on PERA to stop investing in companies that do business in Iran. They plan to introduce legislation next session.

"Iran isn't just your run-of-the-mill bad actor - they're underwriting the insurgency in Iraq, killing our boys and girls every day," Penry said. He also cites Iran's attempts at a nuclear campaign, coupled with leader Mahmoud Ahmadinejad's vicious anti-Israel comments.

All too often, a rhetorical back-and-forth includes references to "the "slippery slope" or the question, "Where do we draw the line?" With the Sudanese divestment, though, we now seem to have opened the door to all sorts of politically based investment decisions.

"There is a line, objectively," Penry said. "I believe Iran falls on the other side of the line with Sudan because of how they're behaving."

Well, so say you, senator. Personally, I suggest we take a look at one of the world's most oppressive regimes, where dissidents are jailed and tortured, and free speech and the free press are nonexistent. Despite being the world's No. 1 executioner, its arbitrary system of "justice" hasn't prevented widespread corruption.

I'm talking about China. It would make me happy if we sent the message that companies who do business with this totalitarian state don't deserve Colorado's public-pension money. To accomplish this, we'd merely need to divest . . . well, just about every stock in PERA's portfolio, since there's a worldwide rush to serve China's 1 billion-plus customers and take advantage of the cheap labor they provide.

I'm not being realistic, of course, but there are a lot more offenders closer to Penry's line. The U.S. State Department has identified Cuba, North Korea and Syria, in addition to Sudan and Iran, as sponsors of terrorism.

Meanwhile, PERA has asked Penry and McNulty to identify some specific criteria for what exactly it means for a company to be "doing business" there, said general counsel Greg Smith. Only then can PERA estimate the cost to its beneficiaries of getting out.

It seems PERA may be asked to take on this exercise more and more in the future.

David Milstead and James Paton take turns writing Up and Down 17th Street. Contact Milstead at 303-954-2648 or milstead@RockyMountainNews.com.

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