Three years after the Commonwealth of Pennsylvania began divesting from companies taking part in “scrutinized activities” in Iran or Sudan, it has not resulted in a loss of investment revenue but rather a net gain.
Lloyd Ebright, a policy analyst with the Pennsylvania Treasury Department, said “scrutinized activities” include assisting the governments of Sudan and Iran with oil purchases and build up of military capacity.
Pennsylvania began its divestment efforts under Act 44 in 2010 in response to the civil war in Darfur, Sudan and “oil-related” activities in Iran.
“We gave our initial notification in 2010, soon after the law was passed,” Ebright said. “But companies come on and off the list on an ongoing basis, so when we do discover a new company that we determine is involved in Iran or Sudan, we go through the whole notification process all over again.”
Ebright said the Treasury determined 84 companies took part in scrutinized activities with those two countries in 2010, and that number is now down to 56 companies in 2013.
“Most of the companies have been pulling out and ceasing their scrutinized activities because of the work of Pennsylvania and the other states that have enacted similar legislation,” Ebright said. “And then there’s also U.S. sanctions on this type of activity.”
Pennsylvania public pension funds including the State Employees’ Retirement System, the Public School Employees’ Retirement System and the Pennsylvania Municipal Retirement System divested from 13 “scrutinized companies” in fiscal year 2012-13 alone.
Proceeds from these sales resulted in more than $59 million and produced a net investment gain of $3.7 million.
Ebright said the scrutinized companies have 180 days to respond to Treasury’s notification.
He said the Treasury monitors the companies that submit a plan to cease activities.
“If they complete their commitment to cease activities, we’re not required to redeem our investments but if they continue with activities, we have a 26 month divestment window in which we must redeem our securities,” Ebright said.
Paul Guggenheimer, host of 90.5 WESA's Essential Pittsburgh spoke with Keith Welks, Deputy Treasurer for fiscal operations about the divestment report. Listen to the interview above.