May 15, 2007
On May 3rd the Jewish Council for Public Affairs and the United Jewish Communities hosted an Iran
Teleconference featuring Missouri State Treasurer Sarah Steelman; Brad Gordon, AIPAC Director of Policy
and Government Affairs; and Roger Robinson, President and CEO of Conflict Securities Advisory Group
(CSAG). The three speakers provided an analysis of current state divestment initiatives vis-à-vis Iran. The
JCPA/UJC Iran Teleconference Series is intended to educate the JCRC/Federation system on all aspects of
this critical issue.
Hadar Susskind, JCPA Washington Director highlighted Iran as an issue that has been on the forefront of
the American Jewish community’s agenda for quite some time. He mentioned the comprehensive approach
that the JCPA is taking in dealing with the Iran issue and noted the discussions at the JCPA 2007 Plenum and
the JCPA Iran resolution which, among other things, endorses divestment strategies. Susskind also spoke
about the efforts the JCPA is putting forth in helping communities, create comprehensive Iran strategies and
in pursuing divestment from Iran on the state level.
In terms of divestment strategies, Susskind elaborated on three different but interrelated approaches to
divestment:
1. Terror-free investments: divesting funds – either state funds or institutional or private funds – from
Iran, Syria, Sudan and North Korea collectively.
2. Divestment specifically from Iran.
3. Divestment specifically from Iran’s energy sector.
The JCPA has not endorsed any particular divestment strategy, but it was noted that while the JCPA does
have a policy that endorses divestment from Iran and Sudan, it does not have equivalent policy related to
Syria or North Korea. Susskind also commented that this should not restrict individual agencies or
communities from supporting divestment measures from Syria and North Korea. He noted that all three of
the speakers on the call possess different perspectives and are all doing great work.
Lastly Susskind described a three tier approach to divestment that the Jewish community should be
examining:
1. Direct divestment- selling stock of companies doing business in either Iran’s energy sector, Iran or
any state sponsor of terror.
2. Urging states to divest their pension funds through both direct divestment and divestment of their
mutual funds.
3. Since states are divesting their pension funds, this will pressure financial institutions to create
investment vehicles that include: terror-free, Iran-free or Iran-energy-sector-free funds for people to
invest in.
Sarah Steelman, State Treasurer of Missouri began by informing participants that billions of tax dollars –
state and federal taxes – are going into investments through public pension plans that are supporting
countries like Iran. She highlighted that this is a threat to both United States and Israel’s security and there is
a risk involved when investing in countries that are state sponsors of terrorism.
Steelman shared that Missouri did not create legislation; the State Treasury decided on its own to change its
investments of state pension funds. Missouri chose to not invest tax payer dollars in international companies
doing business with governments whom are state sponsors of terrorism as identified by the U.S. State
Department. These governments include Iran, Syria, Sudan and North Korea. The U.S. currently has
economic sanctions against all four countries and it is considered a felony for an American to do business in
these countries.
Based on the above criteria, Missouri succeeded in establishing the following practices:
1. Tough anti-terror policy in the treasurer’s office.
2. Complete auditing to prevent the state from doing business with terror sponsoring nations and
companies linked to these nations. For example, the Missouri State Treasurer removed UBS and
Credit Suisse from its portfolio. These two companies responded to public pressure and
subsequently have withdrawn their business from Iran. As a result, Missouri is considering
putting them back on their broker list.
3. Missouri set up the countries first terrorism-free policy and divestment procedure for public
pension funds. The state decided to use the terror-free criteria and exclude any company that
does business with any of the four countries from their investment portfolio. Missouri chose Wall
Street company State Street Global Advisors, whom investigated the state’s portfolio and
eliminated companies based on the above criteria. Steelman pointed out that despite critics who
argue that terror-free funds would not perform well, the performance of the new terror-free
portfolios are in fact outperforming previous funds by more than 4%.
4. Steelman has encouraged other state treasurers to take the same steps that Missouri has taken.
She has also encouraged Missouri police, firefighters and other civil servants to examine their
pension funds.
5. Missouri is the only state in the country that has made sure that a terror-free state college saving
plan is available.
Steelman believes that if financial institutions and individual citizens are educated on this topic, they will not
want their money invested in countries like Iran and will respond. For this reason she thinks it is crucial to
give Missourians and all Americans a choice to invest terror-free or invest in enemies of the United States.
In addition, Steelman expressed that if legislation is adopted throughout the country this will create a great
demand for terror-free, Iran-free or Iran energy sector-free funds and will encourage Wall Street to establish
these types of products. She has already succeeded in getting a nation-wide financial institution to agree to
offer an Iran-free investment option for personal investments. Steelman is also working with several other
large mutual fund companies to create terror-free international funds. She believes that Missouri has proven
wrong any argument against divestment with the success of their new practices.
Brad Gordon, AIPAC Director of Policy and Government Affairs commended Sarah Steelman and
stressed that all state officials responsible for state pension funds should take similar divestment actions,
butnoted that there is an enormous amount of resistance among officials who deal with state pension plans,
because they believe their sole fiduciary responsibility is to bring the best returns to their investors and that,
by divesting in these companies, they run the risk of loosing.
Gordon shared with the participants that the Florida House of Representatives unanimously passed their
state’s joint Iran/Sudan divestment bill that had already passed unanimously in the Florida State Senate. He
highlighted that Florida’s original bill included divesting from all companies doing business in terrordesignated states. The state pension manager vigorously opposed this legislation because it would result in
divesting from hundreds of companies with billions of dollars at stake. The pension manager did approve the
final version, which included divesting from businesses with companies doing business with the Sudanese
government as well as any company investing in Iranian petroleum and natural gas sectors.
Gordon believes that Iran’s energy sector was selected for three reasons. Companies that invest in this sector
in Iran are subject to sanctions under U.S. law, which attaches a fiduciary risk to those stocks and in turn a
fiduciary responsibility to get out of those stocks. Secondly, it affects a limited amount of companies,
approximately twenty foreign companies are included on this list. Lastly, focusing on petroleum and natural
gas hits the Iranians in their chief industry – it provides 80% of their hard currency earnings and 50% of their
budget – and Iran is in desperate need of large foreign investment in their energy sector.
Gordon stated that by urging Iran energy sector divestment, messages are being sent to companies doing
business with Iran that they are in jeopardy of their stocks being sold and their reputations being tarnished.
Similarly to Steelman, Gordon believes that if states divest their pension funds this will force financial
institutions to join the bandwagon and create funds for all the American public to invest in. Most
importantly Gordon pointed out that UN Security Council sanctions and U.S. sanctions have already sparked
debate among Iranian officials who are questioning their current practices. Gordon thinks that divestment is
a crucial action to take to ensure this debate continues.
Roger Robinson, President and CEO of Conflict Securities Advisory Group (CSAG) stressed –
as the other two speakers did – that it is crucial for states to enact divestment of their pension funds in order
to create a demand for terror-free investment options for the average American. Robinson believes that
divestment is a highly achievable process that does not take a long time to implement. He also mentioned
that if any agency is interested in assessing their own funds and switching to terror-free or Iran-free
investments, CSAG is available to assist them in that process.
Call participant Michael Gelman of Washington D.C. commented that his family has been working closely
with CSAG to create a terror-free investment policy which excludes doing business with Iran, Sudan, Syria
and North Korea. Gelman asserted that a direct investment is much easier than if money is invested in a
pooled fund. As a result, the Gelman family plans to send letters to their financial institutions asking them to
create terror free investment vehicles and is encouraging foundations, federations and individual investors to
do the same.
In response to an inquiry regarding the names of the companies Missouri decided to invest in as well as
exclude from their funds, Steelman stated that state employee pension funds are public information and
anyone can gain access to what they hold. In terms of what Missouri sold off and the actual terror-free funds
used, Steelman said these can not be disclosed, but she recommended looking at divestterror.org who has a
list of such companies.
____________________________
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Hold the dates:
* June 3-4 Board of Directors and Task Force Meetings *
* October 21-22 Board of Directors and Task Force Meetings *
* 2008 Plenum – Atlanta GA, February 23-26 *