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Utah lawmakers want the state to stop propping up the regime in Iran, but managers of Utah's pension system say it could cost the state retirement account millions of dollars.
SB112 would prohibit the state retirement system from investing in 24 foreign companies that do considerable business in the Iranian petroleum industry.
"My concern has always been a nuclear Iran and the fact that they are taking the money we invest … and it goes into their economy to support their pursuit of weapons-grade uranium," said Rep. Julie Fisher, R-Fruit Heights, the House backer of the bill.
It has been an effort that Fisher has pushed for years and this legislative session appears to have its best prospects for passage, including an endorsement last week from U.S. Rep. Jason Chaffetz, R-Utah.
"We are at war, folks. There are people who want to kill Americans," he said. Congress passed the Iran Sanctions Act in 1996 to keep U.S. money from going to Iran, and Chaffetz said states should do the same.
The resistance comes from the Utah Retirement Systems, which objects to having its investment options limited and warns that excluding investments in the 24 companies in question could cost the state retirement fund $1.8 million in lost revenue each year.
Robert Newman, executive director of the Utah Retirement Systems, says it's "just opposition in principle."
"The board has the fiduciary responsibility to invest funds to get the best return they can considering the risk of the investment," Newman said.
In the past when discussions have come up about whether to avoid investments in tobacco or alcohol stocks, Newman said the Legislature decided that wasn't its role.
"You don't use investments to try to make political statements," he said. "Once you limit your investment universe, you start to limit your return."
Sen. Curt Bramble, R-Provo, who is sponsoring SB112, said this is not the first step down the road to social investing — it is a unique circumstance that the state should respond to.
Greg Smith, one of about 15 Brigham Young University students who have been advocating for the bill, agrees that the state needs to do what it can.
"We cannot allow bureaucrats and misinformation to stall the support of our troops on a state level," Smith said.
Smith says the petroleum industry is an appropriate target because it's controlled by Iran's Revolutionary Guard, the nation's security force, which, according to the U.S. State Department, is Iran's primary channel for supporting terrorist organizations.
Largely through the guard, the State Department says, Iran has funneled weapons and money to Hamas and Hezbollah; trained and armed Taliban fighters in Afghanistan; and supported Shia militant groups in Iraq.
"I think it's a stance Utah could take that while we have skin in the game in Iraq and Afghanistan and while we're engaged in this war on terrorism, we're not going to support the people who are openly working against us and trying to actively kill our troops," Smith said.
There are currently 24 companies that, under the bill, Utah could not invest in because they have done $20 million or more in business in the Iranian petroleum industry in any year since 1996.
As of 2009, Utah has invested $79 million with those companies, Smith said. The law would not require Utah to divest itself of those investments, only that URS not make future investments in those companies.
It also would not apply to things like mutual funds or other group accounts that might have investments in the scrutinized companies.
Six states — Florida, Georgia, New York, Illinois, Missouri and South Dakota — have actually sold off $2.9 billion worth of investments in the Iranian petroleum industry.
Florida alone divested $1.8 billion in holdings and saw the proceeds from its retirement fund slip by just 0.03 percent, Smith said.
For Fisher, who has tried and failed to get the bill passed for several years, cutting off Utah money would send an important message.
"Utah sends many of our young men and women to Afghanistan and previously to Iraq," she said, "and [Iran] sends IEDs [improvised explosive devices] into those countries that end up killing our soldiers." —
Utah Retirement Systems restriction
SB112 would require the Utah Retirement Systems to prevent the investment of retirement funds in Iran's petroleum sector. It also:
would require the URS to include data designed to explain the extent to which public fund investments in scrutinized companies are being prevented.
would require the URS to prevent the investment of public funds in a scrutinized company by adjusting future investment practices within the office and by stipulating in future investment management contracts that no new investments may be made in a scrutinized company.