

California pension giants CalPERS and CalSTRS are facing a bill in the state assembly that would prohibit them from making new investments in Turkey.
The bill – which passed yesterday at the California State Assembly Public Employee, Retirement and Social Security Committee (PERSS) with a 5-0 vote – does not require immediate divestment but it would prohibit the giant funds from investing in any vehicle “issued by, owned, controlled, or managed” by the government of Turkey.
The rationale for the bill stems from the Armenian genocide early in the 20th Century in which 1.5m people were killed by the Ottoman Empire and its successor state Turkey. Turkey denies the term genocide though 29 countries recognise it. California itself has recognised the genocide for decades, according to the bill.
The bill (AB-1597), which has stalled before at the committee, has gone through in the wake of recent events in Turkey which has seen President Erdogan increase his grip on power.
The bill would require the funds to “liquidate” their existing investments in Turkey within six months if the US federal government imposed sanctions on the country. Existing California law prohibits the funds from investing in Sudan and Iran.
“Enactment of this bill would make it clear that California will stand on principle and make our state’s investment choices consistent with our values and policies,” according to a legislative digest – which put the costs of potential divestment at $800,000. It goes on to discuss how divestment is a complex issue for the funds.
“California’s investments in Turkish government bonds directly subsidises this denial of genocide,” said the bill’s proponent, Democratic Assembly Member Adrin Nazarian, at the meeting. “The bill continues California’s commitment to act appropriately against countries that have a record of human rights violations and undermine democracy.”This view was backed up by Haig Baghdassarianguy of the Armenian National Committee of America, in testimony to the committee. The bill is being opposed by CalPERS and CalSTRS but Baghdassarianguy told the committee: “I respect the pension funds’ position to invest responsibly and wisely, but on the other hand I think it’s your role as elected representatives to make sure that our investments are consistent with our values as Californians.”
Passage through the committee is the first step to it becoming law. It would need to be passed by both houses of the state legislature and be signed by the state governor.
Meanwhile, CalPERS has written to fellow shareholders in Exxon Mobil seeking their support for the climate change proposal it has co-filed with the New York State Common Retirement Fund and Church of England. The letter, signed by CalPERS’ Investment Manager Simiso Nzima lays out its support for a request for an assessment of the company’s portfolio under a 2-degree scenario.
Staying in California, State Treasurer John Chiang has written an open letter to the shareholders of Wells Fargo urging them to in effect cast a vote of ‘no confidence’ in “those Wells Fargo board members who stood by and did nothing as employees defrauded millions of customer accounts over a period of 15 years”. The scandal-hit bank holds its AGM on April 25.
He said: “I have asked my fellow board members of the California Public Employees’ Retirement System and the California State Teachers’ Retirement System – which collectively hold $2.3bn in Wells Fargo equity securities – to vote to demand these resignations.” Link