• Subscribe to the AG's RSS Feed
  • Join the AG's FaceBook
  • Follow the AG on Twitter
  • View the AG's YouTube Channel
  • View the AG's Tumblr Page

Brown Calls on CalPERS and CalSTRS to Divest from Iran

Monday, February 8, 2010
Contact: (415) 703-5837

Sacramento—Attorney General Edmund G. Brown Jr. today called on the nation’s two largest public pension funds—the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS)—to “honor the state law” that requires them to divest from companies doing business in Iran.

“CalPERS and CalSTRS need to honor the state law requiring them to divest from companies doing business in Iran,” Brown said. “It’s time for our public pension funds to show some leadership and stop supporting companies that do business with a tyrannical regime.”

The California Public Divest from Iran Act was signed into law in October 2007 after the state Senate and Assembly passed the bill by unanimous vote. The law requires CalPERS and CalSTRS to annually report holdings in companies doing business in the defense, nuclear, petroleum, and natural gas industries in Iran and to divest from any company that fails to take substantial action to cease or limit operations in Iran.

Although CalPERS and CalSTRS both filed annual reports at the end of 2009, these reports fail to:

• Explain whether investments in companies with ties to Iran have been reduced;
• Describe when the funds anticipate fully divesting from these companies;
• Summarize investments transferred to funds that exclude these companies; and
• Calculate divestment costs or losses.

The full text of the California Public Divest from Iran Act can be read at: http://leginfo.ca.gov/pub/07-08/bill/asm/ab_0201-0250/ab_221_bill_200710...

According to the U.S. Department of State’s “Country Reports on Terrorism 2008,” Iran remains “the most significant state sponsor of terrorism.”

CalPERS is the largest public pension fund in the nation with more than 1.6 million members and more than $200 billion in assets. CalSTRS is the largest teachers’ retirement fund in the country with 833,000 members and more than $130 billion in assets.

Brown’s letters, sent today to CalPERS and CalSTRS, are copied below:

Anne Stausboll
Chief Executive Officer
California Public Employees’ Retirement System
Lincoln Plaza East
400 Q Street, Suite E4800
Sacramento, CA 95811

Re: Violations of Iran Act

Dear Ms. Stausboll:

We have reviewed the December 31, 2009 Iran Related Investments – Second Legislative Report issued by the California Public Employees’ Retirement System (CalPERS). Unfortunately, in violation of state law, the report fails to explain why CalPERS continues to invest in companies that do business in Iran.

In 2007, the Legislature enacted the California Public Divest from Iran Act, declaring it “unconscionable for this state to invest in foreign companies with business activities benefiting foreign states such as Iran that commit egregious violations of human rights and sponsor terrorism.” This law, commonly called the Iran Act, requires CalPERS to report annually on its holdings in companies that are doing business in the defense, nuclear, petroleum, and natural gas industries in Iran, and to divest from any company that fails to take substantial action to cease or limit its Iranian operations.

Although CalPERS has filed annual reports, these reports lack enough detail to enable the public and CalPERS members to know whether CalPERS is complying with the Iran Act. On page 3 of its most recent report, CalPERS declares that it decided “to not divest shares . . . as specified in the Iran Act.” Apparently, this decision was based on a conclusion made by the Board almost a year ago that divestment would violate CalPERS’ fiduciary duty to its members. But the report utterly fails to explain how and why this is the case.

In addition, the report fails to include many of the Iran Act’s specific reporting requirements. The report merely lists 24 CalPERS holdings that do business in Iran (up four from the last report) and states—without analysis or elaboration—that “substantial progress has been made through the engagement process, in the curtailment and cessation of business operations in Iran.” Nothing in these general comments complies with the Iran Act’s requirements for CalPERS to explain whether it has reduced its investments in these companies, to describe when it anticipates fully divesting in these companies (or to explain the reasons for not divesting), to summarize investments transferred to funds that exclude these companies, or to calculate divestment costs or losses.

Please let us know as soon as possible what specific actions you plan to take to comply with the provisions of the Iran Act.

Sincerely,

EDMUND G. BROWN JR.

--------

Jack Ehnes
Chief Executive Officer
California State Teachers’ Retirement System
100 Waterfront Place
Post Office Box 15275
Sacramento, CA 95851-0275

RE: Violation of Iran Act

Dear Mr. Ehnes:

We have reviewed the December 31, 2009 Response to Iran Risk Report issued by the California State Teachers Retirement System (CalSTRS). Unfortunately, in violation of state law, the report fails to explain why CalSTRS continues to invest in companies that do business in Iran.

In 2007, the Legislature enacted the California Public Divest from Iran Act, declaring it “unconscionable for this state to invest in foreign companies with business activities benefiting foreign states such as Iran that commit egregious violations of human rights and sponsor terrorism.” This law, commonly called the Iran Act, requires CalSTRS to report annually on its holdings in companies that are doing business in the defense, nuclear, petroleum, and natural gas industries in Iran, and to divest from any company that fails to take substantial action to cease or limit its Iranian operations.

Although CalSTRS has filed annual reports, these reports lack enough detail to enable the public and CalSTRS members to know whether CalSTRS is complying with the Iran Act. The most recent report refers to several lists of companies with varying degrees of ties to Iran. The report neither identifies all of the companies nor states which ones are actually held by CalSTRS.

Nothing in the report complies with the Iran Act’s requirements for CalSTRS to explain whether it has reduced its investments in companies with ties to Iran, to describe when it anticipates fully divesting in these companies (or to explain the reasons for not divesting), to summarize investments transferred to funds that exclude these companies, or to calculate divestment costs or losses.

Please let us know as soon as possible what specific actions you plan to take to comply with the provisions of the Iran Act.

Sincerely,

EDMUND G. BROWN JR.

# # #

Search News Releases

Subscriptions

Megan's Law

California Registered Sex Offender Database

Search Now

Megan's Law information is also available in these languages:

Site Navigation

Translate Website

  • Google™ Translation Disclaimer

This Google™ translation feature is provided for informational purposes only.

The Office of the Attorney General is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool.

Please consult with a translator for accuracy if you are relying on the translation or are using this site for official business.

If you have any questions please contact:Bilingual Services Program at (916) 324-5482

A copy of this disclaimer can also be found on our Disclaimer page.

Select a Language Below / Seleccione el Idioma Abajo

Close this box or use the [ X ]