The California Public Employees’ Retirement System (CalPERS) has identified 13 companies, including Nokia Corp. and Nordea Bank, that its investment staff is reviewing to see if it meets the threshold for possible divestment because of potential connections to Sudan and Iran.
The $345.6 billion pension system made those disclosures in a Dec. 17 report prepared for the California state legislature. In 2007, the legislature approved and Gov. Arnold Schwarzenegger signed into law a ban on both CalPERS and the California State Teachers’ Retirement System (CalSTRS) investing in companies that engaged in business activity with Sudan and Iran. Add this line. Both pension systems are charged with engaging companies who may be violating the act before taking divestiture action.
In its new report to the state legislature, CalPERS says it holds $636 million in listed equities in the 13 companies under review.
Nordea Bank, Scandinavia’s largest financial institution, is CalPERS’s largest holding being considered for divestment. CalPERS holds Nordea Bank’s stock totaling $249.2 million. It has been embroiled in several controversies over the last few years involving money laundering, unrelated to the Sudan issues. In its report, CalPERS says Nordea Bank is under review because it was identified as potentially providing banking services in Sudan.
It is followed by Nokia in terms of CalPERS’s largest holdings being considered for divestment. CalPERS holds stock worth $146.8 million in the telecommunications and consumer electronics giant. CalPERS says Nokia was potentially identified as providing telecommunications services in Sudan, the report says.
In a July 3 news release, Nokia Corp. announced it had entered into a strategic partnership with Sudatel, a telecommunications and Internet service provider based in Sudan. Per the agreement, the press release said, both the companies will work on the development of ultra-broadband services in Sudan. The collaboration will focus initially on the capital city of Khartoum.
Japanese power tools manufacturer Makita Corp. is third on the list being considered for divestment. The pension system owns shares worth $47.9 million. CalPERS says Makita is on the review list because it was identified as proving products and equipment in Sudan.
Others on the list for possible divestment include:
· Malayan Banking Bhd ($47.5 million in stock held) – The banking company has been identified as providing banking services in Sudan
· LafargeHolcim Ltd ($44.2 million) — The global manufacturer of building material and engineering services was identified as potentially providing services in Sudan
· Ultratech Cement ($11.5 million) — The building material company has been identified as having a subsidiary in Sudan
· China Communications Construction Company Ltd. ($15.2 million) — CalPERS said the company was reported having involvement in several construction projects in Sudan
· China Railway Group ($9.9 million). CalPERS says the transportation company was reported as having contracts in Sudan related to railway maintenance
· Emirates Telecommunications Co. ($26.7 million) — The company has been identified as providing possible telecommunications services in Sudan
· Sapura Energy Bhd. ($524,000) — The company is being examined for divestment because of reports that it has oil drilling ties to Sudan.
· MTN Group Limited ($18.3 million) — CalPERS says the company was identified as providing telecommunications services in Sudan.
· Fuji Electric Co. Ltd. ($9.4 million) is on the list for possible divestment by CalPERS for potentially providing heavy equipment in Sudan.
· Larsen & Tourbro Ltd. ($8.5 million) — The engineering, construction, manufacturing and financial services conglomerate, with global operations was reported as providing consulting services to the government of Sudan.
CalPERS does not state in its report how long the divestment review process will take, nor were they immediately available for comment.
Since CalPERS began its divestment program, it has divested 10 companies that it says have done business in Sudan. These are all Sudan, not Sudan and Iran. The companies divested are: Dongfeng Motor Group Co. Ltd., El Sewedy Electric Co., Oil & Natural Gas Co. (India), Mangalore Refinery and Petrochemical Ltd. (India), Baharat Heavy Electrical Ltd., PECD Bhd., PetroChina, Sudan Telecom (aka Sudatel), China Petroleum and Chemical Corp., and Nam Fatt Co Bhd.
An additional seven companies have been invested for having business connections in Iran. They are China BlueChemical Ltd., China Oilfield Services Ltd., CNOOC Ltd., Daelim Industrial Co., Doosan Corporation, India Oil Corporation, and Oil India Limited.
CalPERS does have an out if it determines companies meet the threshold for divestments. If it finds the divesting would be a violation of its fiduciary duty, in other words it could suffer portfolio losses, it would not be compelled to divest.
Tags: CalPERS, Divestment, Iran, Pension, Sudan