California Pensions Could Be Mandated to Divest from Turkish Assets over WWI Atrocities

The California state legislature has passed an act intended to mandate that California public pension funds divest from assets affiliated with Turkey over the government’s failure to officially acknowledge its responsibility for the Armenian Genocide, a century-old atrocity that claimed the lives of approximately 1.5 million Armenians.

Assembly Bill 1320 would bar the California Public Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS)—the two largest pension plans in the US—from making additional investments “in any investment vehicle that is issued, owned, controlled, or managed by the government of Turkey,” until January 2025, or until Turkey officially acknowledges its responsibility. The bill also mandates the pensions’ full liquidation of such investments within 18 months of the bill’s passage.

CalPERS expressed its opposition to the bill in a memo presented to the pension’s board of trustees, stating that any loss in investment income or fees related to divestiture would have to be reimbursed through employee and employer contributions.

“Every dollar in investment returns that is forgone, or expended on transaction costs and fees, must be offset by employer and employee contributions,” fund staff wrote in a memo. “If CalPERS were to divest from Turkish investment vehicles and the companies performed well, employers and employees would bear the investment loss and transaction costs to maintain divestment through increased contribution rates.”

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The Los Angeles Times reported in March that thousands of people marched through the city dressed in all-black attire and waving the colors of the Armenian flag ”to demand that the century-old killings of 1.5 million Armenians officially be recognized as a genocide.”

“There can be no reconciliation if it’s not recognized as a genocide,” said Vilen Khachatryan, a member of the United Young Armenians group. “We march today to tell the world, ‘Never again.’”

This is not the first time that California leveraged basic human right violations to ban investments from a particular country. The state has acted against Iran for counts related to international terrorism, South Africa for its apartheid policy, and Sudan for the Darfur genocide. The state has also mandated widespread bans against gun manufacturers, thermal coal companies, and companies that have relatively weak environmental, social, and governance (ESG) policies.

CalPERS’s divestment policy states “while CalPERS wants companies in which it invests to meet high corporate governance, ethical, and social conduct standards, an investment in a

company does not signify that CalPERS approves of the company’s policies, products, or actions.”

CalPERS also stated that “there is considerable evidence that divesting is an ineffective strategy for achieving social or political goals. This is because the usual consequence is often a transfer of ownership of divested assets from one investor to another.” By foregoing its ownership in a company, it loses its influence through shareholder activism, CalPERS argued.

Tags: Armenian Genocide, CalPERS, CalSTRS, Divestment, Pension, Turkey

Amid dire predictions of how a no-deal Brexit could damage the British economy,, the head of the UK’s Financial Conduct Authority (FCA) has said the impact of such a scenario has become “less severe” because of the regulator’s preparations.

“We continue to prepare for a full range of possible outcomes and scenarios, which is what we must do as a public body,” said Bailey in a speech at Bloomberg’s London office. “There is no reason to believe that Brexit should restrict access to financial markets. The UK’s financial markets are – as the IMF has described them – a global public good, and we want to keep it that way.”

The UK government was recently forced by Parliament to release a document known as “Operation Yellowhammer,” which outlines the worst-case scenarios regarding the impact of a no-deal Brexit. The document raised public concern because it warned that riots, food price spikes, and reduced medical suppliers were possible.

Bailey said the FCA’s preparation work has required close involvement with its counterparts in other countries, particularly in the European Union. He said the FCA continues to be an active member of the European Securities and Markets Authority (ESMA), and still works closely with regulatory authorities in the EU27.

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“Wherever we end up, our markets will remain closely linked and we will continue to co-operate closely with our EU counterparts after exit in order to meet our objectives,” he said. “We intend to preserve open markets and not limit access.”

Bailey said that as a result of the progress made in its preparations, the Bank of England has judged that its assessment of the impact of a no-deal scenario has become less severe than it was a year ago.

“This reflects progress across much of the economy,” said Bailey. “Consistent with that conclusion, there is no doubt that financial sector preparations have advanced over the course of this year.”

He added that UK firms have stepped up their preparations, and that UK authorities have made “good progress.”

Bailey said the FCA has concluded new cooperation agreements with the EU markets, and insurance and banking authorities, which will take effect in a no-deal scenario. He said the agreements provide a framework for sharing confidential information, allow UK or EU based firms to delegate or outsource certain activities to firms based in the other jurisdiction, and support future market access and equivalence decisions. He added that the FCA has agreed to changes to 43 non-EU

memorandums of understanding that it needs to amend, though he expects to have all signed by Oct. 31.

In March, the FCA released tips for how companies can prepare for a range of scenarios for when the UK leaves the EU.

“The worst case is what we must prepare for,” said Bailey. “It is what could happen, a scenario not a forecast but real nonetheless.”

Tags: Brexit, Financial Conduct Authority, Pension, UK