Report Title:

Employee Retirement System

 

Description:

Mandates the Employee Retirement System to divest itself from companies that operate in countries that support terrorist activities.

 


HOUSE OF REPRESENTATIVES

H.B. NO.

2621

TWENTY-FOURTH LEGISLATURE, 2008

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT


 

 

relating to the employee retirement system.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The legislature finds that divesture is an effective tool to bring change in governments and businesses throughout the world.  Divestment was used by state pension funds in the 1980s as a means to end South Africa's apartheid policy. 

     The legislature also finds that public funds that have refused to invest in countries that sponsor terrorism have been successful financially.  According to Divestterror.org, in 2006, the Missouri Investment Trust was the first public fund in the country to invest in terror free companies has generated better returns after it divested the stocks of companies partnering with terrorist-sponsoring states and has outperformed the benchmark index by 3.9%. 

     Accordingly, the purpose of this Act is to mandate the State of Hawaii Employees' Retirement System to divest itself from companies that operate in countries that support terrorist activities.

     SECTION 2.  As used in this Act, the following terms shall apply:

     "Business ties" means owning or controlling property or assets located in, having employees or facilities located in, providing goods and services to, obtaining goods or services from, having distribution agreements with, issuance of credit or loans to, purchasing bonds or commercial paper issued by, investing or having equity ties to or with Iran, North Korea, Sudan, Syria or any company domiciled in Iran, North Korea, Syria, Sudan or their affiliates thereof.

     "Company" means a corporation, limited liability company, business trust, general or limited partnership, association, sole proprietorship, mutual benefit society, health maintenance organization, nonprofit corporation, or similar organization.

     "Global security risk prohibitive company" means any foreign company that has active or current business ties in Iran, North Korea, Sudan and Syria as determined by an independent, third-party research firm that specializes in global security risk.

     "Independent third-party research firm" means a private U.S. company that has submitted an affidavit to the board of trustees of the employee retirement system averring that: (1) it specializes in identifying and assessing companies that are exposed to global security risk; (2) it offers credible research on corporate ties to Iran, Syria, Sudan and/or North Korea that has been maintained and provided to the market for a minimum of one calendar year; and (3) does not have the potential for conflicts of interest stemming from investment banking and corporate finance activities.

     "Iran" means the Islamic Republic of Iran.

     "North Korea" means the Democratic People's Republic of North Korea.

     "Public investor" or "Public investors" means the state treasurer, the board of trustees of the employee retirement system and employees of the employee retirement system.

     "Sudan" means the Islamic Republic of Sudan.

     "Syria" means the Syrian Arab Republic.

     SECTION 3.  Within one year of the effective date of this Act, all international equity holdings within the employee retirement system shall exclude global security risk prohibitive companies as defined in this Act.  Companies that are certified as nongovernmental organizations by the United Nations, or that, according to an independent researching firm that specializes in global security risk, engage solely in the provision of goods and services that relieve human suffering or promote health or religious, spiritual, educational, humanitarian, or journalistic activities, are exempt from divestment and exclusion; and further provided, that the provisions of this Act shall expire relative to each specific country individually at such time as the President of the United States affirmatively and unambiguously states, by means including, but not limited to, enacted legislation, executive order or written certification from the President to Congress, that the United States Department of State no longer recognizes Iran, North Korea, Sudan and Syria as state sponsors of terrorism.

     SECTION 4.  A public investor is not liable for breach of the public investor's fiduciary duty to the employee retirement system for which that public investor has the authority to invest assets by reason of any decision to restrict, reduce, or eliminate investments in companies doing business in Iran, North Korea, Sudan, or Syria in accordance with the requirements of this Act.

     SECTION 5.  The board of trustees of the employee retirement system shall prepare a report on the progress in implementing the provisions of this Act and shall submit this report to the legislature no later that twenty days prior to the convening of the 2009 regular session.

     SECTION 6.  This Act shall take effect on July 1, 2008.

 

 

INTRODUCED BY:

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