The international community may be easing economic sanctions against Iran in exchange for a 10-year suspension of its nuclear program, but that doesn’t mean a New Jersey pension system boycott of investments in foreign companies doing business with Iran will come to an end as well.
That’s because, unlike the international sanctions, which went through the United Nations, the New Jersey pension-investment ban is a matter of state law.
What it is: New Jersey, beginning in 2008, prohibited investment of state pension system assets in foreign companies that do business with Iran. The law prohibits the New Jersey Division of Investment, an agency within the state Department of Treasury that manages the roughly $80 billion pension system on a daily basis, from investing any state pension assets in a foreign company with any “equity tie” to the government of Iran, or business entities “involved in the natural gas or petroleum sectors of Iran.”
How it happened: New Jersey lawmakers began considering the boycott in 2006. At the time, Iran had just restarted a nuclear program under then-Pres. Mahmoud Ahmadinejad, who was also enacting hardline domestic reforms and had made a series of inflammatory statements about international relations, including threatening to “wipe Israel off the face of the map.”
What the Iran divestment law says: By late 2007, New Jersey lawmakers, in a nearly unanimous vote, had passed a measure enacting the investment boycott. The law, which cited concerns about Ahmadinejad – who is no longer Iran’s president — was signed into law by then-Gov. Jon Corzine on Jan. 4, 2008.
“President Ahmadinejad’s comments regarding Israel together with his determination to promote Iran’s nuclear program leads observers to conclude that the country’s resources are directed towards the destruction of Israel by atomic weapons,” read the 2008 law.
“This State must take action to respond to these calls for the destruction of Israel and threats to world peace and stability,” the law said. “Therefore, it is in the best interest of this State that a statutory prohibition be enacted to prohibit the investment of public employee retirements funds in foreign companies doing business in Iran.”
What it requires: The boycott requires the director of the Division of Investment to file an annual report with the Legislature detailing the divestment of assets in response to the state boycott. The latest version of that divestment report was filed in March by Chris McDonough, the current director of the Division of Investment.
One exception to the ban: The only exception to the boycott allowed under the 2008 law is for foreign companies that are working to provide humanitarian aid to the Iranian people through either “a governmental or non-governmental organization.”
Another state investment ban: Despite the international community’s concerns with North Korea and only recently thawed relations with Cuba, New Jersey lawmakers have authorized only one other outright boycott of pension-system investments in a foreign country.
In 2005, New Jersey was among the first of many states that ultimately enacted pension-fund divestment laws in response to the brutal actions of Sudan’s Khartoum regime against villagers in the Darfur region. As many as 480,000 deaths and the displacement of more than 2 million refugees have been blamed on violence in the region.
The Sudan investment ban was proposed in late 2004 and passed both houses of the Legislature by the end of June the following year. The boycott was signed into law by then-Gov. Richard J. Codey on July 28, 2005.
“The government of Sudan continues to engage in arbitrary arrest, prolonged detention, extra-judicial killings, torture and rape of the Sudanese people and apostasy from Islam is punishable by death,” the 2005 law reads. “Severe restrictions are placed on the freedoms of assembly, association, movement, and speech and the government actively censors the press.”
“The most sobering violation of human rights in Sudan is the existence of slavery or slavery-like indenture and the pro-government militia continues to engage in abduction and slavery with impunity,” the law reads.
The Sudan pension-system investment boycott also requires regular divestment reports to be submitted to the Legislature, with the latest sent by McDonough to lawmakers last August.