The pension fund for Colorado state workers could be forced to sell as much as $182 million worth of investments in companies that do business in Sudan if lawmakers proceed with a plan to ban such holdings.
The policy, which is intended to pressure the Sudanese government to end human- rights abuses in Darfur, could backfire, warned the top manager of the Colorado Public Employees’ Retirement Association.
Meredith Williams, executive director of PERA, said the pension fund would spend more money to manage its portfolio and have less influence over companies with investments in Sudan.
“If we sell our stuff, someone else is going to buy it,” Williams said. “That’s just the way it happens. The company is not going to go under. It’s not going to be forced to curtail its operations. They just have a different stockholder than Colorado PERA.”
If passed, Colorado would join several states that have already enacted bans on pension-fund investments with ties to Sudan.
An Illinois law, which has been challenged in court, covers about 600 public pension funds in that state. California’s ban is less restrictive – focusing on the two largest funds in the state and targeting companies with “active business interests” in Sudan.
House Speaker Andrew Romanoff, D-Denver, said he feels strongly that Colorado should adopt a divestment policy and he plans to sponsor the bill. He said he believes that PERA could make other investments that would bring a comparable or better return.
“I think this is not a political question or a financial question,” Romanoff said. “It’s a moral question. People are being slaughtered, and there is something we can do about it, and we should.”
State Sen. Greg Brophy, R-Wray, said he opposes the proposal.
“I don’t think it would be effective,” Brophy said. “You accomplish nothing except feel good and harm PERA’s ability to make investments.”
Williams said he wants to discuss divestment options with peers at other large public pension funds. The PERA board is expected to consider the issue at its Jan. 19 meeting.
The $182 million worth of investments in companies with ties to Sudan represents one- half of 1 percent of PERA’s total investments of $35.2 billion.
Of that $182 million, $120 million is in just two companies – Marathon Oil Corp. of Houston and Total SA of France.
“They have acquired drilling rights in the Sudan, but they’re dormant,” Williams said. “They actually have no on-the-ground operations. They have no producing wells. They have no exploration going on.”
A Colorado divestment law also would force PERA to move about $1.5 billion out of a portfolio of international stocks that it shares with other large investors.
“If we have to pull out of that, it would cost us in the neighborhood of $4 million to transition out of that portfolio into a separate account,” Williams said.
The pension fund members would also have to pay $1 million more per year to manage the newly free-standing international fund owned solely by PERA.
Some agencies of the state government are already taking action.
The University of Colorado Board of Regents voted in December to divest assets in companies with ties to Sudan.
After screening about 85 percent of CU’s investments, officials identified about $360,000 in such holdings. Those investments – securities owned in funds managed by Vanguard – are Rolls-Royce Ltd. Group and China Petrochemical.
CU treasurer Don Eldhart said he is talking with investment advisers about how to replace the CU investments in those funds.
Staff writer Mark P. Couch can be reached at 303-954-1794 or mcouch@denverpost.com.
