SUDANESE DIVESTITURE

State Senator Collins Introduces Amendment with Sudan Divestment Language

On March 23rd and March 26th, Illinois State Senator Jacqueline Collins filed Senate floor amendments 1 and 2 to SB 1169.  The amendments contain Sudan divestment language and have been referred to the Rules.  To view the text of the amendments - Click Here.

Senator Durbin Introduces Sudan Divestment Legislation

On March 8th, US Senator Dick Durbin introduced a bill that would provide support for state and local government divestment efforts in Sudan.  To read the press release for Senator Durbin's website click here.

            

Senator Durbin's legislation appears to be in response to the recent court case, which declared the Illinois Sudan Divestment law unconstitutional.  The IGFOA will continue to track this issue and how it impacts local pension funds. 

        

Sudan Divestiture Act Declared Unconstitutional

A Federal District Judge ruled to permanently enjoin the State of Illinois from enforcing the Sudan Divestiture Act because the court deemed the Act unconstitutional.  The National Foreign Trade Council (NFTC), which is a trade group representing a majority of Fortune 500 companies brought the suit against the state in early August of 2006.  A small number of police and firefigher pension funds also joined the suit.

 

The law was declared unconstitutional because it interfered with the federal government’s authority over foreign affairs and commerce.

 

The NFTC won a similar suit in 2000, which they brought against a Massachusetts law that prohibited investments in Burma.  This recent ruling is likely to affect actions in a number of other states that passed similar laws.  The Illinois case garnered national attention because it was the first law passed and subsequently challenged.

Read the Full Text of the Court Ruling:  Here

Read Article about the Ruling:  Here

Background of the Act

On June 27, 2005, Governor Blagojovich signed the “Act to End Atrocities and Terrorism in the Sudan,” which became Public Act 94-0079.

• The Act prohibited any future investment of pension funds in companies with ties to the Sudan.  In addition, it established an eighteen month timeline for complete divestment of all pension funds.
• The Act placec stringent restrictions on what constitutes an inappropriate relationship with the Sudan.  In fact, Adam Sterling of the Sudan Divestment Task Force raised concerns that the law may be too stringent and could potential hurt Sudanese recovery.

 

Investment Concern

• The Sudan Act raised concerns regarding the investment of pension fund assets.  Critics worried about the burden the Act placed on pension funds by limiting investment options.  Critics also worried about finding investments that could be certfiied as Sudan Free.

 

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Future of the Sudan Divestiture Issue

The original bill sponsor, Sen. Jacqueline Collins was quoted in a Reuters articles saying that she wanted to make technical changes to the law and reintroduce new legislation that adressed the court's concerns.  She said, "We expect to be introducing legislation to that effect very soon. Hundreds of pension funds across the state have been implementing this in good faith and we'll act quickly to ensure that the state goals of disassociating from genocide and terrorism are promoted."

The IGFOA will continue to monitor the situation and provide any future updates.