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Legislators want Permanent Fund to drop Iran investment

  • Author: Sean Cockerham
  • Updated: September 29, 2016
  • Published November 12, 2011

A bipartisan group of Alaska state legislators hope to force managers of the $37 billion Alaska Permanent Fund to dump the stocks of companies doing business in Iran, but past efforts to divest from Sudan, South Africa and tobacco all came to nothing in spite of public outcry and political noise.

"No bill has ever passed that would require the fund to engage in social investing, and the (Permanent Fund) has never done any social investing under our own authority," said Laura Achee, spokeswoman for the Permanent Fund, the state's oil-wealth savings account.

The latest effort targets investments by the Permanent Fund and state retirement accounts in businesses involved in Iranian oil and gas. Bills have been introduced in the Legislature by an unusual coalition of Democrats and tea party Republicans.

The legislators have been ramping up efforts, and the United Nations' nuclear watchdog agency recently released a report saying there is credible evidence that Iran has secretly worked toward building a nuclear weapon.

"I think this is a unique situation. You have a country that is recognized as supporting terrorism, has recognized human rights violations, is creating a nuclear program that is a threat to the entire world, and that is using money from investments being made there to kill Alaskan and American soldiers," said Sen. Bill Wielechowski, D-Anchorage.

Greg Furbish, a U.S. Army Alaska operations officer, testified at a recent legislative meeting about the Iranian-backed Shia groups implicated in attacks on American troops in Iraq. Others, including an Israeli official, also warned about Iran.

LONG DEBATE

Bills to divest from Iran aren't likely to get far without the support of Gov. Sean Parnell, who has not taken a position, according to his spokeswoman Sharon Leighow. Officials with the Permanent Fund haven't taken a position but have long taken the stance that the fund ought to be invested with a focus on financial returns rather than social or political agendas.

"We've had a pretty long history of trying to invest on economic terms and not be involved in, I guess, social issues," said Permanent Fund CEO Mike Burns. "That's for the political side of the house."

The most recent divestment effort to fall flat targeted Sudan, the African nation whose government was blamed for genocidal killings in the Darfur region. Permanent Fund officials first opposed the effort in 2008. But after the administration of then-Gov. Sarah Palin reversed its position and decided to support the Sudan divestment, the boards for the Permanent Fund and state retirement accounts did the same. The Sudan bills still didn't pass, however.

Debates over Alaska divestment have gone on for decades. In 1981, a legal opinion prepared for the Legislature concluded "any departure from the goal of maximizing economic return ... is suspect." There was an intense debate in the mid-1980s over whether to divest from apartheid South Africa. But bills seeking to make it happen stalled in the Legislature. A citizens group in the late 1990s pressed the state to drop its tobacco stocks, to no avail, and subsequent efforts to make the Permanent Fund have a "socially responsible investment screening process" also withered.

'WOULD IT MAKE A DIFFERENCE?'

More than 20 states already have Iranian divestment policies in place, and Anchorage businessman and financial adviser David Gottstein has been among those who have been pushing for Alaska to join them. Gottstein, who is Alaska chairman of the American Israel Public Affairs Committee, said Iran threatens the Middle East and the U.S.

"The oil and gas sector, and crippling it or debilitating it, is Iran's Achilles' heel. This is how we get them to change their behavior, he said.

The bills introduced in the Legislature seek to force Alaska to drop its stocks with companies doing more than $20 million of oil and gas, mining, energy production or military equipment business with Iran. It's the same monetary thresholds included in a federal law authorizing U.S. government sanctions against firms who invest in Iranian energy.

Legislative researchers found nearly $79 million in Alaska state investments would be subject to Iran divestment, most of which are held by the Permanent Fund. All are investments in foreign companies involved in Iranian oil and gas activities, including China Petroleum and Chemical and the Russian state-owned energy company Gazprom.

"While, given the nature of the global investment marketplace, it is unlikely that the divestment of Alaska public funds from targeted companies would have a direct, negative impact on those companies, proponents of divestment point to the recent decisions by a number of major multinational companies to withdraw from Iran," said a legislative research report.

No oil and gas companies drilling Alaska's North Slope are on the list of targeted companies. The State Department announced last year that Royal Dutch Shell and Italy's Eni, both of which are active in Alaska, were pulling out of Iran in the face of U.S. sanctions.

Reach Sean Cockerham at scockerham@adn.com or 257-4344.

By SEAN COCKERHAM

Anchorage Daily News

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