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AB-1597 Public employee retirement systems: prohibited investments: Turkey.(2017-2018)

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Date Published: 06/11/2018 09:00 PM
AB1597:v97#DOCUMENT

Amended  IN  Senate  June 11, 2018
Amended  IN  Senate  June 22, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1597


Introduced by Assembly Member Nazarian
(Principal coauthor: Senator Wilk coauthors: Senators Portantino and Wilk)
(Coauthors: Assembly Members Travis Allen, Bocanegra, Chen, Dababneh, Friedman, and Gomez and Friedman)

February 17, 2017


An act to amend Section 16642 of, and to add Section 7513.76 to, the Government Code, relating to public employee retirement systems.


LEGISLATIVE COUNSEL'S DIGEST


AB 1597, as amended, Nazarian. Public employee retirement systems: prohibited investments: Turkey.
The California Constitution grants the retirement board of a public employee retirement system plenary authority and fiduciary responsibility for investment of moneys and administration of the retirement fund and system. The California Constitution qualifies this grant of powers by reserving to the Legislature the authority to prohibit investments if it is in the public interest and the prohibition satisfies standards of fiduciary care and loyalty required of a retirement board. Existing law prohibits the boards of administration of the Public Employees’ Retirement System and State Teachers’ Retirement System from making investments in certain countries and in thermal coal companies, as specified, subject to the boards’ plenary authority and fiduciary responsibility for investment of moneys and administration of the systems.
This bill would prohibit the boards of administration of the Public Employees’ Retirement System and State Teachers’ Retirement System from making additional or new investments, or renewing existing investments, of public employee retirement funds in an investment vehicle in Turkey that is issued by the government of Turkey or that is owned, controlled, or managed by the government of Turkey. The bill would require the boards to liquidate existing investments in Turkey in these types of investment vehicles within 6 months of the passage of a federal law imposing sanctions on Turkey. The bill would require these boards, within one year of the passage of a federal law imposing sanctions on Turkey, to make a specified report to the Legislature and the Governor regarding these actions. The bill would provide that its provisions do not require a board to take any action that the board determines in good faith is inconsistent with its constitutional fiduciary responsibilities to the retirement system. The bill would indemnify from the General Fund and hold harmless the present, former, and future board members, officers, and employees of, and investment managers under contract with, the boards, in connection with actions relating to these investments.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares the following:
(a) The State of California has officially recognized the Armenian Genocide each year for decades and has repeatedly urged the Republic of Turkey to acknowledge the facts of the Armenian Genocide and work toward a just resolution, honor its obligations under international treaties and human rights laws, end all forms of religious discrimination and persecution, and return Christian church properties to their rightful owners.
(b) Genocide is defined by the United Nations as an act “committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group.”
(c) Genocide denial is widely viewed as among the final stages of genocide and serves to perpetuate the effects of genocide even after the active phases of extermination, massacres, forced marches, and deportation have ended.
(d) The government of Turkey has engaged and continues to engage in an ongoing campaign of genocide denial and historical revisionism by refusing to acknowledge its responsibility for the Armenian Genocide, refusing to compensate its victims, and actively pursuing a well-funded political lobbying campaign throughout the United States, including in California, to rewrite history and defeat legislation recognizing the Armenian Genocide.
(e) The government of Turkey has engaged, and continues to engage, in efforts to effect Armenian cultural erasure since the founding of the Republic of Turkey, including, but not limited to, ethnic cleansings and the destruction of sacred Armenian religious sites.
(f) Reference A reference in Turkey by any scholar, journalist, or other person to the massacre and deportation of Armenians in 1915 to 1923, inclusive, as genocide can be criminally prosecuted under Article 301 of the Turkish Penal Code.
(g) The State of California is home to the largest Armenian American population in the United States, and Armenians living in California, most of whom are direct descendants of the survivors of the Armenian Genocide, have enriched our state through their leadership and contributions in business, agriculture, academia, government, and the arts, yet continue to suffer the effects of the continued denial campaign by the government of Turkey.
(h) The State of California, as the world’s eighth largest economy, and in accordance with principles of human rights and justice, has taken the lead in adopting legislation to divest from South Africa for its policy of apartheid, Sudan for its genocide in Darfur, and Iran for its support of international terrorism, imposing economic consequences upon regimes that engage in conduct and policy that violate human rights or constitute crimes against humanity.
(i) The State of California, through its Public Employees’ Retirement System (PERS) and its State Teachers’ Retirement System (STRS), directly invests public funds in the government of Turkey, which then reaps profits while actively denying the Armenian Genocide, funding its continued campaign of denial, at least in part, through these investments in its economy.
(j) By investing public funds in the government of Turkey, the State of California as the embodiment of its citizens contradicts its longstanding, just position of recognizing the Armenian Genocide and urging the government of Turkey to acknowledge its responsibility and work toward a just resolution by honoring its obligations under international treaties and human rights laws, to end all forms of religious discrimination and persecution, and to return Christian church properties to their rightful owners.
(k) It is the government of Turkey, not the people of Turkey, that is responsible for Turkey’s continued egregious violations of human rights and active pursuit of genocide denial, cultural erasure, and historical revisionism.
(l) PERS currently has investment holdings in bonds directly issued by the Republic of Turkey in excess of $185,000,000.
(m) STRS currently has investment holdings in bonds directly issued by the Republic of Turkey in excess of several hundred million dollars.
(n) Investment in the Republic of Turkey enables its government to continue to deny justice to the Armenian people.
(o) Divesting these funds would ensure that the State of California is in no way complicit in the continued denial of the Armenian Genocide by the government of Turkey and would encourage said government to acknowledge the Armenian Genocide and to reach a fair and just resolution of reparations for the survivors of the Armenian Genocide.

SEC. 2.

 Section 7513.76 is added to the Government Code, to read:

7513.76.
 (a) As used in this section, the following terms have the following meanings:
(1) “Board” means the Board of Administration of the Public Employees’ Retirement System or the Teachers’ Retirement Board of the State Teachers’ Retirement System, as applicable.
(2) “Government of Turkey” means the government of Turkey or its instrumentalities or political subdivisions. “Government of Turkey” also includes any and all investment vehicles, government bonds, or financial institutions and entities that are owned, controlled, or operated by the government of Turkey.
(3) “Public employee retirement funds” means the Public Employees’ Retirement Fund described in Section 20062 and the Teachers’ Retirement Fund described in Section 22167 of the Education Code.
(4) “Turkey” means the Republic of Turkey or any territory under the administration or control of Turkey.
(b) The board shall not make additional or new investments or renew existing investments of public employee retirement funds in any investment vehicle in Turkey that meets either of the following criteria:
(1) The investment vehicle is issued by the government of Turkey.
(2) The investment vehicle is owned, controlled, or managed by the government of Turkey.
(c) The board shall liquidate investments in Turkey in an investment vehicle described in subdivision (b) within six months of the passage of a federal law imposing sanctions on Turkey.
(d) Within one year of the passage of a federal law imposing sanctions on Turkey, the board shall file a report with the Legislature, in compliance with Section 9795, and the Governor, that shall include the following:
(1) A list of investment vehicles in Turkey of which the board has liquidated its investments pursuant to subdivision (c).
(2) A list of investment vehicles in Turkey of which the board has not liquidated its investments as a result of a determination made pursuant to subdivision (e) that a sale or transfer of investments is inconsistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution and the board’s findings adopted in support of that determination.
(e) Nothing in this section shall require a board to take action as described in this section unless the board determines in good faith that the action described in this section is consistent with the fiduciary responsibilities of the board described in Section 17 of Article XVI of the California Constitution.

SEC. 3.

 Section 16642 of the Government Code is amended to read:

16642.
 Present, future, and former board members of the Public Employees’ Retirement System or the State Teachers’ Retirement System, jointly and individually, state officers and employees, research firms described in subdivision (d) of Section 7513.6, and investment managers under contract with the Public Employees’ Retirement System or the State Teachers’ Retirement System shall be indemnified from the General Fund and held harmless by the State of California from all claims, demands, suits, actions, damages, judgments, costs, charges, and expenses, including court costs and attorney’s fees, and against all liability, losses, and damages of any nature whatsoever that these present, future, or former board members, officers, employees, research firms as described in subdivision (d) of Section 7513.6, or contract investment managers shall or may at any time sustain by reason of any decision to restrict, reduce, or eliminate investments pursuant to Sections 7513.6, 7513.7, and 7513.75, and 7513.76.