Bill Text

Bill Information


PDF |Add To My Favorites | print page

AB-1410 Public employees’ retirement: investments: Turkish investment vehicles.(2015-2016)

SHARE THIS:share this bill in Facebookshare this bill in Twitter
AB1410:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2015–2016 REGULAR SESSION

Assembly Bill
No. 1410

Introduced by Assembly Members Nazarian, Achadjian, and Wilk

February 27, 2015

An act to amend Section 16642 of, and to add Section 7513.75 to, the Government Code, relating to investments.


LEGISLATIVE COUNSEL'S DIGEST


AB 1410, as introduced, Nazarian. Public employees’ retirement: investments: Turkish investment vehicles.
The California Constitution provides that the Legislature may by statute prohibit retirement board investments if it is in the public interest to do so, and providing that the prohibition satisfies specified fiduciary standards.
Existing law prohibits the Public Employees’ Retirement System and the State Teachers’ Retirement System from investing public employee retirement funds in a company with active business operations in Sudan and in Iran, as specified.
This bill would additionally prohibit the Public Employees’ Retirement System and the State Teachers’ Retirement System from investing public employee retirement funds in a Turkish investment vehicle, as specified. The bill would require the Board of Administration of the Public Employees’ Retirement System and the Teachers’ Retirement Board of the State Teachers’ Retirement System to sell or transfer any investments in a Turkish investment vehicle.
This bill would require these boards, on or before January 1, 2017, and annually thereafter, to report to the Legislature any investments in a Turkish investment vehicle and the sale or transfer of those investments, subject to the fiduciary duty of these boards.
This 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 those retirement systems.
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, to end all forms of religious discrimination and persecution, and to 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 has 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 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 7513.75 is added to the Government Code, to read:

7513.75.
 (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) “Turkey” means the Republic of Turkey or any territory under the administration or control of Turkey.
(4)  “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.
(b) The board shall not invest 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) On or before June 30, 2016, the board shall determine which Turkish investment vehicles are subject to divestment.
(d) After the determination described in subdivision (c), the board shall determine, by the next applicable board meeting, if a Turkish investment vehicle meets the criteria described in subdivision (b). If the board plans to invest or has investments in a company that meets the criteria described in subdivision (b), that planned or existing investment shall be subject to subdivisions (g) and (h).
(e) Investments of the board in an investment vehicle that does not meet the criteria described in subdivision (b) are not subject to subdivision (h) if the company does not subsequently meet the criteria described in subdivision (b). The board shall identify the reasons why that investment vehicle does not satisfy the criteria described in subdivision (b) in the report to the Legislature described in subdivision (i).
(f) (1) Notwithstanding subdivisions (d) and (e), if the board’s investment in a company described in subdivision (b) is limited to investment via an externally and actively managed commingled fund, the board shall contact that fund manager in writing and request that the fund manager remove that investment vehicle from the fund as described in subdivision (h). On or before June 30, 2016, if the fund or account manager creates a fund or account devoid of investment vehicles described in subdivision (b), the transfer of board investments from the prior fund or account to the fund or account devoid of the investment vehicles shall be deemed to satisfy subdivision (h).
(2) If the board’s investment in an investment vehicle described in subdivision (b) is limited to an alternative fund or account, the alternative fund or account manager creates an actively managed commingled fund that excludes investment vehicles described in subdivision (b), and the new fund or account is deemed to be financially equivalent to the existing fund or account, the transfer of board investments from the existing fund or account to the new fund or account shall be deemed to satisfy subdivision (h). If the board determines that the new fund or account is not financially equivalent to the existing fund, the board shall include the reasons for that determination in the report described in subdivision (i).
(3) The board shall make a good faith effort to identify any private equity investments that involve investment vehicles described in subdivision (b), or are linked to the government of Turkey. If the board determines that a private equity investment clearly involves an investment vehicle described in subdivision (b), or is linked to the government of Turkey, the board shall consider, at its discretion, if those private equity investments shall be subject to subdivision (h). If the board determines that a private equity investment clearly involves a company described in subdivision (b), or is linked to the government of Turkey and the board does not take action as described in subdivision (h), the board shall include the reasons for its decision in the report described in subdivision (i).
(g) Except as described in subdivisions (e) and (f), the board, in the board’s capacity of shareholder or investor, shall notify any investment vehicle described in subdivision (d) that the investment vehicle is subject to subdivision (h) and permit that investment vehicle to respond to the board. The board shall request that the investment vehicle take substantial action to disassociate itself from the government of Turkey no later than 90 days from the date the board notified the investment vehicle under this subdivision. If the board determines that an investment vehicle has taken substantial action or has made sufficient progress toward substantial action before the expiration of that 90-day period, that investment vehicle shall not be subject to subdivision (h). The board shall, at intervals not to exceed 90 days, continue to monitor and review the progress of the investment vehicle until that investment vehicle has taken substantial action in Turkey. An investment vehicle that fails to complete substantial action within one year from the date of the initial notice by the board shall be subject to subdivision (h).
(h) If an investment vehicle described in subdivision (d) fails to complete substantial action by the time described in subdivision (g), the board shall take the following actions:
(1) The board shall not make additional or new investments or renew existing investments in that investment vehicle.
(2) The board shall liquidate the investments of the board in that investment vehicle no later than 18 months after this subdivision applies to that investment vehicle. The board shall liquidate those investments in a manner to address the need for investment vehicles to take substantial action in Turkey and consistent with the board’s fiduciary responsibilities as described in Section 17 of Article XVI of the California Constitution.
(i) On or before January 1, 2017, and every year thereafter, the board shall file a report with the Legislature. The report shall describe the following:
(1) A list of investments the board has in investment vehicles that satisfy the criteria in subdivision (b), including, but not limited to, the issuer, by name, of the stock, bonds, securities, and other evidence of indebtedness.
(2) A detailed summary of the association between an investment vehicle described in paragraph (1) and the government of Turkey.
(3) Whether the board has reduced its investments in an investment vehicle that satisfies the criteria in subdivision (b).
(4)  If the board has not completely reduced its investments in an investment vehicle that satisfies the criteria in subdivision (b), when the board anticipates that the board will reduce all investments in that investment vehicle or the reasons why 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.
(5) Any information described in subdivisions (d) and (e).
(6) A detailed summary of investments that were transferred to funds or accounts devoid of Turkish investment vehicles as described in subdivision (f).
(7) An annual calculation of any costs or investment losses or other financial results incurred in compliance with the provisions of this section.
(j) If the board voluntarily sells or transfers all of its investments in a Turkish investment vehicle in accordance with this section, this section shall not apply except that the board shall file a report with the Legislature related to that investment vehicle as described in subdivision (i).
(k) Nothing in this section shall require the board to take action as described in this section if the board determines, and adopts findings, in good faith and based on credible information available to the public, that the action described in this section would fail to satisfy the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution.
(l) This section shall be known, and may be cited, as the California Public Divest from Turkey to End the Perpetuation of the Armenian Genocide Act.

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 and 7513.7. 7513.6, 7513.7, and 7513.75.

SEC. 4.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.