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AB-1551 State funds: divestment: foreign boycotts of Israel.(2015-2016)

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CALIFORNIA LEGISLATURE— 2015–2016 REGULAR SESSION

Assembly Bill No. 1551


Introduced by Assembly Member Travis Allen

January 04, 2016


An act to amend Sections 16649.80, 16649.81, 16649.82, 16649.83, 16649.84, 16649.86, 16649.88, and 16649.89 of, and to add Section 16649.85 to, the Government Code, relating to state funds.


LEGISLATIVE COUNSEL'S DIGEST


AB 1551, as introduced, Travis Allen. State funds: divestment: foreign boycotts of Israel.
Existing law prohibits state trust funds, as defined, from making, holding, or renewing investments in business firms or financial institutions that engage in discriminatory business practices in furtherance of, or in compliance with, the Arab League’s economic boycott of Israel, as specified. Existing law also prohibits state moneys, as defined, from being deposited with financial institutions that engage in those discriminatory business practices.
This bill would enact the California Israel Commerce Protection Act. The bill would additionally apply those prohibitions to investment in business firms or financial institutions that engage in discriminatory business practices in furtherance or in compliance with the boycott of Israel, as defined. The bill would require state trust funds to use the most recent federal report on politically motivated acts of boycott, divestment from, and sanctions against Israel to determine which business firms and financial institutions engage in those practices. The bill would make conforming changes and related findings and declarations.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 This act shall be known and may be cited as the California Israel Commerce Protection Act.

SEC. 2.

 The Legislature finds and declares as follows:
(a) The United States and Israel have a unique bond based on their shared, enduring values, which are reflected in the virtues and principles of freedom and democracy, and have stood together as allies since Israel was first formed as a nation.
(b) For years, California and Israel have established business partnerships and trade relations with each other, and those partnerships have helped enhance the agricultural, educational, energy, entertainment, health, medical, scientific, and water policies in California, Israel, and the United States.
(c) On March 5, 2014, as the culmination of an effort started as Assembly Bill 1032 of the 2009–10 Regular Session, the Governor of California and the Prime Minister of Israel signed a memorandum of understanding (MOU) for strategic partnerships for joint innovation, exchanges, and cooperation between California and Israel.
(d) In July 2015, the Legislature affirmed its support for the MOU by passing Senate Concurrent Resolution 25, noting that participants in the MOU had already expanded cooperation between Israel and California in areas such as alternative energy, agriculture, business innovation, and academia, and declaring that collaboration with Israel will foster peace and democracy in the Middle East.
(e) Public retirement systems in this state currently invest on behalf of the citizens of California in publicly traded foreign companies that may be at risk due to ties with businesses that are publicly boycotting Israel.
(f) Investments in publicly traded foreign companies that have business operations with a company that boycotts Israel risk the pensions of the dedicated public employees of this state.
(g) Excluding and divesting from companies that boycott Israel and from portfolios that include those companies will help protect the public retirement systems in this state from investment losses related to these business activities and may improve the investment performance of the public retirement systems.
(h) Israel is recognized around the world as the strongest democratically elected government in the Middle East and is an American ally, and that nation’s democracy and relationship with the United States add to the security and strength of California.
(i) It is unconscionable for this state to invest in companies that boycott Israel, as California has long standing social, political, and economic partnerships with the State of Israel.

SEC. 3.

 Section 16649.80 of the Government Code is amended to read:

16649.80.
 The definitions in this section shall govern the construction and interpretation of this chapter.
(a) “Investment” or “invest” means the commitment of funds or other assets to a business firm, including a loan or other extension of credit made to that firm, or security given for the other assets to that business enterprise, or the beneficial ownership or control of a share or interest in that business firm, or of a bond or other debt instrument issued by that business firm.
(b) “Business firm” means any foreign or domestic organization, association, corporation, partnership, venture, or other entity, its subsidiary, or affiliate which exists for profitmaking purposes or to otherwise secure economic advantage, other than a financial institution.
(c) “Financial institution” means any foreign or domestic bank, bank holding company, savings and loan association, or credit union, or any foreign or domestic insurance company, brokerage firm, securities firm, investment company, mortgage banking company, finance company, personal property broker, mortgage loan broker, or consumer credit company, or any affiliate or subsidiary thereof.
(d) “Business arrangements” means projects, ventures, undertakings, contractual relations, or other efforts requiring ongoing or periodic performance by either or both parties.
(e) “Discriminatory business practices” means business arrangements that are prohibited by Sections 16721 and 16721.5 of the Business and Professions Code.
(f) “State trust moneys” means funds administered by the Public Employees’ Retirement Fund, the Legislators’ Retirement Fund, the State Teachers’ Retirement Fund, the Judges’ Retirement Fund, the Judges’ Retirement System II Fund, the Volunteer Firefighter Fund, the General Fund portion of the University of California Retirement Fund, and any funds invested pursuant to this part.
(g) “State trust fund” means the Public Employees’ Retirement Fund, the Legislators’ Retirement Fund, the State Teachers’ Retirement Fund, the Judges’ Retirement Fund, the Judges’ Retirement System II Fund, the Volunteer Firefighter Fund, and any investment fund created by this part.
(h) “State moneys” means all money, bonds, and securities in possession of or collected by any state agency.
(i) “Compliance with the Arab League’s economic boycott of Israel” means taking any action, with respect to the boycott of Israel by Arab countries, which is prohibited by the United States Export Administration Act of 1979.
(j) “Compliance with the boycott of Israel” means taking any action in compliance with an action by a foreign government, international organization, or affiliated agency of an international organization, that is politically motivated and intended to penalize or otherwise limit commercial relations specifically with Israel or persons doing business in Israel or in Israeli-controlled territories.

SEC. 4.

 Section 16649.81 of the Government Code is amended to read:

16649.81.
 (a) On or after January 1, 1994, state trust moneys shall not be used to make additional or new investments or to renew existing investments in business firms that engage in discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel.
(b) On or after January 1, 2017, state trust moneys shall not be used to make additional or new investments or to renew existing investments in business firms that engage in discriminatory business practices in furtherance of or in compliance with the boycott of Israel.

SEC. 5.

 Section 16649.82 of the Government Code is amended to read:

16649.82.
 (a) Subdivision (a) of Section 16649.81 shall not apply to any business firm which, that, by resolution of its governing body, adopts a policy not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel. The resolution required by this section shall include the following statement: “____ (name of business firm) agrees not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel.”
(b) Subdivision (b) of Section 16649.81 shall not apply to any business firm that, by resolution of its governing body, adopts a policy not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the boycott of Israel. The resolution required by this section shall include the following statement: “____ (name of business firm) agrees not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the boycott of Israel.”

SEC. 6.

 Section 16649.83 of the Government Code is amended to read:

16649.83.
 (a) On or after January 1, 1994, state trust moneys shall not be used to make additional or new investments or to renew existing investments in financial institutions that engage in discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel.
(b) On or after January 1, 2017, state trust moneys shall not be used to make additional or new investments or to renew existing investments in financial institutions that engage in discriminatory business practices in furtherance of or in compliance with the boycott of Israel.

SEC. 7.

 Section 16649.84 of the Government Code is amended to read:

16649.84.
 (a) Subdivision (a) of Section 16649.83 shall not apply to any financial institution which, that, by resolution of its governing body, adopts a policy not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel. The resolution required by this section shall include the following statement: “____ (name of financial institution) agrees not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel.”
(b) Subdivision (b) of Section 16649.83 shall not apply to any financial institution that, by resolution of its governing body, adopts a policy not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the boycott of Israel. The resolution required by this section shall include the following statement: “____ (name of financial institution) agrees not to renew existing, expand existing, or engage in new, discriminatory business practices in furtherance of or in compliance with the boycott of Israel.”

SEC. 8.

 Section 16649.85 is added to the Government Code, to read:

16649.85.
 Beginning January 1, 2017, and annually thereafter, state trust funds shall use the most recent federal report on politically motivated acts of boycott, divestment from, and sanctions against Israel to determine which business firms and financial institutions engage in discriminatory business practices in furtherance of or in compliance with the boycott of Israel.

SEC. 9.

 Section 16649.86 of the Government Code is amended to read:

16649.86.
 (a) A copy of a resolution, as described in Sections 16649.82 and 16649.84, shall be submitted to the Treasurer and to the chief administrative officer of each state trust fund. Information shall also be submitted by business firms that provides a description of the discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel or in compliance with the boycott of Israel in existence as of the date of the resolution.
(b) The copy of a resolution shall be accompanied by a certification, under penalty of perjury, that the adopted policy is being complied with. Annually thereafter a certification, under penalty of perjury, that the adopted policy is being complied with shall be submitted to the Treasurer.
(c) The resolution and the information submitted to the Treasurer shall be deemed public documents and shall be open to public inspection.

SEC. 10.

 Section 16649.88 of the Government Code is amended to read:

16649.88.
 (a) Effective January 1, 1998, state trust funds shall not make or hold any investment in any business firm or financial institution that engages in discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel.
(b) Effective January 1, 2017, state trust funds shall not make or hold any investment in any business firm or financial institution that engages in discriminatory business practices in furtherance of or in compliance with the boycott of Israel.

SEC. 11.

 Section 16649.89 of the Government Code is amended to read:

16649.89.
 (aState moneys shall not be deposited with financial institutions that, following January 1, 1994, engage in discriminatory business practices in furtherance of or in compliance with the Arab League’s economic boycott of Israel.
(b) State moneys shall not be deposited with financial institutions that, following January 1, 2017, engage in discriminatory business practices in furtherance of or in compliance with the boycott of Israel.