Terrorist Treasury: How New York’s Public Pension Fund Invests in our Enemies

Terrorist Treasury: How New York’s Public Pension

Fund Invests in our Enemies

Senator Jeffrey D. Klein Senator Eric AdamsDeputy Minority Leader Ranking Minority Member 34th Senate District Veterans, Homeland Security

& Military Affairs Committee 20th Senate District

June 2007

Senator Jeffrey D. Klein Terrorist Treasury

2

Senator Jeffrey D. KleinDeputy Minority Leader, New York State Senate

Senator Eric AdamsNew York State Senate

Prepared By:

Matthew S. SchneidOffice of Senator Jeffrey D. Klein

Victor MallisonOffice of Senator Jeffrey D. Klein

Shelley AndrewsOffice of Senator Jeffrey D. Klein

Special Thank To:Conflict Securities Advisory Group


3

Letter from Senator KleinDear Reader, The safety of a community should be at the top of every legislator’s list of activities. Ever since a great tragedy befell our great nation on September 11, 2001, it has become even more apparent that we cannot allow our enemies to target our fellow citizens. In the recent years this threat has not subsided as evidenced by the recent terror plot aimed at John F. Kennedy International Airport in Queens. On the national level, our leaders, both Democrats and Republicans, are working to prevent terrorist attacks and stop those who fund terrorist organizations. In New York, it is our duty to play whatever role we can to fight terror as well. The best role we can play in our state is by making sure that none of the public pension fund investments go into the hands of terrorists or those individuals or nations that sponsor and fund them. This report shows the results of a careful analysis of New York’s Public Pension Fund’s 2006 Comprehensive Annual Financial Report asset list. We found that an astonishing $12 billion is invested in companies that do business with terror sponsoring nations. As a law abiding society it our duty to make sure our enemies aren’t able to repeat the tragedy of 9-11. As New Yorkers, we certainly must not allow them to use our own money against us. The results of this analysis demands that our state take action to change the behavior of companies that do business with nation’s that sponsor terrorism. If we can’t change their behavior, we must divest.

To America’s Freedoms!

Jeffrey D. Klein Senator


4

SECTION 1: INTRODUCTION


5

Introduction Since our nation and state was attacked on

September 11, 2001, our country has been awakened to the real threat of global terrorism on America’s shores. To that effect, our national government has engaged in a Global War against Terror to fight terrorist entities and those who support them.

While fighting terror is largely seen as a federal initiative, every government entity has an important role to play, and there are many ways that individual states can contribute. At the top of that agenda is Terror-Free Investing.


6

Introduction, Cont. Terror-Free Investing is a way for states to

engage and fight the global war on terror by directing public pension fund investments away from companies who invest in terrorism or nations who sponsor terrorist groups.

New York State’s public employee pension fund is one of the largest in the nation, with investments totaling $140 billion. The state pension fun can have a considerable financial impact when directed properly.


7

SECTION 2: ANALYSIS OF

TERRORIST THREATS TO NEW YORK


8

Analysis of Problem The US Department of State Identifies five countries

as sponsors of terrorism, and as New Yorkers we must make sure that our tax dollars and other public monies don’t go to increase their funding of terrorist organizations.

Although New York’s pension fund doesn’t directly invest in terrorist groups or terror sponsoring nations, our fund is invested in multiple companies that do business with these nations.

New York especially has to be wary because we are considered the prime target for terrorism in the United States. In addition to the horrific events of 9-11, NY was recently the target of a plot to attack our airports.


9

Country by Country Analysis: Threat to United States

Iran Iran remains the most active state sponsor of terrorism. Its Islamic Revolutionary Guard

Corps (IRGC) and Ministry of Intelligence and Security (MOIS) have been directly involved in the planning and support of terrorist acts and continue to exhort a variety of groups, especially Palestinian groups with leadership cadres in Syria and Lebanese Hezbollah, to use terrorism in pursuit of their goals. In addition, the IRGC was increasingly involved in supplying lethal assistance to Iraqi militant groups, which destabilizes Iraq and threatens the lives of American troops.

Iran continues to be unwilling to bring to justice senior al-Qaida members detained. Iran has refused to publicly identify these senior members on "security grounds." Iran has also resisted numerous calls to transfer custody of its al-Qaida detainees to their countries of origin or to third parties for interrogation and/or trial.

Iran maintains a high-profile role in encouraging anti-Israeli terrorist activity -- rhetorically, operationally, and financially. Supreme Leader Khamenei and President Ahmadi-Nejad have praised Palestinian terrorist operations, and provided Lebanese Hezbollah and Palestinian terrorist groups -- notably HAMAS, Palestinian Islamic Jihad, the al-Aqsa Martyrs Brigades, and the Popular Front for the Liberation of Palestine-General Command -- with extensive funding, training, and weapons.

Iran presents a particular concern, given its active sponsorship of terrorism and its continued development of a nuclear program. Iran is also capable of producing biological and chemical agents or weapons. Like other state sponsors of terrorism with WMD programs, Iran could support terrorist organizations seeking to acquire WMD.


10

Country Analysis: Cont. Syria The Syrian Government continued to provide political and material support

to both Hezbollah and Palestinian terrorist groups. HAMAS, Palestinian Islamic Jihad (PIJ), the Popular Front for the Liberation of Palestine (PLFP), and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC), among others, base their external leadership in Damascus. The Syrian Government insists that the Damascus-based groups undertake only political and informational activities. However, in statements originating from outside Syria, many Palestinian groups have claimed responsibility for anti-Israeli terrorist acts.

The Syrian Government has not been implicated directly in an act of terrorism since 1986, although preliminary findings of a UN investigation into the February assassination of former Lebanese Prime Minister Rafik Hariri have indicated a strong likelihood of official Syrian involvement.

In May 2007the Syrian Government ended intelligence cooperation with the United States, citing continued U.S. public complaints about the inadequate level of assistance to end the flow of fighters and money to Iraq.


11

Country Analysis: Cont. North Korea North Korea , the world’s only unreconstructed

Stalinist country, has not been conclusively linked to a terrorist attack since the bombing of a Korean Airlines flight in 1987, but it still has a prominent place in the war on terrorism because it sells advanced missile technology to other states that sponsor terrorists. Even more worrisome is North Korea ’s October 2002 admission that it has had an ongoing secret nuclear-weapons program, in violation of its treaty commitments and a 1994 agreement with the United States to halt its pursuit of nuclear weapons. North Korea also claims to have other “more powerful” weapons.


12

Country Analysis: Cont. Sudan Sudan continues its cooperative commitment against known and suspected

international terrorist elements believed to be operating in and out of Sudanese territory. The government undertook actions against security threats posed by persons either suspected of using Sudan as a base of operation and/or persons of Sudanese origin purported to be associated with terrorist organizations. Sudan produced desired results against international terrorist elements and the facilitators that support them.

Sudan's history of having played host in the mid-1990s to Al-Qaida leader Osama bin Ladin.

The flow of weapons and personnel between Sudan and most of its western, southern, and eastern neighbors has weakened international efforts to stabilize the region. Many of Sudan's borders, particularly those along the Red Sea coast, remain porous and penetrable making it an easy part point of entry for human-trafficking and other black market elements.

Continued focus has been placed on Sudan for its role in contributing fighters for the Iraqi insurgency. Sudanese and foreign nationals who trained in Sudan have been captured as foreign fighters in Iraq.


13

SECTION 3: RESEARCH AND RESULTS


14

Research Methodology A list of the New York State Common Retirement

Fund’s assets were compiled as of March 31, 2006, the end of the 2006 fiscal year. The list was taken from the 2006 Comprehensive

Annual Report. The listing of the pension fund’s equity assets were

then vetted by The Conflict Securities Advisory Group to assess which companies do business with terror-sponsoring nations. Conflict Securities Advisory Group’s Global Security

Risk Monitor identifies and profiles publicly traded companies with business ties to countries identified by the U.S. State Department as state sponsors of terrorism.


15

Results New York has links to 235 companies

that do business with nations that sponsor terrorism. 7% of NY’s equity assets are linked to

these companies. $12 billion dollars are invested in the

235 companies. 16% of New York equity investments are

tied to companies that invest in nations that sponsor terrorism.


16

Companies with $100 Million or More Invested

from New York’s Pension Fund Chevron Corporation*

Country Connection: Sudan Total NY Investments: $537,599,794

ConocoPhillips Country Connection: Iran and Syria Total NY Investments: $402,524,541

Coca-Cola Country Connection: Iran, North Korea, Sudan and Syria Total NY Investments: $349,280,545

Royal Dutch Shell Country Connection: Iran, Sudan, Syria Total NY Investment: $209,991,294

Total SA Country Connection: Iran, Sudan and Syria Total NY Investment: $165,726,410

ENI SpA Country Connection: Iran NY Investment: $100,774,675

*All companies compiled by the Office of Senator Jeffrey D. Klein


17

Conclusion New York must amend its investment strategy to

direct funds away from terror sponsoring nations. In this century we are facing stronger enemies

than in the previous century. Americans should not be financiers of a war against ourselves. As citizens of New York we can show that we are still as united on standing against terrorists and terrorism as strongly as we were on September 11. We are telling all the terrorists that they are not only being hunted by our military forces, but also with our economic strength.


18

SECTION 4: LEGISLATIVE REFORMS

TO FIGHT TERRORISTS FROM NEW YORK


19

Terror-Free Investing Sweeping the Nation

Multiple state have enacted or proposed legislation regarding divestment from Iran, which is a country listed as a state sponsor of terrorism California Florida Georgia Kansas Louisiana New Jersey Oklahoma Oregon Texas Missouri


20

Legislative Recommendations Enact Terror-Free Investing legislation

in New York State Divest the New York State public

employee pension fund from terror sponsoring nations Iran, Syria, Sudan and North Korea

Measure the success of the program by having the Comptroller provide yearly progress reports to the state legislature


21

Recent Updates in New York The New York State Comptroller has

embraced the notion of using the investment fund as a means of influencing foreign policy.

NYS Comptroller has already advocated divestment of funds from companies who do business with Sudan.


22

AppendixList of Companies with Known Links to Terror-Sponsoring Nations*

Chevron Corporation Sector : Energy Country of Origin: United States Country Connection: Sudan Total NY Investments: $537,599,794

ConocoPhillips Sector: Energy Country of Origin: United States Country Connection: Iran and Syria Total NY Investments: $402,524,541

The Coca-Cola Company Sector: Beverages Country of Origin: United States Country Connection: Iran, North Korea, Sudan and Syria Total NY Investments: $349,280,545

Royal Dutch Shell Sector: Energy Country of Origin: Netherlands Country Connection: Iran, Sudan, Syria Total NY Investment: $209,991,294

*Compiled by Senator Klein’s Office using published reports of links to terror-sponsoring nations


23

Appendix, Cont. Total SA

Sector: Energy Country of Origin: France Country Connection: Iran, Sudan and Syria Total NY Investment: $165,726,410

ENI SpA Sector: Energy Country of Origin: Italy Country Connection: Iran NY Investment: $100,774,675

Baker-Hughes Inc. Sector: Energy Country of Origin: United States Country Connection: Iran and Sudan Total NY Investment: $94,733,521

Norsk Hydro Sector: Energy Country of Origin: Norway Country Connection: Iran Total NY Investment: $52,492,814


24

Appendix, Cont. Alcatel SA

Sector: Telecommunications Country of Origin: France Country Connection: Iran and Sudan Total NY Investment: $33,445,988

Statoil ASA Country of Origin: Norway Country Connection: Iran Total NY Investment: $26,104,368 Sector: Energy

Lukoil Holdings Sector: Energy Country of Origin: Russia Country Connection: Iran Total NY Investment: $ 25,071,390

Technip Coflexip Sector: Energy Country of Origin: France Country Connection: Iran Total NY Investment: $13,888,898


25

Appendix, Cont. BNP Paribas

Sector: Finance Country of Origin: France Country Connection: Iran Total NY Investment: $ 6,763,826

OMV Ag Sector: Energy Country of Origin: Austria Country Connection: Iran Total NY Investment: $4,774,439

KT Corp Sector: Telecommunications Country of Origin: South Korea Country Connection: Iran and North Korea Total NY Investment: $2,276,326

OAO Gazprom Sector: Energy Country of Origin: Russia Country Connection: Iran Total NY Investment: $1,841,163

Terrorist Treasury: How New York’s Public Pension Fund Invests in our Enemies

Documents

Transcript of Terrorist Treasury: How New York’s Public Pension Fund Invests in our Enemies