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VRS investments help fuel genocide, delegate says
RICHMOND – Shannon Valentine’s life suddenly changed when high school students approached the state legislator from Lynchburg, voicing their concern about American investments helping fuel genocide in the Darfur region of Sudan.
Valentine, a Democrat, decided to introduce legislation that human rights activists believe could help bring an end to a genocide that has killed more than 300,000 and displaced an estimated 2 million civilians since the crisis began in 2003.
Across the United States and the world, public and private entities have been dumping investments in companies that do business in Sudan.
Over the past few years, 24 states from Maine to California have enacted legislation to sell off investments in companies linked to Sudan. Those investments help fund the Sudanese government, which U.S. officials and human rights activists say has helped rebels massacre Darfur residents.
This year and last, Valentine introduced a bill that would have required the Virginia Retirement System to divest from these companies. VRS owns about $51 million in stock in companies that do business in Sudan. Most of them are oil companies.
“There is a tremendous movement with divestment. At least 13 states are introducing it this year,” Valentine said. “The strategy is working.”
According to a report from the Genocide Intervention Network’s Divestment Task Force, growth in revenues in Sudan is due in large part to foreign investments. Sudan’s economy grew by 12 percent in 2006, and the government received more than $2.3 billion in direct foreign investment, up nearly 50 percent from 2004, according to the International Monetary Fund.
According to the task force’s report and a former Sudanese finance minister, more than 70 percent of the government’s share of oil profits is spent on its military.
“The Sudanese government cannot continue genocide without foreign investments,” Valentine said. “It is their only source of revenue.”
Valentine handed off her bill to Sen. Ken Cuccinelli, a Republican from Fairfax, who guided it through the Senate with a unanimous vote of 39-0. The bill then moved onto the House, where it was assigned to the House Appropriations Committee. It was tabled shortly thereafter, even though at least 23 House patrons signed onto the measure.
Why did the House committee decide to table the legislation?
“That’s the mystery,” Valentine said.
“But I will say that legislation that is not voted on or defeated says as much about a legislature as the bills that pass.”
Valentine, who took office in 2006, said it was unclear why the House decided not to pass divestment legislation this year. She said House members probably feared that such a law could lead to other forms of divestment legislation within the state.
Jeanne Chenault, public relations manager of VRS, said that because VRS is not a policy-making body, the board does not take a formal position on legislation. However, she said the VRS board does have a few concerns.
“The board has conveyed its concern that legislative restrictions related to Sudan, no matter how well meaning, could lead to other restrictions motivated by social and political interests that are not necessarily in the best interests of the state and local employees,” she said.
“At some point, restrictions on the VRS investments program could depress returns and shift additional costs to the state and local taxpayers.”
Valentine said she would introduce divestment legislation related only to genocide: “I would not introduce legislation if the threshold was not genocide.” According to Valentine, genocide is the “one and only threshold” to warrant divestment legislation.
Valentine said divestment is the right thing to do not only for human rights but also for financial reasons.
“These companies we’re investing in are going to be risky,” she said, referring to the oil companies in which VRS owns stock.
- Chenault said that in response to the controversy over Sudan, VRS has:
Modified the VRS proxy voting policy to support well-written shareholder proposals that call for offending companies to terminate business operations in Sudan. - Contacted VRS investment managers who have stock in companies on the Sudan Divestment Task Force’s “worst offenders list.” VRS has asked the managers about the investment risks these securities might pose as a result of being targeted companies.
- Interacted with public pension peers to learn how they manage divestment activities related to Sudan.
- Monitored U.S. government policy developments on Sudan and also Sudan-related information provided by non-governmental organization.
VRS is the 24th largest public or private pension system in the United States with assets approaching $58 billion. The program provides benefits to approximately 600,000 active public employees, retirees and beneficiaries.
Both Valentine and Cuccinelli intend to push divestment efforts forward in next year’s session.
“The vote last year and the support we got this year indicated strong support for the Sudan bills, and I was very grateful for that,” Cuccinelli said. “I don’t think it’s at a standstill.”
Valentine said the issue boils down to a simple principle: “I do not want to make profits off genocide.”
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