Republicans have sought to paint Democrats and incumbent President Barack Obama as soft on Israel’s security and weak when it comes to stopping Iran’s nuclear program. But Democrats are hitting back this week, arguing that Republican contender Mitt Romney, as governor of Massachusetts from 2003 to 2007, failed to take meaningful steps to divest the state’s employee pension funds from companies that do business with Iran.
“When it counted, he didn’t act,” charged David Harris, head of the National Jewish Democratic Council, the Democratic Party’s outreach arm to the American Jewish community.
The state employee pension fund of Massachusetts, the Pension Reserves Investment Trust Fund, or PRIT, is managed by a nine-member panel appointed by the state’s governor, treasurer and public employee pension systems. The panel, called the Pension Reserves Investment Management Board, or PRIM, oversees investment decisions for some $49.2 billion in assets.
According to a report by conservative think tank Center for Security Policy from 2004, PRIM was invested at the time in 178 companies doing business with “terrorist-sponsoring states” – Iran, “Saddam’s Iraq,” Libya, North Korea, Sudan and Syria. The Center estimated that business as valued at “a minimum” of $23.9 billion, according to the report.
The companies included Barclays PLC, cited by the New York Times in August 2012 as one of five foreign banks facing US Justice Department charges for moving “billions of dollars through their American subsidiaries on behalf of Iran, Cuba and North Korea, sponsors of terrorism and drug cartels.”
Also included was AXA Group, one of the equity managers employed by PRIM. According to the New York-based advocacy group United Against a Nuclear Iran, in a 2009 correspondence with US regulators, AXA reported that “three non-US subsidiaries of the AXA Group provide insurance coverage to local subsidiaries or branches of entities known by AXA to be controlled by the government of Iran,” including helping to provide insurance to Iranian state-controlled banks, insurance companies and maritime and aviation-related businesses.
Fully 130 companies of the 178 mentioned in the report were doing business in Iran, the report noted, and some $427 million in PRIM investments were in “companies with ties to proliferation-related concerns.”
According to NJDC head Harris, “Mitt Romney had an opportunity” as governor during those years to push divestment from these companies. “It was important to AIPAC and to the pro-Israel community.” Instead, “he obviously chose to do something only when it became politically expedient,” a reference to Romney’s calls in 2007 and 2008 for divestment from Iran as part of his failed 2008 bid for the Republican nomination for president.
The Romney campaign could not be reached for comment despite repeated calls. PRIM also did not return a call seeking comment.
But according to a member of the team that wrote the 2004 report, it was unfair to single out Romney because no other state had passed divestment legislation by the time he was out of office.
Christopher Holton is Vice President for Outreach for the Center for Security Policy, has led its Divest Terror Project since 2004, and was a member of the team that wrote the report cited by Romney’s accusers.
“The first pension systems in the US to pass divestment legislation were Florida and then California. And those initiatives did not pass until well into 2007. By the time this divestment really got rolling, Romney had left office in Massachusetts,” said Holton, who has participated in successful divestment efforts in 21 states since 2007.
The only successful pre-2007 state effort to divest from companies doing business with Iran was the creation in 2006 of an alternate “terror-free” investment pension system in Missouri by Republican State Treasurer Sarah Steelman.
“Quite frankly, [Steelman] could not get the legislature to go along with divestment from existing pension systems,” so she created a new one, Holton explained.
In the years he has spent working on state divestment initiatives, Holton says, he has never encountered partisanship on the issue. “The opposition that we encountered always came from the bureaucracies, the pension system bureaucrats themselves who wanted to maintain control over the pension systems and saw this as an imposition on their authority over their investment decisions.”
In Massachusetts, where a divestment bill was successfully passed in 2010, “there was a decidedly Democratic majority in the legislature and we did not have any opposition from them or the Republican minority.
“If you’re going to criticize one guy,” Holton said, “you have to criticize the other guy too. [Then-state senator from Illinois Barack] Obama could have sponsored legislation in Illinois. Neither one of them did anything about [the report], and I think that’s a shame. I would also remind everyone out there that we’ve got a lot more states still investing in foreign companies doing business in Iran, providing corporate life support to the ayatollahs.”
Once out of office in early 2007, Romney attended the security-related Herzliya Conference in Israel, where he said Israeli officials raised the idea of targeted divestment of companies that do business with Iran.
“In my meetings in Israel this week,” he told the conference on January 23, 2007, “I have become aware of a potential US pension system to further isolate the Iranian economy. We should explore a selective disinvestment policy. After a series of briefings here, I actually contacted the Treasurer of my own state of Massachusetts and the governors of some of the neighboring states to begin this process. They are going to begin meeting today with senior Israeli leaders that are in Boston today.”
In a letter to New York State Comptroller Thomas DiNapoli dated February 22, 2007, Romney wrote, “With your new responsibilities
overseeing one of America’s largest pension funds, you have a unique opportunity to lead an effort to isolate Iran as it pursues nuclear armament. I request that you immediately launch a policy of strategic disinvestment from companies linked to the Iranian regime,” a policy that “could have a powerful impact.”
He sent similar letters to then-governor Eliot Spitzer, then-senator Hillary Clinton and Senator Chuck Schumer. New York state employee pension investments in “terror-sponsoring states” were estimated in the 2004 Center for Security Policy report at over $26 billion.
Since 2007, some 21 states have passed legislation divesting public worker pension funds from companies that do business in Iran. Most recently, divestment legislation passed in South Dakota, Iowa and Utah, and efforts are underway in Mississippi to join the list of divesting states.