David Yassky

 

By Adam Dickter Published: April 9, 2008 

William Thompson, who as City Comptroller is custodian of five pension funds with nearly $95 billion in assets, appears prepared to divest from stocks in some companies that do business with Iran, The Jewish Week has learned.

The divestment would be one of the first by a U.S. city, although 10 states have already enacted Iran divestment legislation or policies, and would send a powerful message to other municipalities because New York's pension system is the largest in the nation.

Eighteen foreign corporations that have invested more than $20 million in Iran's oil and natural gas industries since 1996 are at risk of U.S. sanctions, and most of those are believed to be part of the city pension funds' portfolio. Thompson is expected to announce action against two or three of them and possibly freezing up to a dozen others, sources say.

Thompson, whose role as investment adviser requires him to maximize returns for the city's employees and retirees, has previously resisted appeals from AIPAC, the pro-Israel lobby, and other proponents of divestment as a means of convincing Iran to fully abandon its aspirations to be a nuclear power.

"He has said he is hesitant, afraid of a precedent that if he does it with Iran you have to do it with other places," said Councilman David Weprin, a Queens Democrat, chair of the Finance Committee and a candidate to succeed Thompson in 2010. Weprin heard Thompson speak at a recent AIPC forum on divestment where he said the comptroller spelled out his position.

But Thompson, a likely Democratic candidate for mayor next year, has recently said he was open to the idea of limited divestment, according to a source who has been keeping tabs on the issue and has spoken to the players involved.

"The only question now is which stocks" and how many, said the source, who said the comptroller would also divest from companies that trade with Sudan, which is the object of international boycott efforts because of the government-backed genocide of rebel tribes in Darfur.

In an e-mail statement, Thompson spokesman Michael Loughran did not deny a pending divestment but said: "Discussions surrounding investments in Sudan and Iran have been ongoing for some time.  However, nothing is finalized at this point."

Thompson's action would come at a time when federal legislation is pending that would indemnify fund managers from litigation by pensioners due to resulting financial losses if they divest from Iran-linked companies. The measure passed overwhelmingly in the House, sponsored by Massachusetts Democrat Barney Frank and Connecticut Republican Christopher Shays. A Senate version was sponsored by Democrat Barack Obama of Illinois and Republican Sam Brownback of Kansas and awaits a vote.

In November, New York State Comptroller Tom DiNapoli, who is sole trustee of the $154 billion Common Retirement Fund, announced that he would identify investments tied to Iran's energy or defense sectors; request from those companies an accounting of those activities and how they are consistent with a long-term investment strategy; and evaluate those responses with an eye toward divesting funds from companies that are not mitigating risk to the investor.

Representatives of AIPAC have been meeting with legislative leaders and investment officials around the country to press divestment as a key tool in confronting the possibility of a nuclear Iran whose leader, President Mahmoud Ahmadinejad, has threatened to destroy Israel.

"As part of a broader strategy of increasing the economic, diplomatic and political pressure on Iran, we believe divestment efforts are a good idea," said Josh Block, an AIPAC spokesman.

Although the U.S. National Intelligence Estimate in December was construed by many commentators as downplaying the nuclear threat posed by Iran, the country's weapons program remains a national security and international concern. The United Nations Security Council recently passed a third resolution calling on Iran to stop its enrichment of uranium.

Thompson will be forced by term limits to leave office at the end of 2009. Two of the Democratic candidates for the job, Weprin and David Yassky, a councilman from Brooklyn, said they would immediately divest from Iran-linked companies if elected.

"Public dollars should not be going to support the Iranian regime," said Yassky. "These are not sound investments. Keeping pension funds terror-free is totally consistent with getting maximum return for retirees."

Weprin said "there has already been a precedent with South Africa during apartheid. The city pension funds divested stocks and major holdings already. The question is [when] to do it when it rises to what level. We'll have to deal with it on an individual basis."

Three other expected Democratic contenders for comptroller, Councilwoman Melinda Katz, Assemblyman James Brennan and Bronx Borough President Adolfo Carrion, did not return calls for comment at press time.

Among the companies targeted for divestment are France-based Total, Royal Dutch Shell, based in the Netherlands, Spain's Repsol, Italy's ENI, Japan's INPEX, Canada's Bow Valley Energy and Russia's Lukoil.