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MA State risks profits in plan to divest funds from Sudan - official

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Nov 18, 2005 (BOSTON) — A Massachusetts State official yesterday criticized a proposal to divest all of the state’s pension assets in companies with business ties to the corrupt government of Sudan, saying it could hurt investment returns.

Lawmakers have proposed legislation that would prohibit the assets or pension annuities from the state employee retirement system from being invested in companies with any connection with the regime in Sudan.

But Michael Travaglini, executive director of the state Pension Reserve Investment Management board, told a legislative committee that doing so could hurt profits in the $37 billion pension system.

“We don’t condone what’s going on in Sudan, but where do you draw the line?” Travaglini said in an interview. “If it’s Sudan today, then it’s Country B tomorrow. The exception swallows the rule at some point.”

The conflict, in the Darfur region of the East African nation, is between Arab militias recruited by the government and black African residents. The United Nations World Health Organization estimates that between 6,000 and 10,000 people are dying per month.

State Sen. Andrea F. Nuciforo Jr., D-Pittsfield, the bill’s chief Senate sponsor, said the state has a moral obligation to send the Sudanese government and companies with ties to it a message by withdrawing its assets.

However, Travaglini said that the PRIM board’s goal is “to make money for our investors,” and it does not analyze the humanitarian records of companies it invests in.

One of the companies in which PRIM has invested the state’s pension assets is Petrochina Co., the sixth largest oil producer in the world in market value, which has an oil-exploration contract with Sudan. Critics say the Sudanese regime is able to stay in place because of oil profits.

“Petrochina is an enormous oil company. They didn’t get into the business to support the government in Sudan,” Travaglini said. “They sell oil for money. Sudan happens to be a country where they sell oil. The oil they sell to Sudan is a pimple in the amount of profits they make.”

Travaglini added, “It’s not bullets or munitions Petrochina is selling in Sudan. It’s a utility. I don’t know that they would stop selling oil in Sudan if we divested our pension assets in them.”

“This bill is not requiring that PRIM divest itself of all of its stock in companies that do business with oppressive regimes around the globe,” Nuciforo said. “Sudan has a long and unfortunate history of human rights abuses, and by implementing these changes, we can help to bring about change in those practices.”

Supporters of the Sudan divestment estimate that the state has $1.4 billion invested in companies with Sudanese ties, while Travaglini insists the figure is closer to $550 million.

According to Travaglini, the $550 million estimate comes from an analysis of a list of 30 companies which the state of New Jersey identified as having direct business dealings in Sudan. New Jersey was the first state to divest its pension funds in Sudan-linked companies.

Eric Reeves, a Smith College professor who has researched Sudan, said many companies that Massachusetts has pension funds invested may not be included on the New Jersey list.

The legislation may face some resistance in the Senate as Travaglini is the brother of Senate President Robert E. Travaglini, D-East Boston.

(The Lowell Sun)

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