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TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 9-16-55 SO AS TO REQUIRE THE RETIREMENT SYSTEM INVESTMENT COMMISSION, ACTING CONSISTENTLY WITH ITS FIDUCIARY RESPONSIBILITY, TO DIVEST ITS PORTFOLIO OF INVESTMENTS IN COMPANIES THAT IN THEIR OPERATIONS ARE COMPLICIT WITH THE GOVERNMENT OF SUDAN IN THE DARFUR GENOCIDE AND PROHIBIT FUTURE INVESTMENTS BY THE COMMISSION IN SUCH COMPANIES, TO PROVIDE DEFINITIONS AND PROCEDURES RELATING TO THE IMPLEMENTATION OF THESE REQUIREMENTS, TO INDEMNIFY MEMBERS, OFFICERS, AND EMPLOYEES OF THE STATE BUDGET AND CONTROL BOARD AND THE RETIREMENT SYSTEM INVESTMENT COMMISSION FROM CLAIMS ARISING FROM IMPLEMENTATION OF THIS SECTION, AND TO PROVIDE FOR THE CIRCUMSTANCES UNDER WHICH PROVISIONS OF THIS SECTION NO LONGER SHALL APPLY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. A. The General Assembly finds all of the following:
(1) The Congress of the United States has declared that genocide is occurring in the Darfur region of Sudan.
(2) Investing public retirement funds in business firms and institutions with ties to the repressive regime in Sudan is inconsistent with the moral and political values of the people of South Carolina.
(3) The General Assembly acknowledges that divestment is a course of last resort that should be used sparingly and under extraordinary circumstances. This act is based on unique circumstances, specifically, the reprehensible and abhorrent genocide occurring in Sudan. This act is not intended to set precedent with regard to the policies and practices of the South Carolina Retirement System.
B. Article 1, Chapter 16, Title 9 of the 1976 Code is amended by adding:
"Section 9-16-55. (A) As used in this section:
(1) 'Active business operations' means a company engaged in business operations that provide revenue to the government of Sudan or a company engaged in oil-related activities.
(2) 'Business operations' means maintaining, selling, or leasing equipment, facilities, personnel, or any other apparatus of business or commerce in Sudan, including the ownership or possession of real or personal property located in Sudan.
(3) 'Commission' means the Retirement System Investment Commission.
(4) 'Company' means a sole proprietorship, organization, association, corporation, partnership, venture, or other entity, its subsidiary or affiliate that exists for profit-making purposes or to otherwise secure economic advantage. 'Company' also means a company owned or controlled, either directly or indirectly, by the government of Sudan, that is established or organized under the laws of or has its principal place of business in the Republic of the Sudan.
(5) 'Government of Sudan' means the government of Sudan or its instrumentalities as further defined in the Darfur Peace and Accountability Act of 2006.
(6) 'Invest' or 'investment' means the purchase, ownership, or control of stock of a company, association, or corporation, the capital stock of a mutual water company or corporation, bonds issued by the government or a political subdivision of Sudan, corporate bonds or other debt instruments issued by a company.
(7) 'Military equipment' means weapons, arms, or military defense supplies.
(8) 'Oil-related activities' means, but is not limited to, the export of oil, extracting or producing oil, exploration for oil, or the construction or maintenance of a pipeline, refinery, or other oil field infrastructure.
(9) 'Public employee retirement funds' means those assets as defined in Section 9-16-10(1).
(10) 'Substantial action' means a boycott of the government of Sudan, curtailing business in Sudan until that time described in subsection (M), selling company assets, equipment, or real and personal property located in Sudan, or undertaking significant humanitarian efforts in the eastern, southern, or western regions of Sudan.
(11) 'Sudan' means the Republic of the Sudan, a territory under the administration or control of the Sudan, including but not limited to, the Darfur region, or an individual, company, or public agency located in Khartoum, northern Sudan, or the Nile River Valley that supports the Republic of the Sudan.
(B) The commission shall not invest public employee retirement funds in a company with business operations in Sudan that meets all of the following criteria:
(1) The company is engaged in active business operations in Sudan. If that company is not engaged in oil-related activities, that company also lacks significant business operations in the eastern, southern, and western regions of Sudan.
(2) Either of the following apply:
(a) The company is engaged in oil-related activities or energy or power-related operations, or contracts with another company with business operations in the oil, energy, and power sectors of Sudan, and the company failed to take substantial action related to the government of Sudan because of the Darfur genocide.
(b) The company has demonstrated complicity in the Darfur genocide.
(C) Notwithstanding subsection (B), the commission shall not invest public employee retirement funds in a company that supplies military equipment within the borders of Sudan. If a company provides equipment within the borders of Sudan that may be readily used for military purposes, including, but not limited to, radar systems and military-grade transport vehicles, there is a strong presumption against investing in that company unless that company implements safeguards to prevent the use of that equipment for military purposes.
(D)(1) The commission, before March 1, 2008, shall determine those companies that have business operations in Sudan. The board may make this determination in the manner it determines appropriate, and may accept the determinations made by the agencies and instrumentalities of the United States or of any state of the United States.
(2) The board shall take all of the following actions no later than March 30, 2008:
(a) review publicly available information regarding companies with business operations in Sudan;
(b) contact other institutional investors that invest in companies with business operations in Sudan;
(c) send written notice to a company with business operations in Sudan that the company may be subject to this section.
(E)(1) The commission shall determine, by the next applicable commission meeting if a company meets the criteria described in subsection (B) or (C). If the commission plans to invest or has investments in a company that meets the criteria described in subsection (B) or (C), that planned or existing investment is subject to subsection (G) and (H).
(2) Investments of the commission in a company that does not meet the criteria described in subsection (B) or (C) or does not have active business operations in Sudan are not subject to subsection (H), if the company does not subsequently meet the criteria described in subsection (B) or (C) or engage in active business operations. The commission shall identify the reasons why that company does not satisfy the criteria described in subsection (B) or (C) or does not engage in active business operations in the report to the General Assembly described in subsection (I).
(F)(1) Notwithstanding subsection (E), if the commission's investment in a company described in subsection (B) or (C) is limited to investment via an externally and actively managed commingled fund, the commission shall contact that fund manager in writing and request that the fund manager remove that company from the fund as described in subsection (H). Before July 1, 2008, if the fund or account manager creates a fund or account devoid of companies described in subsection (B) or (C), the transfer of commission investments from the prior fund or account to the fund or account devoid of companies with business operations in Sudan is deemed to satisfy subsection (H).
(2) If the commission's investment in a company described in subsection (B) or (C) is limited to an alternative fund or account, the alternative fund or account manager creates an actively managed commingled fund that excludes companies described in subsection (B) or (C), and the new fund or account is deemed to be financially equivalent to the existing fund or account, the transfer of board investments from the existing fund or account to the new fund or account is deemed to satisfy subsection (H). If the commission determines that the new fund or account is not financially equivalent to the existing fund, the commission shall include the reasons for that determination in the report described in subsection (I).
(G) Except as described in subsection (F) or (E)(2), the commission shall notify any company described in subsection (E)(1) that the company is subject to subsection (H) and permit that company to respond to the determination described in subsection (D). The commission shall request that the company take substantial action no later than ninety days from the date the commission notified the company under this subsection. If the commission determines that a company has taken substantial action or has made sufficient progress towards substantial action before the expiration of that period, that company is not subject to subsection (H). The commission, at intervals not to exceed ninety days, shall continue to monitor and review the progress of the company until that company has taken substantial action in Sudan. A company that fails to complete substantial action or continue to make sufficient progress towards substantial action by the next time interval is subject to subsection (H).
(H) If a company described in subsection (E)(2) fails to complete substantial action by the time described in subsection (G), the commission shall take the following actions:
(1) The commission shall not make additional or new investments or renew existing investments in that company.
(2) The commission shall liquidate the investments of the commission in that company no later than eighteen months after this subsection applies to that company. The commission shall liquidate those investments in a manner to address the need for companies to take substantial action in Sudan and consistent with the commission's fiduciary responsibilities as described in this chapter.
(I) On or before January 1, 2009, and every year thereafter, the commission shall file a report with the General Assembly. The report shall describe the following:
(1) a list of investments the commission has in companies with business operations in Sudan, including, but not limited to, the issuer, by name, of the stock, bonds, securities, and other evidence of indebtedness;
(2) a detailed summary of the business operations a company described in item (1) has in Sudan and whether that company satisfies all of the criteria in subsection (B) or (C);
(3) whether the commission has reduced its investments in a company that satisfies the criteria in subsection (B) or (C);
(4) if the commission has not completely reduced its investments in a company that satisfies the criteria in subsection (B) or (C), when the commission anticipates that the commission will reduce all investments in that company or the reasons why a sale or transfer of investments is inconsistent with the fiduciary responsibilities of the commission as described in this chapter;
(5) any information described in subsection (E);
(6) a detailed summary of investments that were transferred to funds or accounts devoid of companies with business operations in Sudan as described in subsection (F).
(J) If the commission voluntarily sells or transfers all of its investments in a company with business operations in Sudan, this section does not apply except that the commission shall file a report with the General Assembly related to that company as described in subsection (I).
(K)(1) Nothing in this section requires the commission to take action as described in this section unless the commission determines, in good faith, that the action described in this section is consistent with the fiduciary responsibilities of the commission as described in this chapter.
(2) Subsection (H) does not apply to any of the following:
(a) investments in a company that is primarily engaged in supplying goods or services intended to relieve human suffering in Sudan;
(b) investments in a company that promotes health, education, journalistic, or religious activities in or welfare in the western, eastern, or southern regions of Sudan;
(c) investments in a United States company that is authorized by the federal government to have business operations in Sudan.
(L) Except with regard to subsection (M), this section applies only until one of the following occurs:
(1) the government of Sudan halts the genocide in Darfur for twelve months as determined by both the Department of State and the Congress of the United States;
(2) the United States revokes its current sanctions against Sudan.
(M) Present, future, and former board members, officers, and employees of the State Budget and Control Board, the Retirement System Investment Commission, and contract investment managers retained by the commission must be indemnified from the general fund of the state and held harmless by the state from all claims, demands, suits, actions, damages, judgments, costs, charges and expenses, including court costs and attorney's fees, and against all liability, losses, and damages of any nature whatsoever that these present, future, or former board members, officers, employees, or contract investment managers shall or may at any time sustain by reason of any decision to restrict, reduce, or eliminate investments pursuant to this section."
SECTION 2. This act takes effect upon approval by the Governor.
This web page was last updated on Monday, June 22, 2009 at 2:31 P.M.