Bill Text: CA AB2650 | 2015-2016 | Regular Session | Amended
Bill Title: Public employee retirement systems: prohibited investments: Turkey.
Sponsorship: Slight Partisan Bill (Republican 2-1)
Status: (Failed) 2016-11-30 - From committee without further action. [AB2650 Detail]
Download: California-2015-AB2650-Amended.html
BILL NUMBER: AB 2650 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 26, 2016
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Members Nazarian, Achadjian, and Wilk
FEBRUARY 19, 2016
An act to amend Section 16642 of, and to add Section 7513.76 to,
the Government Code, relating to public employee retirement systems.
LEGISLATIVE COUNSEL'S DIGEST
AB 2650, as amended, Nazarian. Public employee retirement systems:
prohibited investments: Turkey.
The California Constitution grants the retirement board of a
public employee retirement system plenary authority and fiduciary
responsibility for investment of moneys and administration of the
retirement fund and system. The California Constitution qualifies
this grant of powers by reserving to the Legislature the authority to
prohibit investments if it is in the public interest and the
prohibition satisfies standards of fiduciary care and loyalty
required of a retirement board. Existing law prohibits the boards of
administration of the Public Employees' Retirement System and State
Teachers' Retirement System from making investments in certain
countries and in thermal coal companies, as specified, subject to the
boards' plenary authority and fiduciary responsibility for
investment of moneys and administration of the systems.
This bill would prohibit the boards of administration of the
Public Employees' Retirement System and State Teachers' Retirement
System from making additional or new investments, or renewing
existing investments, of public employee retirement funds in an
investment vehicle in Turkey that is issued by the government of
Turkey or that is owned, controlled, or managed by the government of
Turkey. The bill would require the boards to liquidate existing
investments in Turkey in these types of investment vehicles
on or before July 1, 2018, within 6 months of the
passage of a federal law imposing sanctions on Turkey, subject
to engagement with the government of Turkey regarding whether it is
transitioning to publicly accepting its responsibility for the
Armenian Genocide. The bill would require these boards, on
or before January 1, 2019, within one year of the
passage of a federal law imposing sanctions on Turkey, to make
a specified report to the Legislature and the Governor regarding
these actions. The bill would provide that its provisions do not
require a board to take any action that the board determines in good
faith is inconsistent with its constitutional fiduciary
responsibilities to the retirement system. The bill would indemnify
from the General Fund and hold harmless the present, former, and
future board members, officers, and employees of, and investment
managers under contract with, in connection with actions relating to
these investments.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares the following:
(a) The State of California has officially recognized the Armenian
Genocide each year for decades and has repeatedly urged the Republic
of Turkey to acknowledge the facts of the Armenian Genocide and work
toward a just resolution, honor its obligations under international
treaties and human rights laws, end all forms of religious
discrimination and persecution, and return Christian church
properties to their rightful owners.
(b) Genocide is defined by the United Nations as an act "committed
with intent to destroy, in whole or in part, a national, ethnical,
racial or religious group."
(c) Genocide denial is widely viewed as among the final stages of
genocide and serves to perpetuate the effects of genocide even after
the active phases of extermination, massacres, forced marches, and
deportation have ended.
(d) The government of Turkey has engaged and continues to engage
in an ongoing campaign of genocide denial and historical revisionism
by refusing to acknowledge its responsibility for the Armenian
Genocide, refusing to compensate its victims, and actively pursuing a
well-funded political lobbying campaign throughout the United
States, including in California, to rewrite history and defeat
legislation recognizing the Armenian Genocide.
(e) The government of Turkey has engaged and continues to engage
in efforts to effect Armenian cultural erasure since the founding of
the Republic of Turkey, including, but not limited to, ethnic
cleansings and the destruction of sacred Armenian religious sites.
(f) Reference in Turkey by any scholar, journalist, or other
person to the massacre and deportation of Armenians in 1915 to 1923,
inclusive, as genocide can be criminally prosecuted under Article 301
of the Turkish Penal Code.
(g) The State of California is home to the largest Armenian
American population in the United States, and Armenians living in
California, most of whom are direct descendants of the survivors of
the Armenian Genocide, have enriched our state through their
leadership and contributions in business, agriculture, academia,
government, and the arts, yet continue to suffer the effects of the
continued denial campaign by the government of Turkey.
(h) The State of California, as the world's eighth largest
economy, and in accordance with principles of human rights and
justice, has taken the lead in adopting legislation to divest from
South Africa for its policy of apartheid, Sudan for its genocide in
Darfur, and Iran for its support of international terrorism, imposing
economic consequences upon regimes that engage in conduct and policy
that violate human rights or constitute crimes against humanity.
(i) The State of California, through its Public Employees'
Retirement System (PERS) and its State Teachers' Retirement System
(STRS), directly invests public funds in the government of Turkey,
which then reaps profits while actively denying the Armenian
Genocide, funding its continued campaign of denial, at least in part,
through these investments in its economy.
(j) By investing public funds in the government of Turkey, the
State of California as the embodiment of its citizens contradicts its
longstanding, just position of recognizing the Armenian Genocide and
urging the government of Turkey to acknowledge its responsibility
and work toward a just resolution by honoring its obligations under
international treaties and human rights laws, to end all forms of
religious discrimination and persecution, and to return Christian
church properties to their rightful owners.
(k) It is the government of Turkey, not the people of Turkey, that
is responsible for Turkey's continued egregious violations of human
rights and active pursuit of genocide denial, cultural erasure, and
historical revisionism.
(l) PERS currently has investment holdings in bonds directly
issued by the Republic of Turkey in excess of $185,000,000.
(m) STRS currently has investment holdings in bonds directly
issued by the Republic of Turkey in excess of several hundred million
dollars.
(n) Investment in the Republic of Turkey enables its government to
continue to deny justice to the Armenian people.
(o) Divesting these funds would ensure that the State of
California is in no way complicit in the continued denial of the
Armenian Genocide by the government of Turkey and would encourage
said government to acknowledge the Armenian Genocide and to reach a
fair and just resolution of reparations for the survivors of the
Armenian Genocide.
SEC. 2. Section 7513.76 is added to the Government Code, to read:
7513.76. (a) As used in this section, the following terms have
the following meanings:
(1) "Board" means the Board of Administration of the Public
Employees' Retirement System or the Teachers' Retirement Board of the
State Teachers' Retirement System, as applicable.
(2) "Government of Turkey" means the government of Turkey or its
instrumentalities or political subdivisions. "Government of Turkey"
also includes any and all investment vehicles, government bonds, or
financial institutions and entities that are owned, controlled, or
operated by the government of Turkey.
(3) "Turkey" means the Republic of Turkey or any territory under
the administration or control of Turkey.
(4) "Public employee retirement funds" means the Public Employees'
Retirement Fund described in Section 20062 and the Teachers'
Retirement Fund described in Section 22167 of the Education Code.
(b) The board shall not make additional or new investments or
renew existing investments of public employee retirement funds in any
investment vehicle in Turkey that meets either of the following
criteria:
(1) The investment vehicle is issued by the government of Turkey.
(2) The investment vehicle is owned, controlled, or managed by the
government of Turkey.
(c) The board shall liquidate investments in Turkey in an
investment vehicle described in subdivision (b) on or before
July 1, 2018. within six months of the passage of a
federal law imposing sanctions on Turkey. In making a
determination whether to liquidate investments, the board shall
constructively engage with the government of Turkey to establish
whether the government of Turkey is transitioning to publicly
accepting its responsibility for the Armenian Genocide.
(d) On or before January 1, 2019, Within
one year of the passage of a federal law imposing
sanctions on Turkey, the board shall file a report with the
Legislature, in compliance with Section 9795, and the Governor, that
shall include the following:
(1) A list of investment vehicles in Turkey of which the board has
liquidated its investments pursuant to subdivision (c).
(2) A list of investment vehicles in Turkey in connection with
which the board engaged with the government of Turkey pursuant to
subdivision (c), with supporting documentation to substantiate the
board's determination.
(3) A list of investment vehicles in Turkey of which the board has
not liquidated its investments as a result of a determination made
pursuant to subdivision (e) that a sale or transfer of investments is
inconsistent with the fiduciary responsibilities of the board as
described in Section 17 of Article XVI of the California Constitution
and the board's findings adopted in support of that determination.
(e) Nothing in this section shall require a board to take action
as described in this section unless the board determines in good
faith that the action described in this section is consistent with
the fiduciary responsibilities of the board described in Section 17
of Article XVI of the California Constitution.
SEC. 3. Section 16642 of the Government Code is amended to read:
16642. Present, future, and former board members of the Public
Employees' Retirement System or the State Teachers' Retirement
System, jointly and individually, state officers and employees,
research firms described in subdivision (d) of Section 7513.6, and
investment managers under contract with the Public Employees'
Retirement System or the State Teachers' Retirement System shall be
indemnified from the General Fund and held harmless by the State of
California 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, research firms as described in
subdivision (d) of Section 7513.6, or contract investment managers
shall or may at any time sustain by reason of any decision to
restrict, reduce, or eliminate investments pursuant to Sections
7513.6, 7513.7, 7513.75, and 7513.76.
