SENATE BILL REPORT

SB 5658

BYSenators Fleming and McDermott

Requiring divestment of public pension funds and assets in banks and other businesses with connections to South Africa or Namibia.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 23, 1987; March 5, 1987

Majority Report:  That Substitute Senate Bill No. 5658 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bauer, Fleming, Kreidler, Owen, Rinehart, Talmadge, Vognild, Warnke, Williams, Wojahn.

Minority Report:  Do not pass.

      Signed by Senators Bluechel, Craswell, Hayner, McDonald, Rasmussen, Zimmerman.

Senate Staff:Charles Langen (786-7715); Mike Williams (786-7715)

                  March 6, 1987

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 5, 1987

BACKGROUND:

The State Investment Board is authorized to invest retirement trust funds in the stocks and other equity securities as well as bonds.  The law directs the Board to maximize return on these investments.  The State Treasurer is authorized to invest certain treasury funds in short term investments.  Both the members of the State Investment Board and the State Treasurer are subject to the rule of prudence in their fiduciary roles.

SUMMARY:

No public pension or retirement funds may be invested or remain invested by the State Investment Board in any bank or financial institution which directly or through its subsidiaries has outstanding loans to the Republic of South Africa or Namibia.  No assets may be invested or may remain invested in the stocks, securities, or other obligations of any company doing business in or with South Africa or Namibia.  Any proceeds of sales required by these restrictions shall be invested in banks, institutions, or companies which invest or conduct business in Washington as long as it is consistent with sound investment policy.

If sound investment policy so requires, the State Investment Board may spread the sale of securities over three years' time.  As long as the Board retains securities of institutions or companies involved in South Africa or Namibia, it must report these holdings and their book value to the Legislature annually.

EFFECT OF PROPOSED SUBSTITUTE:

The State Investment Board is to create a list of companies that do business in South Africa and to not use these firms as a first source of investment opportunity.  The Investment Board is to use the standard judgment and care expressed in RCW 43.33A.140 and to report to the Legislature periodically.

The Governor, where possible, is to take a proactive stance in attempting to influence and promote the policy of freedom of civil, human, and political rights of persons regardless of color, creed, nationality, or race within those corporate and other business entities in which the state has invested through active participation at stockholders' meetings of these entities.

The State Investment Board is revised from 14 members to 15 members, with the Governor, or the Governor's representative, added as a member ex officio.  The Board is to publicly exercise its security voting rights, taking into consideration the general policy or guidelines set forth by the Governor.

Fiscal Note:      requested

Senate Committee - Testified: Neo Mnumzana, Chief Representative, African National Conference