OPINION EDITORIAL  Office of Missouri State Treasurer Sarah Steelman RELEASE  -- June 7, 2005

DIVEST FROM TERROR

by State Treasurer Sarah Steelman

In 1990, in Washington, Missouri, John Linde, Jr. scored the winning touchdown and two point conversion to beat long time arch rival Borgia.  Thirteen years later, after serving ten years in the First Recon United of the United States Marine Corps, John Linde, Jr., was killed by a terrorist bomber in Gaza while protecting American diplomats.  The ex-marine had taken this dangerous job, because he needed extra money to help his wife, Courtney, fight bone cancer.  It was later discovered that these terrorists were being financed through Arab Bank. Despite the tragic and pervasive impact of terrorism - and public policies to the contrary -- public pension funds in Missouri remain invested in Arab Bank and other companies and countries that finance and sanction terrorism around the world.

The Missouri State Employee Retirement System (MOSERS) administers Missouri’s pension plan for current and retired state employees and holds assets of $6 billion.  About $20 million of these investments are placed in foreign companies with direct ties to Iran. Iran has been found by the US government to have repeatedly supported terrorist organizations and may be giving safe haven to leading terrorist suspects. It is illegal for American companies or citizens to do business with this nation and doing so could trigger sanctions of $500,000 or 10 years in jail.

Arab Bank is an international bank that is under investigation by the FBI, Congress and the Treasury Department for allegations of moving approximately $20 million from the U.S. to as many as 45 different terrorist organizations.

In February, the Office of the Comptroller of Currency ordered Arab Bank to stop making international wire transfers from the US. In April, the U.S. Treasury Department prohibited the New York branch of Arab Bank from accepting deposits or opening accounts.  NBC News reported that ads had been placed in Palestinian newspaper instructing the family members of suicide bombers to come to local branches of Arab Bank to pick up financial rewards. Arab Bank is also the subject of an $875 million lawsuit by the surviving families of more than 15 terrorist victims, including John Linde, Jr.

As State Treasurer, I am one of 11 members of the board of MOSERS. I am committed to maximizing the return on our pension investments and ensuring that our plan is not exposed to the inherent and extreme risk associated with investments grounded in such illegal and volatile actions.  As an American citizen, I am just as deeply committed to ensuring that our pension investments are not financing terrorist organizations.

MOSERS’ current policy prohibits investing in companies the federal government has identified as supporting terrorism. Yet federal agencies will not tell states which companies to invest or not invest in. Their job, they note, is to ensure companies comply with disclosure laws regarding assets and earnings.

Thus, MOSERS policy is based on a federal listing that does not nor is likely to ever exist.

The result is a policy of bureaucratic doublespeak that purports to preclude investments in terrorist-supporting entities, while allowing exactly these kinds of investments with Missouri’s public pension funds.

I believe it is wrong to invest Missouri’s public pension funds in Arab Bank, or in foreign companies with direct financial ties to terrorist supporting countries.  These kinds of investments could cost our retirees millions of dollars.  That’s exactly what happened to pensions invested in Enron and Worldcom.

We should divest our stock in Arab bank, and preclude future investments in stocks whose operations have been curtailed by the U.S. agencies because of terrorist involvement. Second, we must divest holdings in foreign companies with direct ties to nations sanctioned by the United States for supporting terrorist organizations.

There is more than $3 trillion in public pension funds in the U.S., so Missouri is not alone in facing this challenge. By correcting MOSERS’ investment policy, we can sustain MOSERS’ good earnings and reputation, and lead through example to ensure our public pension funds are not helping finance terrorist organizations.