Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:
SECTION 1. As used in this act the following words shall, unless the context clearly requires otherwise, have the following meanings:-
“Active business operations”, all business operations that are not inactive business operations.
“Board”, the pension reserves investment management board established pursuant to section 23 of chapter 32 of the General Laws.
“Business operations”, engaging in commerce in any form in Sudan, including by acquiring, developing, maintaining, owning, selling, possessing, leasing, or operating equipment, facilities, personnel, products, services, personal property, real property, or any other apparatus of business or commerce.
“Company”, any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other entity or business association, including all wholly-owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such entities or business associations that exist for profit-making purposes.
“Complicit”, taking actions during any preceding 20 month period which have directly supported or promoted the genocidal campaign in Darfur, including, but not limited to, preventing Darfur’s victimized population from communicating with each other, encouraging Sudanese citizens to speak out against an internationally approved security force for Darfur, actively working to deny, cover up, or alter the record on human rights abuses in Darfur, or other similar actions.
“Direct holdings”, all securities of a company held directly by the public fund or in an account or fund in which the public fund owns all shares or interests.
“Government of Sudan”, the government in Khartoum, Sudan, which is led by the National Congress Party, formerly known as the National Islamic Front, or any successor government formed on or after October 13, 2006, including the coalition national unity government agreed upon in the comprehensive peace agreement for Sudan, and does not include the regional government of southern Sudan.
“Inactive business operations”, the continued holding or renewal of rights to property previously operated for the purpose of generating revenues but not presently deployed for such purpose.
“Indirect holdings”, all securities of a company held in an account or fund, such as a mutual fund, managed by 1 or more persons not employed by the public fund, in which the public fund owns shares or interests together with other investors not subject to the provisions of this act.
“Marginalized populations of Sudan”, includes, but is not limited to: (1) the portion of the population in the Darfur region victimized by genocide; (2) the portion of the population of southern Sudan victimized by Sudan’s North-South civil war; (3) the Beja, Rashidiya, and other similarly underserved groups of eastern Sudan; (4) the Nubian and other similarly underserved groups in Sudan’s Abyei, Southern Blue Nile, and Nuba Mountain regions; and (5) the Amri, Hamadab, Manasir, and other similarly underserved groups of northern Sudan.
“Military equipment”, weapons, arms, military supplies, and equipment that readily may be used for military purposes, including, but not limited to, radar systems or military-grade transport vehicles; or supplies or services sold or provided directly or indirectly to any force actively participating in armed conflict in Sudan.
“Mineral extraction activities”, exploring, extracting, processing, transporting, or wholesale selling or trading of elemental minerals or associated metal alloys or oxides (ore), including gold, copper, chromium, chromite, diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as well as facilitating such activities, including by providing supplies or services in support of such activities.
“Oil-related activities”, includes, but is not limited to: (1) owning rights to oil blocks; (2) exporting, extracting, producing, refining, processing, exploring for, transporting, selling, or trading of oil; (3) constructing, maintaining, or operating a pipeline, refinery, or other oil-field infrastructure; and (4) facilitating such activities, including by providing supplies or services in support of such activities, provided that, the mere retail sale of gasoline and related consumer products shall not be considered oil-related activities.
“Power production activities”, any business operation that involves a project commissioned by the National Electricity Corporation of Sudan or other similar government of Sudan entity whose purpose is to facilitate power generation and delivery, including, but not limited to, establishing power-generating plants or hydroelectric dams, selling or installing components for the project, providing service contracts related to the installation or maintenance of the project, as well as facilitating such activities, including by providing supplies or services in support of such activities.
“Public fund”, the Pension Reserves Investment Trust or the Pension Reserves Investment Management Board in charge of managing the pooled investment fund consisting of the assets of the State Employees’ and Teachers’ Retirement Systems as well as the assets of local retirement systems under the control of the board.
“Scrutinized company”, any company that meets the criteria in this definition:-
(1) the company has business operations that involve contracts with or provision of supplies or services to (a) the government of Sudan, (b) companies in which the government of Sudan has any direct or indirect equity share, (c) government of Sudan-commissioned consortiums or projects, or (d) companies involved in government of Sudan-commissioned consortiums or projects; and (i) more than 10 per cent of the company’s revenues or assets linked to Sudan involve oil-related activities or mineral extraction activities; less than 75 per cent of the company’s revenues or assets linked to Sudan involve contracts with or provision of oil-related or mineral extracting products or services to the regional government of southern Sudan or a project or consortium created exclusively by that regional government; and the company has failed to take substantial action; or (ii) more than 10 per cent of the company’s revenues or assets linked to Sudan involve power production activities; less than 75 per cent of the company’s power production activities include projects whose intent is to provide power or electricity to the marginalized populations of Sudan; and the company has failed to take substantial action.
(2) The company is complicit in the Darfur genocide.
(3) The company supplies military equipment within Sudan, unless it clearly shows that the military equipment cannot be used to facilitate offensive military actions in Sudan or the company implements rigorous and verifiable safeguards to prevent use of that equipment by forces actively participating in armed conflict, for example, through post-sale tracking of such equipment by the company, certification from a reputable and objective third party that such equipment is not being used by a party participating in armed conflict in Sudan, or sale of such equipment solely to the regional government of southern Sudan or any internationally recognized peacekeeping force or humanitarian organization. Notwithstanding anything herein to the contrary, a social development company which is not complicit in the Darfur genocide shall not be considered a scrutinized company.
“Social development company”, a company whose primary purpose in Sudan is to provide humanitarian goods or services, including medicine or medical equipment, agricultural supplies or infrastructure, educational opportunities, journalism-related activities, information or information materials, spiritual-related activities, services of a purely clerical or reporting nature, food, clothing, or general consumer goods that are unrelated to oil-related activities, mineral extraction activities, or power production activities.
“Substantial action”, adopting, publicizing, and implementing a formal plan to cease scrutinized business operations within 1 year and to refrain from any such new business operations; undertaking humanitarian efforts in conjunction with an international organization, the government of Sudan, the regional government of southern Sudan, or a non profit entity; and evaluated and certified by an independent third party to be substantial in relationship to the company’s Sudan business operations and of benefit to 1 or more marginalized populations of Sudan; or through engagement with the government of Sudan, materially improving conditions for the population victimized by genocide in Darfur.
SECTION 2. Within 90 days of the effective date of this act, the public fund shall make its best efforts to identify all scrutinized companies in which the public fund has direct or indirect holdings or could possibly have such holdings in the future. The identification of scrutinized companies shall be the responsibility of an independent, third-party research firm, as identified by the public fund, and based on the criteria set forth in this act. By the first meeting of the public fund following the 90-day period, the public fund shall assemble all scrutinized companies identified into a scrutinized companies list. The public fund shall update the scrutinized companies list on a quarterly basis based on evolving information from the aforementioned independent, third-party research firm.
SECTION 3. The public fund shall adhere to the following procedure for companies on the scrutinized companies list:-
(a)(1) the public fund shall immediately determine the companies on the scrutinized companies list in which the public fund owns direct or indirect holdings;
(2) if, and only while such company continues to have scrutinized active business operations, the public fund shall sell, redeem, divest, or withdraw all publicly-traded securities of each company identified in paragraph (1) with active business operations, except as provided below, according to the following schedule: (i) at least 50 per cent of such assets shall be removed from the public fund’s assets under management by 6 months after the company’s most recent appearance on the scrutinized companies list (ii) 100 per cent of such assets shall be removed from the public fund’s assets under management within 12 months after the company’s most recent appearance on the scrutinized companies list;
(3) during the time period outlined in paragraph (2) the public fund may, but is not required to, sign onto engagement letters or participate in shareholder resolutions regarding the scrutinized business operations of companies identified in paragraph (1) with active or inactive business operations in which the public fund still owns direct or indirect holdings;
(4) If a company identified in paragraph (1) with only inactive business operations converts such operations to active business operations, paragraph (2) will immediately apply. The company shall also be immediately reintroduced onto the scrutinized companies list.
(b) At no time shall the public fund acquire securities of companies on the scrutinized companies list that have active business operations, except as provided in subsections (c) and (d).
(c) No company which the United States government affirmatively declares to be excluded from its present or any future federal sanctions regime relating to the government of Sudan shall be subject to divestment or investment prohibition pursuant to subsections (a) and (b).
(d) Notwithstanding anything herein to the contrary, subsections (a) and (b) shall not apply to indirect holdings in actively managed investment funds. The public fund shall, however, submit letters to the managers of such investment funds containing companies with scrutinized active business operations requesting that they consider removing such companies from the fund or create a similar actively managed fund with indirect holdings devoid of such companies. If the manager creates a similar fund, the public fund shall replace all applicable investments with investments in the similar fund in an expedited time frame consistent with prudent investing standards. For the purposes of this section, private equity funds shall be deemed to be actively managed investment funds.
SECTION 4. The public fund shall file a report with the clerks of the senate and the house of representatives and the attorney general that includes the scrutinized companies list within 30 days after the list is created. Annually thereafter, the public fund shall file a report to the clerks of the senate and the house of representatives and the attorney general and send a copy of that report to the United States presidential special envoy to Sudan, or an appropriate designee or successor, that includes: (1) all investments sold, redeemed, divested, or withdrawn in compliance with subsection (a) of section 3; (2) all prohibited investments under subsection (b) of section 3; and (3) any progress made under subsection (d) of section 3.
SECTION 5. With respect to actions taken in compliance with this act, including all good faith determinations regarding companies as required by this act, the public fund shall be exempt from any conflicting statutory or common law obligations, including any such obligations in respect to choice of asset managers, investment funds, or investments for the public fund’s securities portfolios.
SECTION 6. Notwithstanding anything herein to the contrary, the public fund shall be permitted to cease divesting from certain scrutinized companies pursuant to subsection (a) of section 3 or reinvest in certain scrutinized companies from which it divested pursuant to said subsection if clear and convincing evidence shows that the value for all assets under management by the public fund becomes equal to or less than 99.5 per cent (50 basis points) of the hypothetical value of all assets under management by the public fund assuming no divestment for any company had occurred under said subsection. Cessation of divestment, reinvestment, or any subsequent ongoing investment authorized by this section shall be strictly limited to the minimum steps necessary to avoid the contingency set forth in the preceding sentence. For any cessation of divestment, reinvestment, or subsequent ongoing investment authorized by this subsection, the public fund shall provide a written report to the attorney general, the senate and house committees on ways and means and the joint committee on public service in advance of initial reinvestment, updated semi-annually thereafter as applicable, setting forth the reasons and justification, supported by clear and convincing evidence, for its decisions to cease divestment, reinvest, or remain invested in companies with scrutinized active business operations. This section has no application to reinvestment in companies on the ground that they have ceased to have scrutinized active business operations.
SECTION 7. This act shall expire when the government of Sudan is not the subject of sanctions, relative to genocide, imposed by the government of the United States.
Approved November 2, 2007.