On the Question of Divestiture

“State Moving toward Divestment from Sudan: Bill Would Affect Small Percentage of Pension System”, Worcester Telegram and Gazette, March 14, 2007.

On March 29, 2007, actress Mia Farrow appeared before the Massachusetts State House calling for state divestment from Sudan, citing the atrocities committed by the Sudanese troops against the people of Darfur. What is going on there is nothing short of genocide. The bloody war in the Darfur region has caused over 400,000 war deaths. According to the WT&G report, Massachusetts wants to become the eighth state to enact divestment legislation, part of an over all strategy to stop the Sudanese government’s systematic slaughter of Darfur citizens.

The sentiment behind this legislation is to be applauded. As the saying goes, “every little bit helps”. But will it? Let us look closely at what is being contemplated. Again according to WT&G, State Senator Edward M. Augustus Jr. believes that “Mr. Patrick would sign divestment legislation if it reaches his desk”. That is well and good. The next paragraph states, “The bill would allow the state to opt-out of divestment of a particular company, if it turns out that divestment has a NEGATIVE EFFECT ON INVESTMENT RETURNS”. About two-tenth of one percent of the state’s pension fund is invested in companies that do business in Sudan. Well, I am floored.

There was a time in relation of discussion about the looming federal budget deficits that the phrase “smoke and mirror” was coined. If it is for the show, then the legislation or the talk about the possibility for said legislation appease those, who are genuinely concerned over the plight of the Darfur people and lack the power to act on their own, would find the legislation to be the next best thing—to hit the attacker where it hurts the most, in his pocket book. Be real! Is the loss of two tenths of one percent of the state pension fund assets invested in companies doing business in Sudan going to make a dent in the Sudanese government war chest? Remember, they have the BLACK GOLD – oil. Perhaps, this could be so, if all 50 states were to divest. One can but hope.

Let me now turn to examine a most unpalatable provision in the legislation. As quoted earlier, the legislation would allow the state to opt-out of the divestment if pulling out would have a NEGATIVE IMPACT ON INVESTMENT RETURNS. It does not take economic training to figure out the implication of this provision. Companies diversify their investment portfolio to garner highest returns for their investors. In the business world the “bottom line is king.” Investment companies’ executives live and die by the bottom line. The State when investing its pension fund assets in Sudan expected returns on its assets equal if not higher than what it could have earned from different investments. When the State of Massachusetts made their investment decision, the overriding factor was returns for a given risk. The provision that the state would pull out if returns were to fall due to divestment struck me as naïve at best if not downright “erroneous”. All actions are either motivated by profit or social justice. However comforting it may be to believe that the state divestment would speed up the fall of the Sudanese government, or end the devastating effects of the mass killing in the Darfur region, we need to be honest about not only our motives but also our actions. Governor Patrick, if he were to sign the legislation, would further the cause in striking down the opt-out provision from the bill. Most significantly, perhaps, is to make an honest assessment about whether the state divestment will alter the behavior of the Sudanese ruler.

There are no nobler causes than these of restoring life, liberty, and dignity to oppressed people. We, the residents of Massachusetts, should be the ones to ask, “How may we help?” I for one have more questions than answers. Genocide and mass killing in such a far place should not prevent us from asking the question. Perhaps if many of us did, we may be able to change the political landscape. We may even find some answers.