Money talks

Money talks

Contractor ties to Iran’s oppressive regime at issue for the MTA — and possibly Pasadena — after county leaders call for pension fund divestment

By Joe Piasecki 07/23/2009

Like it? Tweet it! SHARE IT!

Los Angeles County Supervisor Michael Antonovich is a conservative Republican.  Supervisor Zev Yaroslavsky is a liberal Democrat. But there’s at least one thing both can firmly agree on: The county should think twice before investing in companies that do business with Iran.

A joint motion by Antonovich and Yaroslavsky that was approved unanimously on Tuesday cites State Department reports of Iran’s support for international terrorism and pursuit of nuclear programs and calls on the Los Angeles County Employees Retirement Association pension fund to dump investments in any company with major ties to Iran’s energy sector.

But it is the Iranian government’s ongoing violent suppression of demonstrators that has ignited passions around the issue and is prompting Pasadena City Councilman Chris Holden to support examining whether the Pasadena Fire and Police Retirement Board holds investments in companies tied to Iran.

“When you see young people marching and in some cases being seriously hurt and killed to have a freer voice in Iran, it speaks volumes and calls out to the rest of the world to do our part,” said Holden, who would encourage withdrawing investments from those companies the same way the council, led by Holden and former Councilman Bill Paparian, ordered divestments in the 1980s over concerns about South African apartheid. City officials did not immediately know whether the police and fire pension funds held investments linked to Iran.

Meanwhile, the Los Angeles MTA Board of Directors, a 13-member body that includes Antonovich and Yaroslavsky, will be meeting today and confronting a similar choice over the handling of a $300 million contract for the purchase of light rail cars.

Board members must decide whether to extend a deal with Italian train makers AnsaldoBreda — which previously won a contract for 50 cars but according to MTA officials has failed to meet the terms of that deal — or send the lucrative purchase order for 100 more cars back out to bid. That bidding process, several media outlets have reported, would likely favor German-based Siemens Corp., which in a joint venture with telecom giant Nokia last year sold Iran a communications monitoring center for spying on phone calls, emails and Internet use that has likely been used in the government’s violent suppression of political speech.

The Italian firm, however, may have even greater ties to the Iranian government. AnsaldoBreda parent company Finmeccanica also operates power plant builder Ansaldo Energia, which boasts lucrative ties with Iran’s Ministry of Energy, the department leading the country’s nuclear program. On its Web site, Ansaldo Energia states that it has supplied 32 gas turbine generators in Iran that constitute “roughly 20 percent of the entire [energy] production of the country.” The company did not respond to questions about the value of that contract, but its Web site reports other contracts for 12 additional generators in Iran.

“I’m getting a ton of emails. This story has really taken on legs,” said MTA Board Chair and Glendale City Councilman Ara Najarian, who said the Board of Supervisors’ support for Iran divestiture sets a precedent for contractors’ dealings with Iran to influence MTA decision making.

If the board sends the train car contract back out to bid, “We can include language to exclude countries that deal with the Islamic Republic of Iran,” said Najarian, “and, I presume, extend it to any other regime that has serious civil and human rights violations.”

Because so many multinational corporations deal with Iran and other troubled nations, the nature of those dealings may also be weighed on a “sliding good-to-evil scale of technology,” said Najarian, to differentiate businesses that provide Iranians with necessary services, such as water filtration, from those with more direct government ties, such as Siemens.

The Board of Supervisors resolution calls for county pension divestment specifically from companies “that are significantly invested in the Iranian energy sector.” The move affects some $50 to $60 million worth of investments, said LA County Employees Retirement Association CEO Gregg Rademacher, whose offices are in Pasadena.

“This is a moment where morality and fiduciary responsibility perfectly align,” said Andrew Cushner, an executive with the Jewish Federation of Los Angeles.

Pasadena Human Relations Commission member Nat Nehdar, an Iranian American of Jewish descent, said he supports attempts to divest from Iran. “We have seen recently the hate and violence [of the Iranian government] against people trying to express their voices,” he said. “If our investment goes to them, it’s hypocrisy. You’re just fanning the flames.”

A state law enacted last year called on the California Public Employees’ Retirement System to divest from companies with significant investments in Iran, but CalPERS has resisted making those changes, citing its charter mission to first protect the security of its beneficiaries’ assets.

“The CalPERS Board decided earlier this year not to divest in companies doing business in Iran,” spokesman Clark McKinley wrote Monday in an email to the Weekly.

In compliance with the 2008 law, CalPERS raised lawmakers’ concerns with affected companies, but “The Iran divestment statute stated that CalPERS is not required to take action under the statute unless it determined in good faith that the action was consistent with its fiduciary responsibilities as described in the California Constitution,” wrote McKinley. “The CalPERS Board concluded that divestment and constraining investment opportunity would do greater harm and conflict with the constitutional mandate to maximize investment returns.”

Under the 1996 Iran Sanctions Act, domestic and foreign companies that do $20 million or more in energy business with Iran are subject to possible federal penalties.

Pending legislation written by Democratic Congressman Barney Frank and cosponsored by 199 legislators, including Pasadena Democrat Adam Schiff, would encourage (but not mandate) state, county and local governments to divest from these companies.
Although staff members for both Yaroslavsky and Antonovich offered no official comment on the county resolution or the coming MTA decision, Yaroslavsky told board members Tuesday that the potential for companies doing business in Iran to face federal sanctions could affect the value of their stock. Shedding such holdings, he said, is “important not only in terms of using the leverage for broader policy issues, but also to protect the financial integrity of our investments.”

Holden adds that the greater purpose of cutting Pasadena’s ties with companies that do business in Iran would be to force them to choose where they do business.

“To what extent we can look at our portfolios and cull out dollars we see directly or indirectly supporting Iran is a change we should certainly look to make,” said Holden. “It’s designed to put those companies between a rock and a hard place — whether it’s more cost-effective to cut American business [and investors] loose or let go of their connections to Iran. At the end of the day, it’s got to go that far.”


Like it? Tweet it!

Other Stories by Joe Piasecki

Related Articles

Post A Comment

Requires free registration.

(Forgotten your password?")