On June 3, the Minnesota State Board of Investment voted unanimously to end consideration of human rights in their investment decisions.
The State Board of Investment (SBI) manages $80 billion in assets used to pay for state pensions and other trusts. In 2014, SBI saw an 18.6 percent yield, with an annualized return over the last 10 years of 8.4 percent.
SBI’s authority rests in four officers outlined by the state constitution—the attorney general (currently Lori Swanson), the secretary of state (currently Steve Simon), the state auditor (currently Rebecca Otto), and the governor (currently Mark Dayton) as chair. The officers supervise a staff headed by Executive Director Mansco Perry.
The vote on the June 3 resolution was initially split 2–2, with
and Otto opposed. Perry repeated
the major points of the resolution and they voted again, this time 4–0. But
none of the constitutional officers is eager to discuss his or her vote. Dayton
and Simon did not respond to
multiple phone and email requests for comment. Ben Wogsland, a spokesman for
the Attorney General, refused to accept questions and deferred comment to
Jim Levi, a spokesman for the Auditor, accepted questions, but deferred response to the June 3 meeting minutes, which, as of press time, had not yet been released. Levi read a prepared statement from Otto: "If I’m approached about potential investments, I refer them to SBI staff. If I’m approached about divestment of any of the investments, I listen. Everything I do on the Board I do as a fiduciary and according to state law."
State law requires SBI to follow the "prudent person rule," meaning the Board is to manage the state’s assets as carefully as they would manage their own. The law includes a few clauses about the types of allowable investments, as well as risk and performance standards, but the four constitutional officers have considerable latitude in setting SBI’s policies and making investment decisions.
Former Duluth Representative Mike Jaros was in the state legislature in the ’80s when it first passed divestment resolutions stemming from human rights concerns. "I think our resolution said that the Board should not invest in
." Jaros says the resolution
was well received and passed easily. South Africa
In 1992, the Board adopted task force recommendations to consider human rights in its investment decisions. In its summary, the task force examined 34 countries, including
, South Africa , and China , but the details are only available
in the full task force report. SBI accepted a data request for the full report
last April, but a few weeks later, SBI Chief Operating Officer LeaAnn Stagg
called to say the full report couldn’t be located. Israel
Union leaders were involved in SBI’s human rights issues in the ’90s, but have since been silent. AFSCME Council 5 head Eliot Seide was on the task force in 1992, but Council 5 Public Affairs Director Jennifer Munt responded to questions via email. "It would be best to interview someone closer to recent actions to change the investment policy."
UNITE/HERE did not respond to requests for comment, despite appearing at an SBI meeting in 2013, seeking support for one of their workers who was employed by a firm connected to one of the Board’s investments.
Having now withdrawn its human rights policy, SBI is free to continue giving taxpayer money to entities flagged by Human Rights Watch, Amnesty International, and the United Nations Commission on Human Rights.
invests in scores of Chinese companies or those doing
business in Minnesota , including more than $40 million
stock in the Bank of China and $190,000 in China ’s Foxconn, an electronics
manufacturer notorious for its 2010–13 employee suicides in protest of working
Chinese labor law fails to meet international standards. Average manufacturing wages are 25 cents an hour and workers lack the right to organize. The Chinese government persecutes dissidents, censors the press, and displaces farmers to give their land to developers.
SBI owns more than $35.5 million stock in Rio Tinto, a mining company that holds mineral exploration leases to 36,000 acres of
land. Through its Kennecott subsidiary,
Rio Tinto is drilling for copper, nickel, and other precious metals in Aitkin
and Minnesota . Carlton Counties
Rio Tinto’s environmental record—from burning PCBs in
to groundwater contamination at Utah ’s Flambeau mine—and its record of
union–busting and squalid working conditions prompted Wisconsin to divest from Rio Tinto in 2008. Norway
SBI owns over $100 million stock in Royal Dutch Shell, which paid out $15 million in 1996 to settle a lawsuit over the oil company’s collaboration in executing tribal leaders in
. Despite promoting itself as a
sustainable energy company, Shell has been linked to dozens of oil spills,
fires, and toxic dumps. Nigeria
SBI owns $80 million stock in Coca–Cola, whose
subsidiaries were accused in 2003
of contracting with paramilitaries to kill union organizers. Colombia
SBI owns $100 million in bonds and dozens of companies in
, which has conducted a violent
military occupation of the Israel since 1967. Sometimes compared to
South African apartheid, Palestinian Territories walled off the Israel West Bank, imposed a blockade on , set up military checkpoints that
restrict Palestinian access to jobs, education, and medical care, and built
civilian settlements on Palestinian land—acts declared illegal by the United
Nations and the International Court of Justice. Gaza
"We have a fiduciary responsibility to maximize the returns," says SBI Executive Director Mansco Perry. "Absent a legislative mandate, the sole criterion is to exercise fiduciary responsibility, to maximize returns."
Perry says SBI’s investment decisions are "very apolitical…We invest in most stocks around the world. When it comes to choosing one or the other, the factors are weighed to try to determine which will give us the best return. We also have to take diversification into consideration, not just the simple, ‘I like A and I don’t like B.’"
But it’s hard to make a case that SBI’s divestments have not been influenced by parallel political trends. In addition to
, the legislature restricted SBI
from investing in South Africa in the 1980s and it currently
prohibits investment in Northern Ireland and Iran . Sudan
More importantly, SBI’s behavior does not suggest its decisions are apolitical.
In 2011, SBI was sued by Minnesota Break the Bonds, an organization seeking divestment of publicly held stocks and bonds in
. [Author’s disclosure: I’m a
member of Break the Bonds, which has been attending SBI meetings since 2009.] Israel
Opposition to divestment was led by the Jewish Community Relations Council, where Secretary of State Steve Simon serves on the board of directors in addition to being a constitutional officer of SBI.
The Council retained
attorney Charles Nauen, who was St. Paul ’s lead attorney in the 2010
Dayton–Emmer vote recount. In addition to contributing to both Dayton and Swanson’s campaigns, Nauen
"spent election night with Dayton in case elections issues came
up," according to the Star Tribune. Nauen also represented Otto last
year in an election dispute with Matt Entenza. Dayton
Break the Bonds’ lawsuit was dismissed for lack of standing, but SBI considered a divestment motion at its quarterly meeting on
March 4, 2015. After comments from the
Arab–American Anti–Discrimination Committee and the Jewish Community Relations
Council, presented a motion declining to divest from Dayton . Simon seconded the motion, opening
the floor to discussion. Israel
A member of the public asked the Board to speak louder so observers could hear them, and
replied that they are not required
After repeating the mantra of "fiduciary duty," Swanson asked Perry about the lawsuit. Perry said the court upheld SBI’s right to invest in
bonds, but he did not mention the
human rights issues in the suit. Israel
Swanson noted that
bonds yield more than treasury
bills (2.4 percent versus 1.54 percent). Perry said the rates were
"competitive," but made no reference to his 2014 report that SBI’s
Combined Funds yielded 18.6 percent in 2014 and 8.4 percent annualized over 10
Simon, making no mention of his board position with the Jewish Community Relations Council, stated, "I will be voting today according to our fiduciary duty, and on that alone."
The motion passed 3–1 with Otto opposed after reiterating her concern that, "Politics should not drive our decisions, as we are fiduciaries."
Followed three months later by the Board’s vote to no longer consider human rights, labor rights, or environmental concerns in its investment decisions, Minnesota pensioners can now be assured their retirements are funded in part by human misery, military violence, and the destruction of the planet.
> The article above was written by Bob Kosuth of the Twin Ports Break the Bonds Campaign. It is reprinted from the Zenith newspaper of Duluth, MN.