Terrorist Treasury: How New York’s Public Pension Fund Invests in our Enemies

1. Terrorist Treasury: How New York’s Public Pension Fund Invests in our Enemies Senator Jeffrey D. KleinSenator Eric Adams Deputy Minority Leader Ranking Minority Member 34th Senate District Veterans, Homeland Security & Military Affairs Committee 20th Senate District June 2007

2. Senator Jeffrey D. Klein Deputy Minority Leader, New York State Senate Senator Eric Adams New York State Senate Prepared By: Matthew S. Schneid Office of Senator Jeffrey D. Klein Victor Mallison Office of Senator Jeffrey D. Klein Shelley Andrews Office of Senator Jeffrey D. Klein Special Thank To: Conflict Securities Advisory Group Senator Jeffrey D. Klein Terrorist Treasury

3. Letter from Senator Klein Senator Jeffrey D. Klein Terrorist Treasury

4. SECTION 1: INTRODUCTION Senator Jeffrey D. Klein Terrorist Treasury

5. Introduction • Since our nation and state was attacked on September 11, 2001, our country has been awakened to the real threat of global terrorism on America’s shores. To that effect, our national government has engaged in a Global War against Terror to fight terrorist entities and those who support them. • While fighting terror is largely seen as a federal initiative, every government entity has an important role to play, and there are many ways that individual states can contribute. At the top of that agenda is Terror-Free Investing. Senator Jeffrey D. Klein Terrorist Treasury

6. Introduction, Cont. • Terror-Free Investing is a way for states to engage and fight the global war on terror by directing public pension fund investments away from companies who invest in terrorism or nations who sponsor terrorist groups. • New York State’s public employee pension fund is one of the largest in the nation, with investments totaling $140 billion. The state pension fun can have a considerable financial impact when directed properly. Senator Jeffrey D. Klein Terrorist Treasury

7. SECTION 2: ANALYSIS OF TERRORIST THREATS TO NEW YORK Senator Jeffrey D. Klein Terrorist Treasury

8. Analysis of Problem • The US Department of State Identifies five countries as sponsors of terrorism, and as New Yorkers we must make sure that our tax dollars and other public monies don’t go to increase their funding of terrorist organizations. • Although New York’s pension fund doesn’t directly invest in terrorist groups or terror sponsoring nations, our fund is invested in multiple companies that do business with these nations. • New York especially has to be wary because we are considered the prime target for terrorism in the United States. In addition to the horrific events of 9-11, NY was recently the target of a plot to attack our airports. Senator Jeffrey D. Klein Terrorist Treasury

9. Country by Country Analysis: Threat to United States • Iran • Iran remains the most active state sponsor of terrorism. Its Islamic Revolutionary Guard Corps (IRGC) and Ministry of Intelligence and Security (MOIS) have been directly involved in the planning and support of terrorist acts and continue to exhort a variety of groups, especially Palestinian groups with leadership cadres in Syria and Lebanese Hezbollah, to use terrorism in pursuit of their goals. In addition, the IRGC was increasingly involved in supplying lethal assistance to Iraqi militant groups, which destabilizes Iraq and threatens the lives of American troops. • Iran continues to be unwilling to bring to justice senior al-Qaida members detained. Iran has refused to publicly identify these senior members on "security grounds." Iran has also resisted numerous calls to transfer custody of its al-Qaida detainees to their countries of origin or to third parties for interrogation and/or trial. • Iran maintains a high-profile role in encouraging anti-Israeli terrorist activity -- rhetorically, operationally, and financially. Supreme Leader Khamenei and President Ahmadi-Nejad have praised Palestinian terrorist operations, and provided Lebanese Hezbollah and Palestinian terrorist groups -- notably HAMAS, Palestinian Islamic Jihad, the al-Aqsa Martyrs Brigades, and the Popular Front for the Liberation of Palestine-General Command -- with extensive funding, training, and weapons. • Iran presents a particular concern, given its active sponsorship of terrorism and its continued development of a nuclear program. Iran is also capable of producing biological and chemical agents or weapons. Like other state sponsors of terrorism with WMD programs, Iran could support terrorist organizations seeking to acquire WMD. Senator Jeffrey D. Klein Terrorist Treasury

10. Country Analysis: Cont. • Syria • The Syrian Government continued to provide political and material support to both Hezbollah and Palestinian terrorist groups. HAMAS, Palestinian Islamic Jihad (PIJ), the Popular Front for the Liberation of Palestine (PLFP), and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC), among others, base their external leadership in Damascus. The Syrian Government insists that the Damascus-based groups undertake only political and informational activities. However, in statements originating from outside Syria, many Palestinian groups have claimed responsibility for anti-Israeli terrorist acts. • The Syrian Government has not been implicated directly in an act of terrorism since 1986, although preliminary findings of a UN investigation into the February assassination of former Lebanese Prime Minister Rafik Hariri have indicated a strong likelihood of official Syrian involvement. • In May 2007the Syrian Government ended intelligence cooperation with the United States, citing continued U.S. public complaints about the inadequate level of assistance to end the flow of fighters and money to Iraq. Senator Jeffrey D. Klein Terrorist Treasury

11. Country Analysis: Cont. • North Korea • North Korea , the world’s only unreconstructed Stalinist country, has not been conclusively linked to a terrorist attack since the bombing of a Korean Airlines flight in 1987, but it still has a prominent place in the war on terrorism because it sells advanced missile technology to other states that sponsor terrorists. Even more worrisome is North Korea ’s October 2002 admission that it has had an ongoing secret nuclear-weapons program, in violation of its treaty commitments and a 1994 agreement with the United States to halt its pursuit of nuclear weapons. North Korea also claims to have other “more powerful” weapons. Senator Jeffrey D. Klein Terrorist Treasury

12. Country Analysis: Cont. • Sudan • Sudan continues its cooperative commitment against known and suspected international terrorist elements believed to be operating in and out of Sudanese territory. The government undertook actions against security threats posed by persons either suspected of using Sudan as a base of operation and/or persons of Sudanese origin purported to be associated with terrorist organizations. Sudan produced desired results against international terrorist elements and the facilitators that support them. • Sudan's history of having played host in the mid-1990s to Al-Qaida leader Osama bin Ladin. • The flow of weapons and personnel between Sudan and most of its western, southern, and eastern neighbors has weakened international efforts to stabilize the region. Many of Sudan's borders, particularly those along the Red Sea coast, remain porous and penetrable making it an easy part point of entry for human-trafficking and other black market elements. • Continued focus has been placed on Sudan for its role in contributing fighters for the Iraqi insurgency. Sudanese and foreign nationals who trained in Sudan have been captured as foreign fighters in Iraq. Senator Jeffrey D. Klein Terrorist Treasury

13. SECTION 3: RESEARCH AND RESULTS Senator Jeffrey D. Klein Terrorist Treasury

14. Research Methodology • A list of the New York State Common Retirement Fund’s assets were compiled as of March 31, 2006, the end of the 2006 fiscal year. • The list was taken from the 2006 Comprehensive Annual Report. • The listing of the pension fund’s equity assets were then vetted by The Conflict Securities Advisory Group to assess which companies do business with terror-sponsoring nations. • Conflict Securities Advisory Group’s Global Security Risk Monitor identifies and profiles publicly traded companies with business ties to countries identified by the U.S. State Department as state sponsors of terrorism. Senator Jeffrey D. Klein Terrorist Treasury

15. Results • New York has links to 235 companies that do business with nations that sponsor terrorism. • 7% of NY’s equity assets are linked to these companies. • $12 billion dollars are invested in the 235 companies. • 16% of New York equity investments are tied to companies that invest in nations that sponsor terrorism. Senator Jeffrey D. Klein Terrorist Treasury

16. Companies with $100 Million or More Invested from New York’s Pension Fund • Chevron Corporation* • Country Connection: Sudan • Total NY Investments: $537,599,794 • ConocoPhillips • Country Connection: Iran and Syria • Total NY Investments: $402,524,541 • Coca-Cola • Country Connection: Iran, North Korea, Sudan and Syria • Total NY Investments: $349,280,545 • Royal Dutch Shell • Country Connection: Iran, Sudan, Syria • Total NY Investment: $209,991,294 • Total SA • Country Connection: Iran, Sudan and Syria • Total NY Investment: $165,726,410 • ENI SpA • Country Connection: Iran • NY Investment: $100,774,675 *All companies compiled by the Office of Senator Jeffrey D. Klein Senator Jeffrey D. Klein Terrorist Treasury

17. Conclusion • New York must amend its investment strategy to direct funds away from terror sponsoring nations. • In this century we are facing stronger enemies than in the previous century. Americans should not be financiers of a war against ourselves. As citizens of New York we can show that we are still as united on standing against terrorists and terrorism as strongly as we were on September 11. We are telling all the terrorists that they are not only being hunted by our military forces, but also with our economic strength. Senator Jeffrey D. Klein Terrorist Treasury

18. SECTION 4: LEGISLATIVE REFORMS TO FIGHT TERRORISTS FROM NEW YORK Senator Jeffrey D. Klein Terrorist Treasury

19. Terror-Free Investing Sweeping the Nation • Multiple state have enacted or proposed legislation regarding divestment from Iran, which is a country listed as a state sponsor of terrorism • California • Florida • Georgia • Kansas • Louisiana • New Jersey • Oklahoma • Oregon • Texas • Missouri Senator Jeffrey D. Klein Terrorist Treasury

20. Legislative Recommendations • Enact Terror-Free Investing legislation in New York State • Divest the New York State public employee pension fund from terror sponsoring nations • Iran, Syria, Sudan and North Korea • Measure the success of the program by having the Comptroller provide yearly progress reports to the state legislature Senator Jeffrey D. Klein Terrorist Treasury

21. Recent Updates in New York • The New York State Comptroller has embraced the notion of using the investment fund as a means of influencing foreign policy. • NYS Comptroller has already advocated divestment of funds from companies who do business with Sudan. Senator Jeffrey D. Klein Terrorist Treasury

22. Appendix List of Companies with Known Links to Terror-Sponsoring Nations* • Chevron Corporation • Sector : Energy • Country of Origin: United States • Country Connection: Sudan • Total NY Investments: $537,599,794 • ConocoPhillips • Sector: Energy • Country of Origin: United States • Country Connection: Iran and Syria • Total NY Investments: $402,524,541 • The Coca-Cola Company • Sector: Beverages • Country of Origin: United States • Country Connection: Iran, North Korea, Sudan and Syria • Total NY Investments: $349,280,545 • Royal Dutch Shell • Sector: Energy • Country of Origin: Netherlands • Country Connection: Iran, Sudan, Syria • Total NY Investment: $209,991,294 *Compiled by Senator Klein’s Office using published reports of links to terror-sponsoring nations Senator Jeffrey D. Klein Terrorist Treasury

23. Appendix, Cont. • Total SA • Sector: Energy • Country of Origin: France • Country Connection: Iran, Sudan and Syria • Total NY Investment: $165,726,410 • ENI SpA • Sector: Energy • Country of Origin: Italy • Country Connection: Iran • NY Investment: $100,774,675 • Baker-Hughes Inc. • Sector: Energy • Country of Origin: United States • Country Connection: Iran and Sudan • Total NY Investment: $94,733,521 • Norsk Hydro • Sector: Energy • Country of Origin: Norway • Country Connection: Iran • Total NY Investment: $52,492,814 Senator Jeffrey D. Klein Terrorist Treasury

24. Appendix, Cont. • Alcatel SA • Sector: Telecommunications • Country of Origin: France • Country Connection: Iran and Sudan • Total NY Investment: $33,445,988 • Statoil ASA • Country of Origin: Norway • Country Connection: Iran • Total NY Investment: $26,104,368 • Sector: Energy • Lukoil Holdings • Sector: Energy • Country of Origin: Russia • Country Connection: Iran • Total NY Investment: $ 25,071,390 • Technip Coflexip • Sector: Energy • Country of Origin: France • Country Connection: Iran • Total NY Investment: $13,888,898 Senator Jeffrey D. Klein Terrorist Treasury

25. Appendix, Cont. • BNP Paribas • Sector: Finance • Country of Origin: France • Country Connection: Iran • Total NY Investment: $ 6,763,826 • OMV Ag • Sector: Energy • Country of Origin: Austria • Country Connection: Iran • Total NY Investment: $4,774,439 • KT Corp • Sector: Telecommunications • Country of Origin: South Korea • Country Connection: Iran and North Korea • Total NY Investment: $2,276,326 • OAO Gazprom • Sector: Energy • Country of Origin: Russia • Country Connection: Iran • Total NY Investment: $1,841,163 Senator Jeffrey D. Klein Terrorist Treasury