BILL NUMBER: AB 1410	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Members Nazarian, Achadjian, and Wilk

                        FEBRUARY 27, 2015

   An act to amend Section 16642 of, and to add Section 7513.75 to,
the Government Code, relating to investments.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1410, as introduced, Nazarian. Public employees' retirement:
investments: Turkish investment vehicles.
   The California Constitution provides that the Legislature may by
statute prohibit retirement board investments if it is in the public
interest to do so, and providing that the prohibition satisfies
specified fiduciary standards.
   Existing law prohibits the Public Employees' Retirement System and
the State Teachers' Retirement System from investing public employee
retirement funds in a company with active business operations in
Sudan and in Iran, as specified.
   This bill would additionally prohibit the Public Employees'
Retirement System and the State Teachers' Retirement System from
investing public employee retirement funds in a Turkish investment
vehicle, as specified. The bill would require the Board of
Administration of the Public Employees' Retirement System and the
Teachers' Retirement Board of the State Teachers' Retirement System
to sell or transfer any investments in a Turkish investment vehicle.
   This bill would require these boards, on or before January 1,
2017, and annually thereafter, to report to the Legislature any
investments in a Turkish investment vehicle and the sale or transfer
of those investments, subject to the fiduciary duty of these boards.
   This bill would indemnify from the General Fund and hold harmless
the present, former, and future board members, officers, and
employees of and investment managers under contract with those
retirement systems.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares the following:
   (a) The State of California has officially recognized the Armenian
Genocide each year for decades and has repeatedly urged the Republic
of Turkey to acknowledge the facts of the Armenian Genocide and work
toward a just resolution, honor its obligations under international
treaties and human rights laws, to end all forms of religious
discrimination and persecution, and to return Christian church
properties to their rightful owners.
   (b) Genocide is defined by the United Nations as an act "committed
with intent to destroy, in whole or in part, a national, ethnical,
racial or religious group".
   (c) Genocide denial is widely viewed as among the final stages of
genocide and serves to perpetuate the effects of genocide even after
the active phases of extermination, massacres, forced marches, and
deportation has ended.
   (d) The government of Turkey has engaged and continues to engage
in an ongoing campaign of genocide denial and historical revisionism
by refusing to acknowledge its responsibility for the Armenian
Genocide, refusing to compensate its victims, and actively pursuing a
well-funded political lobbying campaign throughout the United
States, including in California, to rewrite history and defeat
legislation recognizing the Armenian Genocide.
   (e) The government of Turkey has engaged and continues to engage
in efforts to effect Armenian cultural erasure since the founding of
the Republic of Turkey, including, but not limited to, ethnic
cleansings and the destruction of sacred Armenian religious sites.
   (f) Reference in Turkey by any scholar, journalist, or other
person to the massacre and deportation of Armenians in 1915 to 1923,
inclusive, as genocide can be criminally prosecuted under Article 301
of the Turkish Penal Code.
   (g) The State of California is home to the largest
Armenian-American population in the United States, and Armenians
living in California, most of whom are direct descendants of the
survivors of the Armenian Genocide, have enriched our state through
their leadership and contributions in business, agriculture,
academia, government, and the arts, yet continue to suffer the
effects of the continued denial campaign by the government of Turkey.

   (h) The State of California, as the world's eighth largest
economy, and in accordance with principles of human rights and
justice, has taken the lead in adopting legislation to divest from
South Africa for its policy of apartheid, Sudan for its genocide in
Darfur, and Iran for its support of international terrorism, imposing
economic consequences upon regimes that engage in conduct and policy
that violate human rights or constitute crimes against humanity.
   (i) The State of California, through its Public Employees'
Retirement System (PERS) and its State Teachers' Retirement System
(STRS), directly invests public funds in the government of Turkey,
which then reaps profits while actively denying the Armenian
Genocide, funding its continued campaign of denial, at least in part,
through these investments in its economy.
   (j) By investing public funds in the government of Turkey, the
State of California as the embodiment of its citizens contradicts its
longstanding, just position of recognizing the Armenian Genocide and
urging the government of Turkey to acknowledge its responsibility
and work toward a just resolution by honoring its obligations under
international treaties and human rights laws, to end all forms of
religious discrimination and persecution, and to return Christian
church properties to their rightful owners.
   (k) It is the government of Turkey, not the people of Turkey, that
is responsible for Turkey's continued egregious violations of human
rights and active pursuit of genocide denial, cultural erasure, and
historical revisionism.
   (l) PERS currently has investment holdings in bonds directly
issued by the Republic of Turkey in excess of $185,000,000.
   (m) STRS currently has investment holdings in bonds directly
issued by the Republic of Turkey in excess of several hundred million
dollars.
   (n) Investment in the Republic of Turkey enables its government to
continue to deny justice to the Armenian people.
   (o) Divesting these funds would ensure that the State of
California is in no way complicit in the continued denial of the
Armenian Genocide by the government of Turkey and would encourage
said government to acknowledge the Armenian Genocide and to reach a
fair and just resolution of reparations for the survivors of the
Armenian Genocide.
  SEC. 2.  Section 7513.75 is added to the Government Code, to read:
   7513.75.  (a) As used in this section, the following terms have
the following meanings:
   (1) "Board" means the Board of Administration of the Public
Employees' Retirement System or the Teachers' Retirement Board of the
State Teachers' Retirement System, as applicable.
   (2) "Government of Turkey" means the government of Turkey or its
instrumentalities or political subdivisions. "Government of Turkey"
also includes any and all investment vehicles, government bonds, or
financial institutions and entities that are owned, controlled, or
operated by the government of Turkey.
   (3) "Turkey" means the Republic of Turkey or any territory under
the administration or control of Turkey.
   (4)  "Public employee retirement funds" means the Public Employees'
Retirement Fund described in Section 20062 and the Teachers'
Retirement Fund described in Section 22167 of the Education Code.
   (b) The board shall not invest public employee retirement funds in
any investment vehicle in Turkey that meets either of the following
criteria:
   (1) The investment vehicle is issued by the government of Turkey.
   (2) The investment vehicle is owned, controlled, or managed by the
government of Turkey.
   (c) On or before June 30, 2016, the board shall determine which
Turkish investment vehicles are subject to divestment.
   (d) After the determination described in subdivision (c), the
board shall determine, by the next applicable board meeting, if a
Turkish investment vehicle meets the criteria described in
subdivision (b). If the board plans to invest or has investments in a
company that meets the criteria described in subdivision (b), that
planned or existing investment shall be subject to subdivisions (g)
and (h).
   (e) Investments of the board in an investment vehicle that does
not meet the criteria described in subdivision (b) are not subject to
subdivision (h) if the company does not subsequently meet the
criteria described in subdivision (b). The board shall identify the
reasons why that investment vehicle does not satisfy the criteria
described in subdivision (b) in the report to the Legislature
described in subdivision (i).
   (f) (1) Notwithstanding subdivisions (d) and (e), if the board's
investment in a company described in subdivision (b) is limited to
investment via an externally and actively managed commingled fund,
the board shall contact that fund manager in writing and request that
the fund manager remove that investment vehicle from the fund as
described in subdivision (h). On or before June 30, 2016, if the fund
or account manager creates a fund or account devoid of investment
vehicles described in subdivision (b), the transfer of board
investments from the prior fund or account to the fund or account
devoid of the investment vehicles shall be deemed to satisfy
subdivision (h).
   (2) If the board's investment in an investment vehicle described
in subdivision (b) is limited to an alternative fund or account, the
alternative fund or account manager creates an actively managed
commingled fund that excludes investment vehicles described in
subdivision (b), and the new fund or account is deemed to be
financially equivalent to the existing fund or account, the transfer
of board investments from the existing fund or account to the new
fund or account shall be deemed to satisfy subdivision (h). If the
board determines that the new fund or account is not financially
equivalent to the existing fund, the board shall include the reasons
for that determination in the report described in subdivision (i).
   (3) The board shall make a good faith effort to identify any
private equity investments that involve investment vehicles described
in subdivision (b), or are linked to the government of Turkey. If
the board determines that a private equity investment clearly
involves an investment vehicle described in subdivision (b), or is
linked to the government of Turkey, the board shall consider, at its
discretion, if those private equity investments shall be subject to
subdivision (h). If the board determines that a private equity
investment clearly involves a company described in subdivision (b),
or is linked to the government of Turkey and the board does not take
action as described in subdivision (h), the board shall include the
reasons for its decision in the report described in subdivision (i).
   (g) Except as described in subdivisions (e) and (f), the board, in
the board's capacity of shareholder or investor, shall notify any
investment vehicle described in subdivision (d) that the investment
vehicle is subject to subdivision (h) and permit that investment
vehicle to respond to the board. The board shall request that the
investment vehicle take substantial action to disassociate itself
from the government of Turkey no later than 90 days from the date the
board notified the investment vehicle under this subdivision. If the
board determines that an investment vehicle has taken substantial
action or has made sufficient progress toward substantial action
before the expiration of that 90-day period, that investment vehicle
shall not be subject to subdivision (h). The board shall, at
intervals not to exceed 90 days, continue to monitor and review the
progress of the investment vehicle until that investment vehicle has
taken substantial action in Turkey. An investment vehicle that fails
to complete substantial action within one year from the date of the
initial notice by the board shall be subject to subdivision (h).
   (h) If an investment vehicle described in subdivision (d) fails to
complete substantial action by the time described in subdivision
(g), the board shall take the following actions:
   (1) The board shall not make additional or new investments or
renew existing investments in that investment vehicle.
   (2) The board shall liquidate the investments of the board in that
investment vehicle no later than 18 months after this subdivision
applies to that investment vehicle. The board shall liquidate those
investments in a manner to address the need for investment vehicles
to take substantial action in Turkey and consistent with the board's
fiduciary responsibilities as described in Section 17 of Article XVI
of the California Constitution.
   (i) On or before January 1, 2017, and every year thereafter, the
board shall file a report with the Legislature. The report shall
describe the following:
   (1) A list of investments the board has in investment vehicles
that satisfy the criteria in subdivision (b), including, but not
limited to, the issuer, by name, of the stock, bonds, securities, and
other evidence of indebtedness.
   (2) A detailed summary of the association between an investment
vehicle described in paragraph (1) and the government of Turkey.
   (3) Whether the board has reduced its investments in an investment
vehicle that satisfies the criteria in subdivision (b).
   (4)  If the board has not completely reduced its investments in an
investment vehicle that satisfies the criteria in subdivision (b),
when the board anticipates that the board will reduce all investments
in that investment vehicle or the reasons why a sale or transfer of
investments is inconsistent with the fiduciary responsibilities of
the board as described in Section 17 of Article XVI of the California
Constitution.
   (5) Any information described in subdivisions (d) and (e).
   (6) A detailed summary of investments that were transferred to
funds or accounts devoid of Turkish investment vehicles as described
in subdivision (f).
   (7) An annual calculation of any costs or investment losses or
other financial results incurred in compliance with the provisions of
this section.
   (j) If the board voluntarily sells or transfers all of its
investments in a Turkish investment vehicle in accordance with this
section, this section shall not apply except that the board shall
file a report with the Legislature related to that investment vehicle
as described in subdivision (i).
   (k) Nothing in this section shall require the board to take action
as described in this section if the board determines, and adopts
findings, in good faith and based on credible information available
to the public, that the action described in this section would fail
to satisfy the fiduciary responsibilities of the board as described
in Section 17 of Article XVI of the California Constitution.
   (l) This section shall be known, and may be cited, as the
California Public Divest from Turkey to End the Perpetuation of the
Armenian Genocide Act.
  SEC. 3.  Section 16642 of the Government Code is amended to read:
   16642.  Present, future, and former board members of the Public
Employees' Retirement System or the State Teachers' Retirement
System, jointly and individually, state officers and employees,
research firms described in subdivision (d) of Section 7513.6, and
investment managers under contract with the Public Employees'
Retirement System or the State Teachers' Retirement System shall be
indemnified from the General Fund and held harmless by the State of
California from all claims, demands, suits, actions, damages,
judgments, costs, charges and expenses, including court costs and
attorney's fees, and against all liability, losses, and damages of
any nature whatsoever that these present, future, or former board
members, officers, employees, research firms as described in
subdivision (d) of Section 7513.6, or contract investment managers
shall or may at any time sustain by reason of any decision to
restrict, reduce, or eliminate investments pursuant to Sections
 7513.6 and 7513.7.   7513.6, 7513.7, and
7513.75. 
  SEC. 4.  The provisions of this act are severable. If any provision
of this act or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.