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Murphy Conditionally Vetoes Pension Divestment Bills

Wednesday, July 25, 2018  
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In his veto Gov. Phil Murphy argued the State Investment Council should make decisions as to where the state pension fund should be allowed to invest. - ()

Gov. Phil Murphy has conditionally vetoed bills that would have placed restrictions on where the state $78.6 billion pension fund can invest its money.

The move bounces the bills back to the state Legislature.

Senate Bill 1208 would have prohibited investments in companies that failed to meet their Superfund obligations in cleaning up heavily polluted sites.

Senate Bill 1914 would have prohibited pension investments into companies that engaged in home foreclosures in areas of Puerto Rico ravaged by Hurricane Maria.

Murphy, in his Monday veto message, said he supported the ideas behind both bills in theory but had concerns over divestment as a first course of action. The governor also argued that the State Investment Council, not the Legislature, should decide where the state pension fund should be allowed to invest.

To that end, Murphy said he’d recommend the council institute an “Environmental, Social and Governance” as a tool to pressure a company’s behavior.

“The council recently took a similar approach with great success, by convincing mortgage lenders to suspend foreclosures of Puerto Rican properties in the wake of Hurricane Maria,” Murphy wrote in his veto message. “Had divestiture been mandated, these lenders might still be foreclosing on devastated families and hindering the island’s recovery efforts.

Murphy also cited the Legislature’s Israeli company divestment bill as a reason that Legislature shouldn’t be making the rules on prohibiting pension investments.

“The state has spent more than $23 million monitoring the divestiture of holdings as a result of recent statutory mandates to divest pension system assets from companies that do business with Iran and companies that boycott Israel and Israeli businesses,” Murphy wrote.

The bill’s sponsors – Senate Education Chair M. Teresa Ruiz, D-29th District, and Senate Economic Growth Chair Nilsa Cruz-Perez, D-5th District – said Murphy’s veto seemed to contradict his prior approach to helping Puerto Rico get off its feet following Hurricane Maria.

Murphy, before taking office, visited Puerto Rico to meet with its governor, and later he signed Executive Order 10 establishing a commission on Puerto Rico Relief.

“The administration acknowledges that divestiture is an appropriate penalty in certain instances; however, it leads to question why the administration wouldn’t agree that in this instance that divesture isn’t warranted when the bill unanimously passed the Senate,” they said.



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