HARRISBURG State will explore contract to avoid financing terrorism

The database lists companies that deal with countries sponsoring terrorism.
HARRISBURG (AP) -- With lawmakers worried that some state assets might indirectly be financing terrorism, legislative staffers plan to explore a contract with a Washington, D.C., firm that identifies publicly held companies that have business with countries identified by the federal government as sponsors of terrorism.
Ultimately, the staff of the Legislative Budget and Finance Committee hopes to compare the state's investments -- including approximately $70 billion invested by Pennsylvania's treasury and the two largest public pension systems -- with the firm's database and present the findings to the General Assembly.
Has misgivings
The effort comes despite the misgivings of state Treasurer Barbara Hafer, who maintains that the federal government is best equipped to offer such guidance.
Neither the Securities and Exchange Commission nor the U.S. Treasury, however, is prepared to do so, spokesmen said.
"It's not a question of regulation, but of policy, and we would leave that for states to decide," U.S. Treasury spokesman Taylor Griffin said. And as long as companies disclose to shareholders activities that could affect their financial health, the SEC is satisfied, said spokesman Herb Perone.
It's not clear what the General Assembly would do with the information.
Passed a bill
In late 2001, the House passed a bill to bar state assets from being invested in any corporation that does business in countries identified by the United States as sponsors of terrorism. The bill died in the Senate.
Still, Pennsylvania is not alone in its introspection. State treasurers in Arizona and Nebraska are pushing for a similar review of their state's assets.
In Pennsylvania, a House resolution that passed unanimously May 7 directed the review, saying corporations could help fuel terrorist-sponsoring countries and such a connection could also threaten the value of an investment in those corporations.
Has a database
Last week, the legislative budget and finance committee authorized its staff to look into a contract with Conflict Securities Advisory Group. The firm is believed to be the only one with a database of companies that do business with countries -- Iran, Iraq, Libya, North Korea, Sudan, and Syria -- identified by the U.S. State Department as state sponsors of terrorism that have weapons of mass destruction programs.
American companies are barred by federal law from doing business with or in those countries, but their foreign subsidiaries can be exempt in some cases, and foreign companies are not subject to the U.S. laws.
Conflict Securities Advisory Group drew up the database with the Investor Responsibility Research Center, a for-profit firm also based in Washington. The database identifies about 375 firms -- about 35 of which are American -- that have business dealings in or with the sanctioned countries, said Adam Pener, the chief operating officer for Conflict Securities.
Those companies include such large and widely traded firms as Exxon Mobil Corp., General Electric Co., ChevronTexaco Corp., and Halliburton Co., according to the research center.
Involvement varies
Pener noted that some of the companies on the list sell consumer goods and have a relatively small amount of money invested, while other companies may have large-scale projects that introduce "dual-use technologies" that send millions of dollars to those governments.
Iraq is still on the list, though most sanctions against the country have been dropped since American-led forces ousted Iraqi President Saddam Hussein.