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November 14, 2007

DiNapoli Announces Plan for Iran-linked Investments

Strategy Parallels California Divestment Legislation

State Comptroller Thomas P. DiNapoli today announced that the New York State Common Retirement Fund (CRF) will initiate a three-phase strategy to address the CRF’s investments in companies doing business in Iran. DiNapoli said the strategy was created to address the unique risks posed by Iran and its president’s pro-genocide comments and will include a number of actions, up to and including possible divestment.

“Iran is supporting terrorism. It’s trying to obtain nuclear weapons, and its president has made public statements that amount to an incitement to commit genocide by calling for the destruction of the state of Israel,” DiNapoli said. “At some point we have to ask, can we afford to risk pension fund investments in a country led by this kind of regime?

“My first responsibility as sole trustee of the Common Retirement Fund is to fulfill my fiduciary duty. The pension fund must be managed for the benefit of the members, retirees and beneficiaries, and investing in companies that operate in a uniquely unstable environment is not consistent with long-term investment strategies. I’m confident the members of the Retirement System do not want the pension fund to support governments that sponsor terrorism and incite genocide.”

DiNapoli, the sole trustee of the $154 billion CRF, said his policy on Iran is in response to Iran’s support of terrorism, attempts to attain nuclear weapons, and Iranian President Mahmoud Ahmadinejad’s repeated calls to annihilate Israel, an action that could qualify as a criminal act under the United Nations’ Convention on the Prevention and Punishment of the Crime of Genocide. DiNapoli’s approach to Iran-related investments is similar to the strategy he initiated in June on investments in companies with substantial links to the government in Sudan.

DiNapoli’s strategy, which is targeted toward companies involved in Iran’s energy and defense sectors, parallels a program enacted by the California State Legislature directing the California Public Employees’ Retirement and California State Teachers’ Retirement systems to begin a divestment process from certain companies doing business in Iran. The Florida State Legislature has also passed legislation directing similar action. Lawmakers in several other states and in Congress are weighing comparable legislation.

The three phases of the DiNapoli plan include:

  • Phase I: Identify those companies the CRF is invested in that have business operations in Iran related to the country’s energy or defense sectors;
  • Phase II: Contact companies identified during Phase I and request they provide:
    1. a detailed description and full history of the companies’ business activities in Iran;
    2. an explanation as to how these activities are consistent with a sound and prudent long-term investment strategy; and
    3. a report on any steps that have been taken to mitigate investment risks posed by doing business in Iran.
  • Phase III: Evaluate the companies’ responses and determine if they have taken substantial steps to minimize risk to the CRF. Should companies fail to mitigate risk, the CRF, consistent with the Comptroller’s fiduciary obligations, will:
    1. withhold additional or new investments, or decline to renew existing investments in non-complying companies; and/or
    2. divest CRF investments in such companies.

No action will be taken unless it is determined that such action is consistent with the Comptroller’s fiduciary responsibility.

About the New York State Common Retirement Fund
The $154.5 billion New York State Common Retirement Fund is the third largest public pension plan in the United States with more than one million members, retirees and beneficiaries from state and local governments. Comptroller DiNapoli is the sole trustee of the fund and manages diversified portfolio of public and private equities, fixed income, real estate and alternative instruments.



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