Thursday, June 02, 2011

Jewish Voice for Peace and Divestment from Israel

Divest This! just posted about the latest failure of divestment activists in the U.S. - the attempt by Jewish Voice for Peace to place a shareholder resolution on the ballot of TIAA-CREF regarding several companies that do business with or are situated in Israel - Caterpillar, Elbit, Northrop Grumman, Veolia, and Motorola Solutions. JVP says about them: "These serve as examples. TIAA-CREF is invested in other companies that profit from the Israeli occupation," thus implying that this shareholder resolution could be the first of many that would require TIAA-CREF to divest from a wide variety of companies that do business in Israel.

The proposed resolution would have required TIAA-CREF to engage with these companies about their activities in Israel, and if they didn't stop "profiting from the Israeli occupation" within the next year, to divest from them. TIAA-CREF wrote to the Securities and Exchange Commission informing it that the resolution would not appear on the ballot, and the SEC informed it that there would be no action taken in response to the non-appearance of the resolution. See No-Action Letter for the text of the SEC's letter. An article at Social Funds online provides links both to the TIAA-CREF letter to the SEC and the JVP letter with the proposed sharehold resolution (they are downloads from the SEC website).

TIAA-CREF - the Teachers Insurance and Annuity Association/College Retirement Equities Fund - is the largest retirement fund for college and university employees in the US. My retirement funds are invested with TIAA-CREF. CREF has divested from investments in the past for political reasons - for example, they divested from several non-US oil companies doing business in Sudan because of the ongoing genocide in Darfur. This was based on the "TIAA-CREF Policy Statement on Corporate Governance" - "[TIAA-CREF] may, as a last resort, consider divesting from companies we judge to be complicit in genocide and crimes against humanity, the most serious human rights violations, after sustained efforts at dialogue have failed and divestment can be undertaken in a manner consistent with our fiduciary duties." (Quotation taken from the letter sent to the Securities and Exchange Commission on March 22, 2011, requesting permission not to consider the JVP proposal at this year's upcoming shareholder meeting).

The reasons that TIAA-CREF put forward for rejecting the shareholder resolution are very interesting, in my opinion, because they point out how biased and partial the JVP resolution is: "The Proposal advocates one side in a highly controversial and complex geopolitical dispute, and makes assertions of immoral and illegal conduct that are subject to widespread disagreement." The letter also points out that there is no consensus in the United States supporting divestment from companies that do business with or in Israel: "In this connection, it is instructive to compare the Proposal with the human rights situation in Sudan, where public attention and debate led to the passing of legislation by the United States government, condemnation by the United Nations, and widespread divestiture by a broad spectrum of university endowments, public pension funds and other entities.  By contrast, the United States has vetoed proposed resolutions in the United Nations Security Council that would have supported condemnation of the activities at the heart of the Proposal."

The TIAA-CREF letter also accuses the JVP resolution of presenting accusations without a factual basis and of falsely attributing a quotation to a 2011 TIAA-CREF investing report (in other words, accusing JVP of making up a quote and attributing it to TIAA-CREF).
The Proposal includes factual assertions that are, at best, highly controversial and subject to widely differing views as to their accuracy and implications and, at worst, on their face untrue and contrary to positions taken by the United States government. As discussed above, the Proposal makes these statements in connection with asking shareholders to take sides on a complex, controversial geopolitical dispute. CREF could not include the Proposal and these asserted facts without a response. However, CREF does not believe it would be possible to provide, in the 2011 Proxy Materials, a fair and balanced presentation on these facts and issues that would provide a basis for shareholders to reach an informed view on this controversy and the merits of the Proposal. Even if it were possible to provide a balanced discussion of the facts asserted, CREF does not believe that the Commission's proxy rules are intended to subject issuers to the severe burdens and expense of attempting to make their proxy materials a full and fair forum for debate on Middle East politics.

In addition, the Proposal materially mischaracterizes CREF's beliefs and policies relating to activities of its portfolio companies in a manner that is likely to be confusing and misleading to CREF shareholders.
I am glad that TIAA-CREF has decided not to consider the JVP shareholder resolution, and I hope that they continue to reject such proposals. 


  1. Disclaimer: My company (IBM) has an Israeli presence and uses Israeli-grown technology.

    This is antisemitism, full stop. It's also anti-capitalism and anti-globalism, but it still smells like shit.

  2. Yes, and it's hard to imagine that TIAA-CREF would decide to divest from IBM or the other high-tech companies with Israeli subsidiaries, like Intel.