Florida Senate - 2012 SB 1144
By Senator Garcia
40-01080-12 20121144__
1 A bill to be entitled
2 An act relating to scrutinized companies; amending s.
3 215.473, F.S.; providing legislative findings;
4 revising and providing definitions; requiring the
5 State Board of Administration to identify all
6 companies in which public moneys are invested and
7 which are doing certain types of business in or with
8 Cuba or Syria; requiring the board to create and
9 maintain certain scrutinized companies lists that name
10 all such companies; requiring the board to
11 periodically contact all scrutinized companies and
12 encourage them to refrain from engaging in certain
13 types of business in or with Cuba or Syria; requiring
14 the board to inform scrutinized companies of their
15 status as a scrutinized company and to provide notice
16 of the opportunity to clarify the nature of the
17 company’s business activities; providing for removal
18 of a company from the list under certain conditions;
19 requiring the board to divest all publicly traded
20 securities of a scrutinized company under certain
21 conditions; providing for reintroduction of a company
22 onto the list; providing exceptions to the divestment
23 requirement; prohibiting the board from acquiring
24 securities of scrutinized companies that have active
25 business operations; providing an exemption to the
26 divestment requirement and investment prohibition;
27 providing an additional exception from the divestment
28 requirement and the investment prohibition for certain
29 indirect holdings in actively managed investment
30 funds; providing procedures of the board with respect
31 to requesting removal of scrutinized companies from
32 actively managed investment funds and defined
33 contribution plans or the creation of a similar fund
34 that excludes such companies; providing reporting
35 requirements of the board; providing for cessation of
36 assembly of the Scrutinized Companies with Activities
37 in Cuba List and the Scrutinized Companies with
38 Activities in Syria List, cessation of engagement and
39 divestment of such companies, and restoration of
40 authority to reinvest in such companies under
41 specified conditions; authorizing the board to cease
42 divesting or reinvesting in certain companies having
43 scrutinized active business operations under specified
44 conditions; amending s. 287.135, F.S.; prohibiting a
45 state agency or local governmental entity from
46 contracting for goods and services of more than a
47 certain amount with a company that is on the
48 Scrutinized Companies with Activities in Cuba List or
49 the Scrutinized Companies with Activities in Syria
50 List; requiring a contract provision that allows for
51 termination of the contract if the company is found to
52 have been placed on such list; providing exceptions;
53 requiring certification upon submission of a bid or
54 proposal for a contract, or before a company enters
55 into or renews a contract, with an agency or
56 governmental entity that the company is not on the
57 Scrutinized Companies with Activities in Cuba List or
58 the Scrutinized Companies with Activities in Syria
59 List; providing procedures upon determination that a
60 company has submitted a false certification; providing
61 for civil action; providing penalties; providing for
62 attorney fees and costs; providing a statute of
63 repose; prohibiting a private right of action;
64 requiring the Department of Management Services to
65 notify the Attorney General after the act becomes law;
66 providing an effective date.
67
68 WHEREAS, with a population of approximately 11 million,
69 Cuba is a totalitarian communist state that does not tolerate
70 opposition to official policy, and
71 WHEREAS, the current government of Cuba assumed power on
72 January 1, 1959, and
73 WHEREAS, although the Cuban constitution recognizes the
74 unicameral National Assembly as the supreme authority in Cuba,
75 the Communist Party is recognized in the constitution as the
76 only legal party and “the superior leading force of society and
77 of the state,” and
78 WHEREAS, elections in January 2008 for the Cuban National
79 Assembly were neither free nor fair, and all of the candidates
80 had to be preapproved by a Communist Party candidacy commission,
81 with the result that the Communist Party candidates and their
82 allies won 98.7 percent of the vote and 607 of 614 seats in the
83 National Assembly, and
84 WHEREAS, the Cuban government continues to deny its
85 citizens their basic human rights, including the right to change
86 their government, and has committed numerous and serious abuses
87 against the citizens of Cuba, and
88 WHEREAS, among the human rights problems reported within
89 Cuba are beatings and abuse of prisoners and detainees, harsh
90 and life-threatening prison conditions, including denial of
91 medical care, harassment, and beatings, and threats against
92 political opponents by government-recruited mobs, police, and
93 state security officials who acted with impunity, and
94 WHEREAS, arbitrary arrest and detention of human rights
95 advocates and members of independent professional organizations,
96 and denial of fair trial for at least 194 political prisoners
97 and as many as 5,000 persons who have been convicted of
98 potential “dangerousness” without being charged with any
99 specific crime are also reported, and
100 WHEREAS, there have also been severe limitations on freedom
101 of speech and the press, denial of peaceful assembly and
102 association, restrictions on freedom of movement, including
103 selective denial of exit permits to citizens and the forcible
104 removal of persons from Havana to their hometowns, restrictions
105 on freedom of religion and refusal to recognize domestic human
106 rights groups or permit them to function legally, discrimination
107 against persons of African descent, and severe restrictions on
108 workers’ rights, including the right to form independent unions,
109 and
110 WHEREAS, other problems that are prevalent in Cuba include
111 increasing incidences of domestic violence, underage
112 prostitution, and trafficking in human beings, and
113 WHEREAS, Cuba is on the United States Department of State’s
114 list of State Sponsors of Terrorism, and for nearly half a
115 century the United States has unilaterally imposed an economic,
116 commercial, and financial embargo against Cuba, and
117 WHEREAS, the embargo, partially imposed on Cuba in October
118 1960, was enacted after Cuba nationalized the properties of
119 United States citizens and corporations and it was strengthened
120 to a near-total embargo on February 7, 1962, and
121 WHEREAS, though the severity and the scope of the sanctions
122 have varied, depending upon political developments in Cuba, the
123 United States, and the rest of the world, the United States
124 Government Accountability Office has stated that “the embargo on
125 Cuba is the most comprehensive set of United States sanctions on
126 any country, including other countries designated by the United
127 States Government to be state sponsors of terrorism,” and
128 WHEREAS, also on the Department of State’s list of State
129 Sponsors of Terrorism is the nation of Syria, and
130 WHEREAS, on March 8, 1963, the Baath Party in Syria enacted
131 an emergency law that suspended basic constitutional rights such
132 as freedom of speech and assembly and instituted martial law,
133 and
134 WHEREAS, in February 1982, the Syrian army, under the
135 orders of Syrian President Hafez al-Assad, effectively ended a
136 campaign begun in 1976 by Sunni Islamic groups against the Assad
137 regime with what is now known as “the Hama massacre,” the
138 quelling of a revolt by the Sunni Muslim community against the
139 Assad regime which resulted in Syrian deaths, the estimates of
140 which range from 10,000 to possibly as many as 40,000 Syrian
141 citizens according to the Syrian Human Rights Committee, and
142 WHEREAS, the Hama massacre has been described as being
143 among “the single deadliest acts by any Arab government against
144 its own people in the Middle East,” and
145 WHEREAS, in 2011 the “Syrian uprising” began in that
146 country, and
147 WHEREAS, the Syrian uprising is an ongoing internal
148 conflict occurring in Syria which began with protests that
149 started on January 26, 2011, and then escalated to an uprising
150 by March 15, 2011, and
151 WHEREAS, the demands of protesters in this sustained
152 campaign of civil resistance include the allowance by the ruling
153 Baath Party of other political parties, the end of President
154 Bashar al-Assad’s presidency, equal rights for Kurds, and broad
155 political freedoms such as freedom of the press, free speech,
156 and freedom to assemble, and
157 WHEREAS, as protests continued, the Syrian government used
158 tanks and snipers to force Syrian citizens off the streets,
159 water and electricity were shut off, and security forces began
160 confiscating flour and food in various areas of the country, and
161 WHEREAS, violence escalated as the crisis wore on and as a
162 result more than 3,000 people were killed, many more were
163 injured, and thousands of protesters have been detained, with
164 dozens of detainees reportedly having been tortured and killed,
165 and
166 WHEREAS, since the beginning of the uprising, the Syrian
167 government has made several concessions, including the repeal on
168 April 21, 2011, of the 1963 emergency law that allowed the
169 government sweeping authority to suspend constitutional rights,
170 though the concessions are widely considered trivial and
171 superficial by protesters demanding more meaningful reform,
172 especially in light of the fact that government crackdowns on
173 protesters have continued to heighten, and
174 WHEREAS, the oppressive Assad regime blatantly murders
175 protesters of the regime in mass, regularly detains political
176 and human rights activists and journalists, engages in
177 widespread media censorship, and is associated with the
178 disappearance of citizens opposed to the Assad regime, and
179 WHEREAS, the United States Government and other nations
180 throughout the world have openly called for President Assad to
181 step down from office, and
182 WHEREAS, effective August 18, 2011, President Barack Obama
183 issued a new Executive Order imposing significant new economic
184 sanctions on Syria, and
185 WHEREAS, the action greatly expanded United States
186 international trade restrictions against Syria and its
187 government in certain important respects, representing a more
188 comprehensive unilateral economic embargo, and
189 WHEREAS, most notably, the sanctions now include a freeze
190 on the property and interests of property of the Government of
191 Syria in the United States or held by United States persons,
192 defined to include entities in the United States and their
193 foreign branch offices, United States citizens or lawful
194 permanent residents, and anyone of any nationality acting or
195 located within the United States, and
196 WHEREAS, the sanctions include prohibitions on United
197 States persons engaging in any transactions with the Syrian
198 Government, making new investments in Syria, providing any
199 services to Syria, or conducting business dealings in or related
200 to petroleum or petroleum products of Syrian origin, and
201 WHEREAS, the sanctions also include a ban on the
202 importation of Syrian-origin petroleum products into the United
203 States and a prohibition against United States persons
204 facilitating, approving, financing, or guaranteeing a
205 transaction or dealing with a foreign person related to any of
206 the prohibitions in place against Syria, and
207 WHEREAS, both the Government of Cuba and the Government of
208 Syria have repeatedly committed human rights violations through
209 intimidation by military and security forces, through
210 bureaucratic and administrative obstruction, through acts of
211 terrorism and atrocities directed against civilians, and through
212 the displacement of citizens from their homes, and
213 WHEREAS, the Federal Government has imposed sanctions
214 against the Government of Cuba and the Government of Syria, and
215 such sanctions are monitored through the United States Treasury
216 Department’s Office of Foreign Assets Control (OFAC), and
217 WHEREAS, according to a former chair of the United States
218 Securities and Exchange Commission, the fact that a foreign
219 company is doing material business with a country, government,
220 or entity on OFAC’s sanctions list is, in the SEC staff’s view,
221 substantially likely to be significant to a reasonable
222 investor’s decision about whether to invest in that company, and
223 WHEREAS, because the United States Secretary of State has
224 determined that both Cuba and Syria are countries whose
225 governments have provided support for acts of international
226 terrorism, as a result, the United States has restricted
227 assistance, defense exports, defense sales, financial
228 transactions, and various other transactions with the Government
229 of Cuba and the Government of Syria, and
230 WHEREAS, a 2006 report by the United States House of
231 Representatives states that “a company’s association with
232 sponsors of terrorism and human rights abuses, no matter how
233 large or small, can have a materially adverse result on a public
234 company’s operations, financial condition, earnings, and stock
235 prices, all of which can negatively affect the value of an
236 investment,” and
237 WHEREAS, in response to the financial risk posed by
238 investments in companies doing business with a state that
239 sponsors terrorists, the Securities and Exchange Commission
240 established its Office of Global Security Risk to provide for
241 enhanced disclosure of material information regarding such
242 companies, and
243 WHEREAS, divestment actions precipitated by such
244 sponsorship of terrorism and human rights violations encompass
245 universities, municipalities, states, and private pension plans,
246 and
247 WHEREAS, companies facing such widespread divestment
248 present further material risk to remaining investors, and
249 WHEREAS, it is a fundamental responsibility of the State of
250 Florida to decide where, how, and by whom financial resources in
251 its control should be invested, taking into account numerous
252 pertinent factors, and
253 WHEREAS, it is the prerogative and desire of the State of
254 Florida, with respect to investment resources in its control and
255 to the extent reasonable, with due consideration for return on
256 investment on behalf of the state and its investment
257 beneficiaries, not to participate in an ownership or capital
258 providing capacity with entities that provide significant
259 practical support for terrorism and human rights violations,
260 including certain non-United States companies presently doing
261 business in such countries, and
262 WHEREAS, while divestiture should be considered with the
263 intent to improve investment performance and by the rules of
264 prudence, fiduciaries must take into account all relevant
265 substantive factors in arriving at an investment decision, and
266 WHEREAS, the State of Florida is deeply concerned about
267 investments in publicly traded companies that have business
268 activities in and ties to Cuba and Syria as a financial risk to
269 the shareholders, and
270 WHEREAS, by investing in publicly traded companies having
271 ties to Cuba and Syria, the Florida State Board of
272 Administration is putting the funds it oversees at substantial
273 financial risk, and
274 WHEREAS, divestiture from markets that are vulnerable to
275 embargo, loan restrictions, and sanctions from the United States
276 and the international community, including the United Nations
277 Security Council, is in accordance with the rules of prudence,
278 and
279 WHEREAS, the Legislature finds that this act should remain
280 in effect only insofar as it continues to be consistent with and
281 does not unduly interfere with the foreign policy of the United
282 States as determined by the Federal Government, and
283 WHEREAS, to protect Florida’s assets, it is in the best
284 interest of the state to enact a statutory prohibition regarding
285 the investments managed by the State Board of Administration
286 doing business in Cuba and Syria, NOW, THEREFORE,
287
288 Be It Enacted by the Legislature of the State of Florida:
289
290 Section 1. Section 215.473, Florida Statutes, is amended to
291 read:
292 215.473 Divestiture by the State Board of Administration;
293 Sudan; Iran; Cuba; Syria.—
294 (1) DEFINITIONS.—As used in this act, the term:
295 (a) “Active business operations” means all business
296 operations that are not inactive business operations.
297 (b) “Business operations” means engaging in commerce in any
298 form in Sudan, or Iran, Cuba, or Syria, including, but not
299 limited to, acquiring, developing, maintaining, owning, selling,
300 possessing, leasing, or operating equipment, facilities,
301 personnel, products, services, personal property, real property,
302 or any other apparatus of business or commerce.
303 (c) “Company” means any sole proprietorship, organization,
304 association, corporation, partnership, joint venture, limited
305 partnership, limited liability partnership, limited liability
306 company, or other entity or business association, including all
307 wholly owned subsidiaries, majority-owned subsidiaries, parent
308 companies, or affiliates of such entities or business
309 associations, that exists for the purpose of making profit.
310 (d) “Complicit” means taking actions during any preceding
311 20-month period which have directly supported or promoted:
312 1. The genocidal campaign in Darfur, including, but not
313 limited to, preventing Darfur’s victimized population from
314 communicating with each other;
315 2. Encouraging Sudanese citizens to speak out against an
316 internationally approved security force for Darfur;
317 3. Actively working to deny, cover up, or alter the record
318 on human rights abuses in Darfur; or
319 4. Other similar actions.
320 (e) “Cuba” means the nation of Cuba.
321 (f)(e) “Direct holdings” in a company means all securities
322 of that company that are held directly by the public fund or in
323 an account or fund in which the public fund owns all shares or
324 interests.
325 (g) “Government of Cuba” means the government of Cuba,
326 under the control of General Raul Castro and the Cuban Communist
327 Party, its instrumentalities, and companies owned or controlled
328 by the government of Cuba.
329 (h)(f) “Government of Iran” means the government of Iran,
330 its instrumentalities, and companies owned or controlled by the
331 government of Iran.
332 (i)(g) “Government of Sudan” means the government in
333 Khartoum, Sudan, that is led by the National Congress Party,
334 formerly known as the National Islamic Front, or any successor
335 government formed on or after October 13, 2006, including the
336 coalition National Unity Government agreed upon in the
337 Comprehensive Peace Agreement for Sudan, and does not include
338 the regional government of southern Sudan.
339 (j) “Government of Syria” means the government of Syria,
340 under the control of President Bashar al-Assad and the Arab
341 Socialist Baath Party, its instrumentalities, and companies
342 owned or controlled by the government of Syria.
343 (k)(h) “Inactive business operations” means the mere
344 continued holding or renewal of rights to property previously
345 operated for the purpose of generating revenues but not
346 presently deployed for such purpose.
347 (l)(i) “Indirect holdings” in a company means all
348 securities of that company that are held in an account or fund,
349 such as a mutual fund, managed by one or more persons not
350 employed by the public fund, in which the public fund owns
351 shares or interests together with other investors not subject to
352 the provisions of this act.
353 (m)(j) “Iran” means the Islamic Republic of Iran.
354 (n)(k) “Marginalized populations of Sudan” include, but are
355 not limited to, the portion of the population in the Darfur
356 region that has been genocidally victimized; the portion of the
357 population of southern Sudan victimized by Sudan’s north-south
358 civil war; the Beja, Rashidiya, and other similarly underserved
359 groups of eastern Sudan; the Nubian and other similarly
360 underserved groups in Sudan’s Abyei, Southern Blue Nile, and
361 Nuba Mountain regions; and the Amri, Hamadab, Manasir, and other
362 similarly underserved groups of northern Sudan.
363 (o)(l) “Military equipment” means weapons, arms, military
364 supplies, and equipment that may readily be used for military
365 purposes, including, but not limited to, radar systems,
366 military-grade transport vehicles, or supplies or services sold
367 or provided directly or indirectly to any force actively
368 participating in armed conflict in Sudan, Cuba, or Syria.
369 (p)(m) “Mineral-extraction activities” include the
370 exploring, extracting, processing, transporting, or wholesale
371 selling or trading of elemental minerals or associated metal
372 alloys or oxides (ore), including gold, copper, chromium,
373 chromite, diamonds, iron, iron ore, silver, tungsten, uranium,
374 and zinc, as well as facilitating such activities, including
375 providing supplies or services in support of such activities.
376 (q)(n) “Oil-related activities” include, but are not
377 limited to, owning rights to oil blocks; exporting, extracting,
378 producing, refining, processing, exploring for, transporting,
379 selling, or trading of oil; constructing, maintaining, or
380 operating a pipeline, refinery, or other oil-field
381 infrastructure; and facilitating such activities, including
382 providing supplies or services in support of such activities,
383 except that the mere retail sale of gasoline and related
384 consumer products is not considered an oil-related activity.
385 (r)(o) “Petroleum resources” means petroleum, petroleum
386 byproducts, or natural gas.
387 (s)(p) “Power-production activities” means any business
388 operation that involves a project commissioned by the National
389 Electricity Corporation (NEC) of Sudan or other similar entity
390 of the government of Sudan whose purpose is to facilitate power
391 generation and delivery, including, but not limited to,
392 establishing power-generating plants or hydroelectric dams,
393 selling or installing components for the project, providing
394 service contracts related to the installation or maintenance of
395 the project, as well as facilitating such activities, including
396 providing supplies or services in support of such activities.
397 (t)(q) “Public fund” means all funds, assets, trustee, and
398 other designates under the State Board of Administration
399 pursuant to chapter 121.
400 (u)(r) “Scrutinized active business operations” means
401 active business operations that have resulted in a company
402 becoming a scrutinized company.
403 (v)(s) “Scrutinized business operations” means business
404 operations that have resulted in a company becoming a
405 scrutinized company.
406 (w)(t) “Scrutinized company” means any company that meets
407 any of the following criteria:
408 1. The company has business operations that involve
409 contracts with or provision of supplies or services to the
410 government of Sudan, companies in which the government of Sudan
411 has any direct or indirect equity share, consortiums or projects
412 commissioned by the government of Sudan, or companies involved
413 in consortiums or projects commissioned by the government of
414 Sudan, and:
415 a. More than 10 percent of the company’s revenues or assets
416 linked to Sudan involve oil-related activities or mineral
417 extraction activities; less than 75 percent of the company’s
418 revenues or assets linked to Sudan involve contracts with or
419 provision of oil-related or mineral-extracting products or
420 services to the regional government of southern Sudan or a
421 project or consortium created exclusively by that regional
422 government; and the company has failed to take substantial
423 action; or
424 b. More than 10 percent of the company’s revenues or assets
425 linked to Sudan involve power-production activities; less than
426 75 percent of the company’s power-production activities include
427 projects whose intent is to provide power or electricity to the
428 marginalized populations of Sudan; and the company has failed to
429 take substantial action.
430 2. The company is complicit in the Darfur genocide.
431 3. The company supplies military equipment within Sudan,
432 unless it clearly shows that the military equipment cannot be
433 used to facilitate offensive military actions in Sudan or the
434 company implements rigorous and verifiable safeguards to prevent
435 use of that equipment by forces actively participating in armed
436 conflict. Examples of safeguards include post-sale tracking of
437 such equipment by the company, certification from a reputable
438 and objective third party that such equipment is not being used
439 by a party participating in armed conflict in Sudan, or sale of
440 such equipment solely to the regional government of southern
441 Sudan or any internationally recognized peacekeeping force or
442 humanitarian organization.
443 4. The company has business operations that involve
444 contracts with or provision of supplies or services to the
445 government of Iran, companies in which the government of Iran
446 has any direct or indirect equity share, consortiums, or
447 projects commissioned by the government of Iran, or companies
448 involved in consortiums or projects commissioned by the
449 government of Iran and:
450 a. More than 10 percent of the company’s total revenues or
451 assets are linked to Iran and involve oil-related activities or
452 mineral-extraction activities; and the company has failed to
453 take substantial action; or
454 b. The company has, with actual knowledge, on or after
455 August 5, 1996, made an investment of $20 million or more, or
456 any combination of investments of at least $10 million each,
457 which in the aggregate equals or exceeds $20 million in any 12
458 month period, and which directly or significantly contributes to
459 the enhancement of Iran’s ability to develop the petroleum
460 resources of Iran.
461 5. The company has business operations that involve
462 contracts with or provision of supplies or services to the
463 government of Cuba, companies in which the government of Cuba
464 has any direct or indirect equity share, consortiums or projects
465 commissioned by the government of Cuba, or companies involved in
466 consortiums or projects commissioned by the government of Cuba
467 and:
468 a. More than 10 percent of the company’s total revenues or
469 assets are linked to Cuba, and the company has failed to take
470 substantial action; or
471 b. The company has, with actual knowledge, on or after
472 January 1, 1959, made an investment of $20 million or more, or
473 any combination of investments of at least $10 million each,
474 which in the aggregate equals or exceeds $20 million in any 12
475 month period.
476 6. The company supplies military equipment within Cuba,
477 unless it clearly shows that the military equipment cannot be
478 used to facilitate offensive military actions in Cuba or the
479 company implements rigorous and verifiable safeguards to prevent
480 use of that equipment by forces actively participating in armed
481 conflict. Examples of safeguards include post-sale tracking of
482 such equipment by the company, certification from a reputable
483 and objective third party that such equipment is not being used
484 by a party participating in armed conflict in Cuba, or sale of
485 such equipment solely to any internationally recognized
486 peacekeeping force or humanitarian organization.
487 7. The company has business operations that involve
488 contracts with or provision of supplies or services to the
489 government of Syria, companies in which the government of Syria
490 has any direct or indirect equity share, consortiums or projects
491 commissioned by the government of Syria, or companies involved
492 in consortiums or projects commissioned by the government of
493 Syria and:
494 a. More than 10 percent of the company’s total revenues or
495 assets are linked to Syria and involve oil-related activities,
496 and the company has failed to take substantial action; or
497 b. The company has, with actual knowledge, on or after
498 March 8, 1963, made an investment of $20 million or more, or any
499 combination of investments of at least $10 million each, which
500 in the aggregate equals or exceeds $20 million in any 12-month
501 period, and which directly or significantly contributes to the
502 enhancement of Syria’s ability to develop the petroleum
503 resources of Syria.
504 8. The company supplies military equipment within Syria,
505 unless it clearly shows that the military equipment cannot be
506 used to facilitate offensive military actions in Syria or the
507 company implements rigorous and verifiable safeguards to prevent
508 use of that equipment by forces actively participating in armed
509 conflict. Examples of safeguards include post-sale tracking of
510 such equipment by the company, certification from a reputable
511 and objective third party that such equipment is not being used
512 by a party participating in armed conflict in Syria, or sale of
513 such equipment solely to any internationally recognized
514 peacekeeping force or humanitarian organization.
515 (x)(u) “Social-development company” means a company whose
516 primary purpose in Sudan is to provide humanitarian goods or
517 services, including medicine or medical equipment; agricultural
518 supplies or infrastructure; educational opportunities;
519 journalism-related activities; information or information
520 materials; spiritual-related activities; services of a purely
521 clerical or reporting nature; food, clothing, or general
522 consumer goods that are unrelated to oil-related activities;
523 mineral-extraction activities; or power-production activities.
524 (y) “Substantial action specific to Cuba” means adopting,
525 publicizing, and implementing a formal plan to cease scrutinized
526 business operations within 1 year and to refrain from any such
527 new business operations.
528 (z)(v) “Substantial action specific to Iran” means
529 adopting, publicizing, and implementing a formal plan to cease
530 scrutinized business operations within 1 year and to refrain
531 from any such new business operations.
532 (aa)(w) “Substantial action specific to Sudan” means
533 adopting, publicizing, and implementing a formal plan to cease
534 scrutinized business operations within 1 year and to refrain
535 from any such new business operations; undertaking humanitarian
536 efforts in conjunction with an international organization, the
537 government of Sudan, the regional government of southern Sudan,
538 or a nonprofit entity evaluated and certified by an independent
539 third party to be substantially in a relationship to the
540 company’s Sudan business operations and of benefit to one or
541 more marginalized populations of Sudan; or, through engagement
542 with the government of Sudan, materially improving conditions
543 for the genocidally victimized population in Darfur.
544 (bb) “Substantial action specific to Syria” means adopting,
545 publicizing, and implementing a formal plan to cease scrutinized
546 business operations within 1 year and to refrain from any such
547 new business operations.
548 (cc) “Syria” means the nation of Syria.
549 (2) IDENTIFICATION OF COMPANIES.—
550 (a) Within 90 days after the effective date of this act,
551 the public fund shall make its best efforts to identify all
552 scrutinized companies in which the public fund has direct or
553 indirect holdings or could possibly have such holdings in the
554 future. Such efforts include:
555 1. Reviewing and relying, as appropriate in the public
556 fund’s judgment, on publicly available information regarding
557 companies having business operations in Sudan, including
558 information provided by nonprofit organizations, research firms,
559 international organizations, and government entities;
560 2. Contacting asset managers contracted by the public fund
561 that invest in companies having business operations in Sudan; or
562 3. Contacting other institutional investors that have
563 divested from or engaged with companies that have business
564 operations in Sudan.
565 4. Reviewing the laws of the United States regarding the
566 levels of business activity that would cause application of
567 sanctions for companies conducting business or investing in
568 countries that are designated state sponsors of terror.
569 (b) By the first meeting of the public fund following the
570 90-day period described in paragraph (a), the public fund shall
571 assemble all scrutinized companies that fit criteria specified
572 in subparagraphs (1)(w)1., 2., and 3. (1)(t)1., 2., and 3. into
573 a “Scrutinized Companies with Activities in Sudan List,” and
574 shall assemble all scrutinized companies that fit criteria
575 specified in subparagraph (1)(w)4. (1)(t)4. into a “Scrutinized
576 Companies with Activities in the Iran Petroleum Energy Sector
577 List,.” shall assemble all scrutinized companies that fit
578 criteria specified in subparagraphs (1)(w)5. and 6. into a
579 “Scrutinized Companies with Activities in Cuba List,” and shall
580 assemble all scrutinized companies that fit criteria specified
581 in subparagraphs (1)(w)7. and 8. into a “Scrutinized Companies
582 with Activities in Syria List.”
583 (c) The public fund shall update and make publicly
584 available quarterly the Scrutinized Companies with Activities in
585 Sudan List, and the Scrutinized Companies with Activities in the
586 Iran Petroleum Energy Sector List, the Scrutinized Companies
587 with Activities in Cuba List, and the Scrutinized Companies with
588 Activities in Syria List based on evolving information from,
589 among other sources, those listed in paragraph (a).
590 (d) Notwithstanding the provisions of this act, a social
591 development company that is not complicit in the Darfur genocide
592 is not considered a scrutinized company under subparagraph
593 (1)(w)1. (1)(t)1., subparagraph (1)(w)2. (1)(t)2., or
594 subparagraph (1)(w)3. (1)(t)3.
595 (3) REQUIRED ACTIONS.—The public fund shall adhere to the
596 following procedure for assembling companies on the Scrutinized
597 Companies with Activities in Sudan List, and the Scrutinized
598 Companies with Activities in the Iran Petroleum Energy Sector
599 List, the Scrutinized Companies with Activities in Cuba List,
600 and the Scrutinized Companies with Activities in Syria List:
601 (a) Engagement.—
602 1. The public fund shall immediately determine the
603 companies on the Scrutinized Companies with Activities in Sudan
604 List, and the Scrutinized Companies with Activities in the Iran
605 Petroleum Energy Sector List, the Scrutinized Companies with
606 Activities in Cuba List, and the Scrutinized Companies with
607 Activities in Syria List in which the public fund owns direct or
608 indirect holdings.
609 2. For each company identified in this paragraph that has
610 only inactive business operations, the public fund shall send a
611 written notice informing the company of this act and encouraging
612 it to continue to refrain from initiating active business
613 operations in Sudan, or Iran, Cuba, or Syria until it is able to
614 avoid scrutinized business operations. The public fund shall
615 continue such correspondence semiannually.
616 3. For each company newly identified under this paragraph
617 that has active business operations, the public fund shall send
618 a written notice informing the company of its scrutinized
619 company status and that it may become subject to divestment by
620 the public fund. The notice must inform the company of the
621 opportunity to clarify its Sudan-related, or Iran-related, Cuba
622 related, or Syria-related activities and encourage the company,
623 within 90 days, to cease its scrutinized business operations or
624 convert such operations to inactive business operations in order
625 to avoid qualifying for divestment by the public fund.
626 4. If, within 90 days after the public fund’s first
627 engagement with a company pursuant to this paragraph, that
628 company ceases scrutinized business operations, the company
629 shall be removed from the Scrutinized Companies with Activities
630 in Sudan List, and the Scrutinized Companies with Activities in
631 the Iran Petroleum Energy Sector List, the Scrutinized Companies
632 with Activities in Cuba List, and the Scrutinized Companies with
633 Activities in Syria List, and the provisions of this act shall
634 cease to apply to that company unless that company resumes
635 scrutinized business operations. If, within 90 days after the
636 public fund’s first engagement, the company converts its
637 scrutinized active business operations to inactive business
638 operations, the company is subject to all provisions relating to
639 inactive business operations. A company may be removed from one
640 list but remain on the other list, in which case the company
641 shall be subject to the provisions applicable to the list on
642 which the company remains.
643 (b) Divestment.—
644 1. If, after 90 days following the public fund’s first
645 engagement with a company pursuant to paragraph (a), the company
646 continues to have scrutinized active business operations, and
647 only while such company continues to have scrutinized active
648 business operations, the public fund shall sell, redeem, divest,
649 or withdraw all publicly traded securities of the company,
650 except as provided in paragraph (d), from the public fund’s
651 assets under management within 12 months after the company’s
652 most recent appearance on the Scrutinized Companies with
653 Activities in Sudan List, or on the Scrutinized Companies with
654 Activities in the Iran Petroleum Energy Sector List, the
655 Scrutinized Companies with Activities in Cuba List, or the
656 Scrutinized Companies with Activities in Syria List.
657 2. If a company that ceased scrutinized active business
658 operations following engagement pursuant to paragraph (a)
659 resumes such operations, this paragraph immediately applies, and
660 the public fund shall send a written notice to the company. The
661 company shall also be immediately reintroduced onto the
662 Scrutinized Companies with Activities in Sudan List, or on the
663 Scrutinized Companies with Activities in the Iran Petroleum
664 Energy Sector List, the Scrutinized Companies with Activities in
665 Cuba List, or the Scrutinized Companies with Activities in Syria
666 List, as applicable.
667 (c) Prohibition.—The public fund may not acquire securities
668 of companies on the Scrutinized Companies with Activities in
669 Sudan List, or the Scrutinized Companies with Activities in the
670 Iran Petroleum Energy Sector List, the Scrutinized Companies
671 with Activities in Cuba List, or the Scrutinized Companies with
672 Activities in Syria List that have active business operations,
673 except as provided in paragraph (d).
674 (d) Exemption.—A company that the United States Government
675 affirmatively declares to be excluded from its present or any
676 future federal sanctions regime relating to Sudan, or Iran,
677 Cuba, or Syria is not subject to divestment or the investment
678 prohibition pursuant to paragraphs (b) and (c).
679 (e) Excluded securities.—Notwithstanding the provisions of
680 this act, paragraphs (b) and (c) do not apply to indirect
681 holdings in actively managed investment funds. However, the
682 public fund shall submit letters to the managers of such
683 investment funds containing companies that have scrutinized
684 active business operations requesting that they consider
685 removing such companies from the fund or create a similar
686 actively managed fund having indirect holdings devoid of such
687 companies. If the manager creates a similar fund, the public
688 fund shall replace all applicable investments with investments
689 in the similar fund in an expedited timeframe consistent with
690 prudent investing standards. For the purposes of this section, a
691 private equity fund is deemed to be an actively managed
692 investment fund.
693 (f) Further exclusions.—Notwithstanding any other provision
694 of this act, the public fund, when discharging its
695 responsibility for operation of a defined contribution plan,
696 shall engage the manager of the investment offerings in such
697 plans requesting that they consider removing scrutinized
698 companies from the investment offerings or create an alternative
699 investment offering devoid of scrutinized companies. If the
700 manager creates an alternative investment offering and the
701 offering is deemed by the public fund to be consistent with
702 prudent investor standards, the public fund shall consider
703 including such investment offering in the plan.
704 (4) REPORTING.—
705 (a) The public fund shall file a report with each member of
706 the Board of Trustees of the State Board of Administration, the
707 President of the Senate, and the Speaker of the House of
708 Representatives that includes the Scrutinized Companies with
709 Activities in Sudan List, and the Scrutinized Companies with
710 Activities in the Iran Petroleum Energy Sector List, the
711 Scrutinized Companies with Activities in Cuba List, and the
712 Scrutinized Companies with Activities in Syria List within 30
713 days after the list is created. This report shall be made
714 available to the public.
715 (b) At each quarterly meeting of the Board of Trustees
716 thereafter, the public fund shall file a report, which shall be
717 made available to the public and to each member of the Board of
718 Trustees of the State Board of Administration, the President of
719 the Senate, and the Speaker of the House of Representatives, and
720 send a copy of that report to the United States Presidential
721 Special Envoy to Sudan, and the United States Presidential
722 Special Envoy to Iran, the United States Presidential Special
723 Envoy to Cuba, and the United States Presidential Special Envoy
724 to Syria, or an appropriate designee or successor, which
725 includes:
726 1. A summary of correspondence with companies engaged by
727 the public fund under subparagraphs (3)(a)2. and 3.;
728 2. All investments sold, redeemed, divested, or withdrawn
729 in compliance with paragraph (3)(b);
730 3. All prohibited investments under paragraph (3)(c);
731 4. Any progress made under paragraph (3)(e); and
732 5. A list of all publicly traded securities held directly
733 by this state.
734 (5) EXPIRATION.—This act expires upon the occurrence of all
735 of the following:
736 (a) If any of the following occur, the public fund shall no
737 longer scrutinize companies according to subparagraphs (1)(w)1.,
738 2., and 3. (1)(t)1., 2., and 3. and shall no longer assemble the
739 Scrutinized Companies with Activities in Sudan List, shall cease
740 engagement and divestment of such companies, and may reinvest in
741 such companies as long as such companies do not satisfy the
742 criteria for inclusion in the Scrutinized Companies with
743 Activities in the Iran Petroleum Energy Sector List, the
744 Scrutinized Companies with Activities in Cuba List, or the
745 Scrutinized Companies with Activities in Syria List:
746 1. The Congress or President of the United States,
747 affirmatively and unambiguously states, by means including, but
748 not limited to, legislation, executive order, or written
749 certification from the President to Congress, that the Darfur
750 genocide has been halted for at least 12 months;
751 2. The United States revokes all sanctions imposed against
752 the government of Sudan;
753 3. The Congress or President of the United States
754 affirmatively and unambiguously states, by means including, but
755 not limited to, legislation, executive order, or written
756 certification from the President to Congress, that the
757 government of Sudan has honored its commitments to cease attacks
758 on civilians, demobilize and demilitarize the Janjaweed and
759 associated militias, grant free and unfettered access for
760 deliveries of humanitarian assistance, and allow for the safe
761 and voluntary return of refugees and internally displaced
762 persons; or
763 4. The Congress or President of the United States
764 affirmatively and unambiguously states, by means including, but
765 not limited to, legislation, executive order, or written
766 certification from the President to Congress, that mandatory
767 divestment of the type provided for in this act interferes with
768 the conduct of United States foreign policy.
769 (b) If any of the following occur, the public fund shall no
770 longer scrutinize companies according to subparagraph (1)(w)4.
771 (1)(t)4. and shall no longer assemble the Scrutinized Companies
772 with Activities in the Iran Petroleum Energy Sector List and
773 shall cease engagement, investment prohibitions, and divestment.
774 The public fund may reinvest in such companies as long as such
775 companies do not satisfy the criteria for inclusion in the
776 Scrutinized Companies with Activities in Sudan List, the
777 Scrutinized Companies with Activities in Cuba List, or the
778 Scrutinized Companies with Activities in Syria List:
779 1. The Congress or President of the United States
780 affirmatively and unambiguously states, by means including, but
781 not limited to, legislation, executive order, or written
782 certification from the President to Congress, that the
783 government of Iran has ceased to acquire weapons of mass
784 destruction and support international terrorism;
785 2. The United States revokes all sanctions imposed against
786 the government of Iran; or
787 3. The Congress or President of the United States
788 affirmatively and unambiguously declares, by means including,
789 but not limited to, legislation, executive order, or written
790 certification from the President to Congress, that mandatory
791 divestment of the type provided for in this act interferes with
792 the conduct of United States foreign policy.
793 (c) If any of the following occur, the public fund shall no
794 longer scrutinize companies according to subparagraphs (1)(w)5.
795 and 6. and shall no longer assemble the Scrutinized Companies
796 with Activities in Cuba List and shall cease engagement,
797 investment prohibitions, and divestment. The public fund may
798 reinvest in such companies as long as such companies do not
799 satisfy the criteria for inclusion in the Scrutinized Companies
800 with Activities in Sudan List, the Scrutinized Companies with
801 Activities in the Iran Petroleum Energy Sector List, or the
802 Scrutinized Companies with Activities in Syria List:
803 1. The Congress or President of the United States
804 affirmatively and unambiguously states, by means including, but
805 not limited to, legislation, executive order, or written
806 certification from the President to Congress, that the
807 government of Cuba has ceased to acquire weapons of mass
808 destruction and support international terrorism;
809 2. The United States revokes all sanctions imposed against
810 the government of Cuba; or
811 3. The Congress or President of the United States
812 affirmatively and unambiguously declares, by means including,
813 but not limited to, legislation, executive order, or written
814 certification from the President to Congress, that mandatory
815 divestment of the type provided for in this act interferes with
816 the conduct of United States foreign policy.
817 (d) If any of the following occur, the public fund shall no
818 longer scrutinize companies according to subparagraphs (1)(w)7.
819 and 8. and shall no longer assemble the Scrutinized Companies
820 with Activities in Syria List and shall cease engagement,
821 investment prohibitions, and divestment. The public fund may
822 reinvest in such companies as long as such companies do not
823 satisfy the criteria for inclusion in the Scrutinized Companies
824 with Activities in Sudan List, the Scrutinized Companies with
825 Activities in the Iran Petroleum Energy Sector List, or the
826 Scrutinized Companies with Activities in Cuba List:
827 1. The Congress or President of the United States
828 affirmatively and unambiguously states, by means including, but
829 not limited to, legislation, executive order, or written
830 certification from the President to Congress, that the
831 government of Cuba has ceased to acquire weapons of mass
832 destruction and support international terrorism;
833 2. The United States revokes all sanctions imposed against
834 the government of Syria; or
835 3. The Congress or President of the United States
836 affirmatively and unambiguously declares, by means including,
837 but not limited to, legislation, executive order, or written
838 certification from the President to Congress, that mandatory
839 divestment of the type provided for in this act interferes with
840 the conduct of United States foreign policy.
841 (6) INVESTMENT POLICY STATEMENT OBLIGATIONS.—The public
842 fund’s actions taken in compliance with this act, including all
843 good faith determinations regarding companies as required by
844 this act, shall be adopted and incorporated into the public
845 fund’s investment policy statement (the IPS) as set forth in s.
846 215.475.
847 (7) REINVESTMENT IN CERTAIN COMPANIES HAVING SCRUTINIZED
848 ACTIVE BUSINESS OPERATIONS.—Notwithstanding any other provision
849 of this act to the contrary, the public fund may cease divesting
850 from certain scrutinized companies pursuant to paragraph (3)(b)
851 or reinvest in certain scrutinized companies from which it
852 divested pursuant to paragraph (3)(b) if clear and convincing
853 evidence shows that the value of all assets under management by
854 the public fund becomes equal to or less than 99.50 percent, or
855 50 basis points, of the hypothetical value of all assets under
856 management by the public fund assuming no divestment for any
857 company had occurred under paragraph (3)(b). Cessation of
858 divestment, reinvestment, or any subsequent ongoing investment
859 authorized by this act is limited to the minimum steps necessary
860 to avoid the contingency set forth in this subsection or that no
861 divestment of any company is required for less than fair value.
862 For any cessation of divestment, reinvestment, or subsequent
863 ongoing investment authorized by this act, the public fund shall
864 provide a written report to each member of the Board of Trustees
865 of the State Board of Administration, the President of the
866 Senate, and the Speaker of the House of Representatives in
867 advance of initial reinvestment, updated semiannually thereafter
868 as applicable, setting forth the reasons and justification,
869 supported by clear and convincing evidence, for its decisions to
870 cease divestment, reinvest, or remain invested in companies
871 having scrutinized active business operations. This act does not
872 apply to reinvestment in companies on the grounds that they have
873 ceased to have scrutinized active business operations.
874 Section 2. Section 287.135, Florida Statutes, is amended to
875 read:
876 287.135 Prohibition against contracting with scrutinized
877 companies.—
878 (1) In addition to the terms defined in ss. 287.012 and
879 215.473, as used in this section, the term:
880 (a) “Awarding body” means, for purposes of state contracts,
881 an agency or the department, and for purposes of local
882 contracts, the governing body of the local governmental entity.
883 (b) “Local governmental entity” means a county,
884 municipality, special district, or other political subdivision
885 of the state.
886 (2) A company that, at the time of bidding or submitting a
887 proposal for a new contract or renewal of an existing contract,
888 is on the Scrutinized Companies with Activities in Sudan List,
889 or the Scrutinized Companies with Activities in the Iran
890 Petroleum Energy Sector List, the Scrutinized Companies with
891 Activities in Cuba List, or the Scrutinized Companies with
892 Activities in Syria List, created pursuant to s. 215.473, is
893 ineligible for, and may not bid on, submit a proposal for, or
894 enter into or renew a contract with an agency or local
895 governmental entity for goods or services of $1 million or more.
896 (3)(a) Any contract with an agency or local governmental
897 entity for goods or services of $1 million or more entered into
898 or renewed on or after July 1, 2011, through June 30, 2012, must
899 contain a provision that allows for the termination of such
900 contract at the option of the awarding body if the company is
901 found to have submitted a false certification as provided under
902 subsection (5) or been placed on the Scrutinized Companies with
903 Activities in Sudan List or the Scrutinized Companies with
904 Activities in the Iran Petroleum Energy Sector List.
905 (b) Any contract with an agency or local governmental
906 entity for goods or services of $1 million or more entered into
907 or renewed on or after July 1, 2012, must contain a provision
908 that allows for the termination of such contract at the option
909 of the awarding body if the company is found to have submitted a
910 false certification as provided under subsection (5) or been
911 placed on the Scrutinized Companies with Activities in Sudan
912 List, the Scrutinized Companies with Activities in the Iran
913 Petroleum Energy Sector List, the Scrutinized Companies with
914 Activities in Cuba List, or the Scrutinized Companies with
915 Activities in Syria List.
916 (4) Notwithstanding subsection (2) or subsection (3), an
917 agency or local governmental entity, on a case-by-case basis,
918 may permit a company on the Scrutinized Companies with
919 Activities in Sudan List, or the Scrutinized Companies with
920 Activities in the Iran Petroleum Energy Sector List, the
921 Scrutinized Companies with Activities in Cuba List, or the
922 Scrutinized Companies with Activities in Syria List to be
923 eligible for, bid on, submit a proposal for, or enter into or
924 renew a contract for goods or services of $1 million or more
925 under either of the following conditions set forth in paragraph
926 (a) or the conditions set forth in paragraph (b):
927 (a)1. With respect to a company on the Scrutinized
928 Companies with Activities in Sudan List or the Scrutinized
929 Companies with Activities in the Iran Petroleum Energy Sector
930 List, all of the following occur:
931 a.1. The scrutinized business operations were made before
932 July 1, 2011.
933 b.2. The scrutinized business operations have not been
934 expanded or renewed after July 1, 2011.
935 c.3. The agency or local governmental entity determines
936 that it is in the best interest of the state or local community
937 to contract with the company.
938 d.4. The company has adopted, has publicized, and is
939 implementing a formal plan to cease scrutinized business
940 operations and to refrain from engaging in any new scrutinized
941 business operations.
942 2. With respect to a company on the Scrutinized Companies
943 with Activities in Cuba List or the Scrutinized Companies with
944 Activities in Syria List, all of the following occur:
945 a. The scrutinized business operations were made before
946 July 1, 2012.
947 b. The scrutinized business operations have not been
948 expanded or renewed after July 1, 2012.
949 c. The agency or local governmental entity determines that
950 it is in the best interest of the state or local community to
951 contract with the company.
952 d. The company has adopted, has publicized, and is
953 implementing a formal plan to cease scrutinized business
954 operations and to refrain from engaging in any new scrutinized
955 business operations.
956 (b) One of the following occurs:
957 1. The local governmental entity makes a public finding
958 that, absent such an exemption, the local governmental entity
959 would be unable to obtain the goods or services for which the
960 contract is offered.
961 2. For a contract with an executive agency, the Governor
962 makes a public finding that, absent such an exemption, the
963 agency would be unable to obtain the goods or services for which
964 the contract is offered.
965 3. For a contract with an office of a state constitutional
966 officer other than the Governor, the state constitutional
967 officer makes a public finding that, absent such an exemption,
968 the office would be unable to obtain the goods or services for
969 which the contract is offered.
970 (5) At the time a company submits a bid or proposal for a
971 contract or before the company enters into or renews a contract
972 with an agency or governmental entity for goods or services of
973 $1 million or more, the company must certify that the company is
974 not on the Scrutinized Companies with Activities in Sudan List,
975 or the Scrutinized Companies with Activities in the Iran
976 Petroleum Energy Sector List, the Scrutinized Companies with
977 Activities in Cuba List, or the Scrutinized Companies with
978 Activities in Syria List.
979 (a) If, after the agency or the local governmental entity
980 determines, using credible information available to the public,
981 that the company has submitted a false certification, the agency
982 or local governmental entity shall provide the company with
983 written notice of its determination. The company shall have 90
984 days following receipt of the notice to respond in writing and
985 to demonstrate that the determination of false certification was
986 made in error. If the company does not make such demonstration
987 within 90 days after receipt of the notice, the agency or the
988 local governmental entity shall bring a civil action against the
989 company. If a civil action is brought and the court determines
990 that the company submitted a false certification, the company
991 shall pay the penalty described in subparagraph 1. and all
992 reasonable attorney attorney’s fees and costs, including any
993 costs for investigations that led to the finding of false
994 certification.
995 1. A civil penalty equal to the greater of $2 million or
996 twice the amount of the contract for which the false
997 certification was submitted shall be imposed.
998 2. The company is ineligible to bid on any contract with an
999 agency or local governmental entity for 3 years after the date
1000 the agency or local governmental entity determined that the
1001 company submitted a false certification.
1002 (b) A civil action to collect the penalties described in
1003 paragraph (a) must commence within 3 years after the date the
1004 false certification is submitted.
1005 (6) Only the agency or local governmental entity that is a
1006 party to the contract may cause a civil action to be brought
1007 under this section. This section does not create or authorize a
1008 private right of action or enforcement of the penalties provided
1009 in this section. An unsuccessful bidder, or any other person
1010 other than the agency or local governmental entity, may not
1011 protest the award of a contract or contract renewal on the basis
1012 of a false certification.
1013 (7) This section preempts any ordinance or rule of any
1014 agency or local governmental entity involving public contracts
1015 for goods or services of $1 million or more with a company
1016 engaged in scrutinized business operations.
1017 (8) The department shall submit to the Attorney General of
1018 the United States a written notice:
1019 (a) Describing this section within 30 days after July 1,
1020 2011.
1021 (b) Within 30 days after July 1, 2012, apprising the
1022 Attorney General of the United States of the inclusion of
1023 companies on the Scrutinized Companies with Activities in Cuba
1024 List and the Scrutinized Companies with Activities in Syria List
1025 within the provisions of this section.
1026 (9) This section becomes inoperative on the date that
1027 federal law ceases to authorize the states to adopt and enforce
1028 the contracting prohibitions of the type provided for in this
1029 section.
1030 Section 3. This act shall take effect July 1, 2012.