A U.S. District Court judge said he expects to rule in three or four weeks on a challenge to the Illinois law requiring state public pension fund divestment of companies connected with Sudan.
In a hearing on Wednesday, Judge Matthew F. Kennelly acknowledged an affidavit filed on behalf of the plaintiffs that argues the law will make it harder for municipal pension plans to invest in mutual funds because they aren't likely to seek Sudan-free certification under the statute. "The problem from the plaintiff perspective is you (the state) are imposing onerous requirements (on the public pension funds)," Mr. Kennelly said. However, he did not indicate how he would rule in the case.
The statute interferes with the federal government's authority to carry out foreign policy and provides for no divestment exception, "even if that conduct is lawful," argued attorney Eric L. Hirschhorn with the law firm of Winston & Strawn, representing the National Foreign Trade Council and a number of Illinois municipal police and firefighter pension funds, all plaintiffs in the case.
Gary M. Griffin, bureau chief in the office of the state attorney general, one of the defendants in the case, argued in court that some managers have created Sudan-free funds, mitigating the investing problem. But Mr. Hirschhorn countered that Illinois law prohibits public pension funds from investing in mutual funds that are less than 5 years old.
Mr. Griffin denied the law interferes with foreign policy. He said the state has a right to decide how to invest public pension money, noting the state already dictates some investment limitations and is the ultimate guarantor of public pension benefits.
Mr. Kennelly didn't say he would rule before the Jan. 27 deadline for public pension funds to divest 60% of Sudan-related investments. Under the law, the other 40% has to be divested by July 27.