A federal court judge has overturned an Illinois statute requiring state public pension funds to divest investments in companies with ties to Sudan. "The act violates federal constitutional provisions that preclude the states from taking actions that interfere with the federal government's authority over foreign affairs and commerce with foreign countries," Judge Matthew F. Kennelly of U.S. District Court in Chicago wrote in his ruling Friday.
Under the law, public pension funds in the state were required to divest 60% of their Sudan-related investments by Jan. 27 and would be required to divest the rest of such investments by July 27.
The $39 billion Illinois Teachers' Retirement System, Springfield, estimates the law cost it $2.1 million, including opportunity and brokerage costs, for compliance, said Eva Goltermann, public information officer. The teachers' fund "will look to our internal counsel" on how to proceed, she said. "There is always the possibility an appeal will be made. We have to take great care to comply with this law and we feel the need to proceed cautiously with any changes."
The $11.9 billion Illinois State Board of Investment, Chicago, "has borne a real measurable cost as a result of the law," said William R. Atwood, executive director. The estimated costs include $800,000 in investment transaction costs, $50,000 in legal fees and incalculable staff time, Mr. Atwood said. "Our biggest concern is whether there will be an appeal or whether the General Assembly will rewrite the legislation and pass a different Sudan bill."
Robyn Ziegler, spokeswoman for Illinois Attorney General Lisa Madigan, one of the defendants in the suit, said: "We're reviewing the decision and will be discussing next steps and possible appeal" with state Sen. Jacqueline Collins, who sponsored the Sudan divestment bill.