A business group is lobbying against an effort in Congress to give states constitutional cover in their effort to prohibit pension funds from investing in companies with ties to Sudan.
Officials at the National Foreign Trade Council (NFTC), which represents 300 multinational companies, say a provision in a House-passed bill is unconstitutional because it interferes with the federal government’s ability to conduct foreign policy.
The bill would block assets and deny visas to any individual responsible for genocide or war crimes in Sudan and employ other punitive measures designed to pressure the government to end the crisis in Darfur, where marauding Janjaweed militia members have killed and displaced hundreds from the country’s western region.
The Sudanese government, which denies involvement, is thought to have armed and otherwise supported the Janjaweed.
The language in the bill that is generating controversy states that nothing in the act “or any provision in law shall be construed to preempt state law that prohibits investment of state funds … in or relating to the Republic of the Sudan.” Supporters argue that states should be allowed to put whatever additional pressure they can on Sudan.
“Sudan doesn’t care about political pressure,” said one House aide who supports the bill. “What they care about is whether the flow of money stops.”
American companies are already prohibited from doing business in Sudan. But according to the group Sudan Divestment Task Force, several continue to operate there through foreign affiliates. Several foreign companies that aren’t restricted by the U.S. sanctions also continue to operate in Sudan.
Four states, Illinois, Oregon, New Jersey and Maine, have passed measures that would force pensions funds and other financial institutions to divest any ties to Sudan, according to sudandivest.org.
Similar bills are under review in several other states as well. Additionally, many colleges and universities have sought to divest from companies that do business in Sudan.
Rep. Barbara Lee (D-Calif.), a member of the House International Relations Committee, added the language to the bill.
Supporters say the measure is needed to protect the state laws from legal challenges like the one that the NFTC plans to file to block the Illinois Legislature from implementing its bill, which is one of the most restrictive measures.
Daniel O’Flaherty, an NFTC vice president, describes the Sudanese government as ruthless and said his group has no problem with states’ passing measures encouraging pension managers to divest investments in companies that do business in Sudan.
But he argues that state laws that require such divestment violate the U.S. Constitution, which gives the federal government supremacy in determining foreign policy.
“You don’t want 50 states weighing in with different carrots and sticks,” O’Flaherty said.
“You want a clean and coherent national foreign policy. … States shouldn’t muddle in this kind of thing.”
In its legal fight, the NFTC will rely on a 2000 U.S. Supreme Court case it was also involved in. The NFTC had sued to block Massachusetts from restricting state agencies from doing business with companies that do business in Burma, now known as Myanmar.
The court affirmed previous appellate rulings that found that the Massachusetts law infringed on federal foreign-affairs power, violated the foreign-commerce clause and was preempted by the federal law relating to business in Burma.
A Senate draft version of the Sudan bill does not include the clause in question. A Senate source agreed the provision is likely unconstitutional. As such, including it could delay implementation of other aspects of the bill, the source said.
Administration officials have also relayed concerns about the House provision, the source said. Since the House passed its measure, congressional activity has stalled as members have sought to allow administration efforts to negotiate a peaceful resolution in Sudan to proceed.
Negotiations over the language continue, but it is unclear when the bill might move.