- Associated Press - Wednesday, March 18, 2015

TOPEKA, Kan. (AP) - Kansas’ public employee pension system would be forced to divest from any companies operating in Iran under a bill considered by a House panel on Wednesday.

The bill, which comes amid a spat between Republicans and Democrats in Washington over President Barack Obama’s handling of Iran, would require the pension system to sell stock in any companies that had invested $20 million or more in Iran’s petroleum industry since 1996. That would immediately impact the Kansas Public Employees Retirement System’s $68.5 million investments in Royal Dutch Shell, Total and Toyota.

KPERS would be required to notify those companies of the move, and if the companies did not divest from Iran voluntarily, KPERS would be forced to sell their stock within 12 months.

Republican Rep. Scott Schwab of Olathe, who sponsored the bill in the Pensions and Benefits Committee, said it would keep Kansas public employees from unwittingly contributing to Iran’s economy and reduce the pension fund’s investment risk should relations with Iran deteriorate.

“You’re also protecting our assets because if we do go to war with Iran - I believe that day will come, I think there will be a day that we go to war with Iran - they’re not going to gobble up our resources,” Schwab said.

Obama has been hoping for a deal that would reportedly limit Iran’s ability to develop nuclear weapons in exchange for easing economic sanctions on the country. Democrats have accused Republican lawmakers of trying to sabotage the talks by inviting Israeli Prime Minister Benjamin Netanyahu to speak to the U.S. House of Representatives March 3 and by sending a letter to Iran’s leaders suggesting a future president might invalidate the nuclear deal.

Schwab called the letter a strong move said divesting the state pension fund from Iran would signal Washington where Kansas stands on the country’s relationship to Israel and Iran.

“This would send a message to Washington and even to the White House saying, ‘Look, we’re going to defend our allies and we’re not going to invest in those who try to do harm to them or us,’” Schwab said.

Chairman and Republican Rep. Steven Johnson from Assaria said that he hopes to put the measure to a vote Friday, but it is unlikely to advance further if the committee does not endorse it by then.

Alan Conroy, executive director of KPERS, said the bill would cost the pension fund $8,000 per year for additional research and as much as $2.6 million per year in losses from dumping and avoiding Iran-connected investments. Conroy acknowledged that it was difficult to project how the changes would affect the fund’s long-term profitability.

Republican Rep. John Edmonds from Great Bend, who previously served on KPERS’ board, said he was uncomfortable with adding political considerations to the funds’ investment decisions.

“It’s just not what we’re about, it’s just not what KPERS exists for, it’s not what is consistent with the responsibility that is has been placed upon the trustees and their staff,” Edmonds said.

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