Connecticut Seal

General Assembly

File No. 69

    February Session, 2018

House Bill No. 5269

House of Representatives, March 28, 2018

The Committee on Government Administration and Elections reported through REP. FOX of the 148th Dist., Chairperson of the Committee on the part of the House, that the bill ought to pass.

AN ACT CONCERNING THE DIVESTMENT OF STATE FUNDS INVESTED IN COMPANIES DOING BUSINESS IN VENEZUELA.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective October 1, 2018) (a) For the purposes of this section:

(1) "Company" means any corporation, utility, partnership, joint venture, franchisor, franchisee, trust, entity investment vehicle, financial institution or other entity or business association, including all wholly-owned subsidiaries, majority-owned subsidiaries, parent companies or affiliates of such entities or business associations that exist for the purpose of making profit;

(2) "Doing business in Venezuela" means engaging in commerce in any form in Venezuela, including maintaining equipment, facilities, personnel or other apparatus of business or commerce in Venezuela, including, but not limited to, the lease or ownership of real or personal property in Venezuela or engaging in any business activity with the government of Venezuela;

(3) "Invest" means the commitment of funds or other assets to a company, including, but not limited to, the ownership or control of a share or interest in the company, and the ownership or control of a bond or other debt instrument by the company;

(4) "Venezuela" means the Bolivarian Republic of Venezuela, including its government and any of its agencies, instrumentalities or political subdivisions;

(5) "Oil-related activities" include, but are not limited to, activities such as (A) owning rights to oil blocks, (B) exporting, extracting, producing, refining, processing, exploring for, transporting, selling or trading of oil, (C) constructing, maintaining or operating a pipeline, refinery or other oil field infrastructure, and (D) facilitating such activities, including providing supplies and services in support of such activities, but does not include the selling of retail gasoline and related consumer products; and

(6) "Petroleum resources" means petroleum, petroleum byproducts and natural gas.

(b) The State Treasurer shall review the major investment holdings of the state for the purpose of determining the extent to which state funds are invested in companies doing business in Venezuela. Whenever feasible and consistent with the fiduciary duties of the State Treasurer, the State Treasurer shall encourage companies in which state funds are invested and that are doing business in Venezuela, as identified by the United States Department of Treasury's Office of Foreign Assets Control or the State Treasurer, to act responsibly and not take actions that promote or otherwise enable Venezuela's corruption and the impoverishment of the Venezuelan people.

(c) The State Treasurer (1) may divest, decide to not further invest state funds or not enter into any future investment in any company doing business in Venezuela; and (2) shall divest and not further invest in any security or instrument issued by Venezuela. In determining whether to divest state funds in accordance with the provisions of subdivision (1) of this subsection, the factors that the Treasurer shall consider shall include, but need not be limited to, the following: (A) Revenues paid by such company directly to the government of Venezuela; (B) whether the company is doing business in Venezuela that involves contracts with or provision of supplies or services to (i) the government of Venezuela, (ii) companies in which the government of Venezuela has any direct or indirect equity share, (iii) consortia or projects commissioned by the government of Venezuela, or (iv) companies involved in consortia or projects commissioned by the government of Venezuela where such business involves oil-related activities, investments that directly and significantly contribute to the development of Venezuela's petroleum resources or any other business activity that has been made the subject of economic sanctions imposed by the United States government; (C) whether such company knowingly obstructs lawful inquiries into its operations and investments in Venezuela; (D) whether such company attempts to circumvent any applicable sanctions of the United States; (E) the extent of any humanitarian activities undertaken by such company in Venezuela; (F) whether such company is authorized by the federal government of the United States to do business in Venezuela; and (G) any other factor that the Treasurer deems prudent. In the event that the Treasurer determines that divestment of state funds is warranted from a company in which state funds are invested due to such company doing business in Venezuela, the Treasurer shall give notice to such company that such funds shall be divested from such company for as long as such company does business in Venezuela.

(d) The State Treasurer shall, at least once per fiscal year, provide a report to the Investment Advisory Council on actions taken by the Treasurer pursuant to the provisions of this section.

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2018

New section

GAE

Joint Favorable

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: None

Municipal Impact: None

Explanation

The bill is permissive. It is not expected to result in a fiscal impact to the state because it is anticipated that if the Treasurer chooses to disinvest any funds, they will be reinvested in other companies that will produce similar rates of return.

The Out Years

State Impact: None

Municipal Impact: None

OLR Bill Analysis

HB 5269

AN ACT CONCERNING THE DIVESTMENT OF STATE FUNDS INVESTED IN COMPANIES DOING BUSINESS IN VENEZUELA.

SUMMARY

This bill requires the state treasurer to divest and not further invest in any security or instrument issued by Venezuela. It also requires her to review the state's major investment holdings to determine the extent to which state funds are invested in companies doing business in Venezuela.

The bill allows the state treasurer to divest in any company doing business with Venezuela or decide to not further invest state funds or not enter any future investments with such companies. The bill requires the state treasurer to consider several factors when making this determination, described below. If she determines divestment is warranted, she must give notice to the company that funds will be divested for as long as the company does business in Venezuela.

Under the bill, the state treasurer, whenever feasible and consistent with her fiduciary duties, must encourage certain companies in which state funds are invested to act responsibly and not take actions promoting or enabling Venezuela's corruption and the Venezuelan peoples' impoverishment. This requirement applies to companies that the United State Department of Treasury's Office of Foreign Assets Control or the state treasurer identifies as doing business in Venezuela.

The bill also requires the state treasurer to report, at least once per fiscal year, to the Investment Advisory Council on any actions she takes under the bill.

EFFECTIVE DATE: October 1, 2018

COMPANIES DOING BUSINESS IN VENEZUELA

The bill requires the state treasurer to determine the extent to which state funds are invested in companies doing business in Venezuela and determine whether to divest, not further invest state funds, or not enter into any future investments with such companies. Under the bill, invest means a commitment of funds or other assets to a company, including ownership or control of a share or interest in the company, its bonds, or other debt instruments. Under the bill, a company is any:

The bill's provisions apply for companies doing business in Venezuela, which, under the bill, means engaging in commerce in any form in the Bolivarian Republic of Venezuela, its government, and any of its agencies, instrumentalities, or political subdivisions, including (1) maintaining equipment, facilities, personnel, or other business or commerce apparatus in Venezuela; (2) leasing or owning real or personal property in Venezuela; or (3) engaging in any business activity with Venezuela's government.

DIVESTMENT DECISION FACTORS

The bill requires the state treasurer to consider the following factors when determining whether to take action under the bill:

She must also consider whether the company's business conducted in Venezuela involves contracts with or provisions of supplies or services to:

Under the bill, oil-related activities exclude selling retail gasoline and related consumer products, but include:

COMMITTEE ACTION

Government Administration and Elections Committee

Joint Favorable

Yea

11

Nay

5

(03/09/2018)

TOP