MOSERS board retains Arab Bank investment

With a 5-5 vote, the board of directors of the Missouri State Employees Retirement System June 16 failed to adopt a motion by state Treasurer Sarah Steelman to sell MOSERS stock holdings in Arab Bank.

However, according to a news release from Steelman’s office, the board did unanimously adopt Steelman’s motion to review its policy on screening investments for ties to terrorism.

According to the release, Arab Bank has been sanctioned by the U.S. Treasury Department for ties to terrorist activities. Sanctions include stopping Arab Bank from making international wire transfers and from opening accounts or accepting deposits.

In April, Wall Street Journal reported that the New York branch of Arab Bank was instrumental in transferring more than $20 million to 45 different terrorist groups.

Arab Bank also is facing an $875 million lawsuit by family members of terrorist victims, including Marine Corps veteran John Linde Jr., a Missouri native killed in a terrorist attack in the Gaza region while guarding U.S. diplomats.

Steelman’s failed motion would have required that MOSERS be immediately divested of its holdings in Arab Bank. Steelman is surprised and disappointed that the motion to divest MOSERS of its holdings in Arab Bank failed.

“We have no business using public dollars to buy stock in Arab Bank,” Steelman said in the release.

However, she is pleased that the board approved a review of the policy that enabled the investment.

“With the proper policy, investments like this will stop, and will not be made again,” she added.

Ineffective policy

Steelman said MOSERS’ current policy related to terrorism investments is ineffective because it only requires that staff annually check the retirement fund’s holdings against lists that federal agencies provide of companies that states should not invest in.

However, she cited letters from federal agencies to MOSERS staff that explain that by law, federal agencies only require that companies disclose assets and make required reports, but they do not provide lists of companies in which states should not invest.

“The fact is, our terrorism policy is based on federal lists that do not exist, and that will never exist,” she said.

The board agreed to set up a subcommittee to review a policy change proposed by Steelman to increase protections against terrorist investments, establish more careful screenings of investments to detect terrorist ties and to report findings of questionable holdings to the board.

The board would consider final action on changes proposed by the subcommittee in July.

Her proposed policy would prohibit investments in foreign companies that have direct equity ties with governments that the U.S. State Department have declared to be terrorist-sanctioning states. These countries include Iran, Sudan, Cuba, Syria and North Korea.

MOSERS directly holds stock in at least 10 companies that fall into this category, the release stated, and American companies are prohibited by law from being involved in such business activities in those countries.

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