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City Council Takes Aim at Iran's Pocketbook

December 10, 2009 By:
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Philadelphia City Council passed legislation last week that would prohibit the city from accepting a bid, or holding investments in, foreign-owned firms that do business with Iran or Sudan.

Its primary sponsor, Democratic Councilman James Kenney, insisted that the bill is not just a symbolic victory, but will hurt both countries in the pocketbook as well. He did acknowledge that the financial implications for various city departments weren't immediately clear.

The vote in City Hall came just a few days before the Pennsylvania House of Representatives unanimously passed a bill that would mandate the state's three largest pension funds to divest from companies that deal with Iran and Sudan. A similar measure, sponsored by State Rep. Josh Shapiro (D-District 153), passed the House in 2008, but later stalled in the Senate.

"Investing in companies with ties to terrorist nations puts the Commonwealth's assets at substantial financial risk. A company's association with terrorism and human-rights abuses undermines the value of our investment in such a company," said Shapiro, who is hopeful that the bill stands a better chance this time.

A spokesman for Philadelphia Mayor Michael Nutter said that the 12-page Council bill was currently under review.

Kenney noted that he expects the mayor to sign it shortly.

"Those companies doing business there are going to feel the economic pinch," said Kenney, a lawmaker from South Philadelphia.

The Jewish Federation of Greater Philadelphia lobbied on behalf of the city legislation.

Essentially, the law would forbid the city from accepting a contractual bid from a foreign-owned company doing business in Iran or Sudan. Some, but not all, of the parameters for determining which companies would be specified are laid out in the bill's language, and some still need to be worked out, explained Kenney.

There are several provisions for waivers, including the stipulation that if the next lowest bidder would cost the city 10 percent more, it could hire what would otherwise be a prohibited company.

Kenney said that the city will undergo a review to determine if it currently has any contracts with a prohibited company. The law can't nullify an existing contract, but would prevent an agreement from being renewed.

A major compromise for the bill involved leaving out any language that related to the city's pension funds, making it very different from the bill being debated in Harrisburg, which is all about public pension funds.

Rob Dubow, who heads up the city's department of finance and chairs the Board of Pensions and Retirement, cited a concern from the city's lawyers as the reason. In a written statement to the council, Dubow said that the City Law Department feared that forcing the pension board to divest might not square with current federal law.

"If the federal law were to change, the Board would adopt an appropriate resolution," he wrote.

Many in Washington are trying to do just that.

In October, the U.S. House passed the Iran Sanctions Enabling Act, which would make it easier for states and local governments to enact divestments targeting Iran and Sudan. The U.S. Senate banking committee also approved a similar measure; it's now awaiting a floor vote.

On Dec. 2, the Federation issued an action alert asking Jewish community members to urge members of the U.S. House and Senate to approve two separate bills regarding divestment and sanctions that are currently being debated on the Hill.


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