ASSEMBLY, No. 2556

STATE OF NEW JERSEY

INTRODUCED DECEMBER 9, 1996

By Assemblyman JONES

An Act concerning the investment of certain public funds and supplementing P.L.1950, c.270 (C.52:18A-79 et seq.).

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. Notwithstanding the provisions of any law, rule or regulation to the contrary, no assets subject to investment by or otherwise under the jurisdiction of the Division of Investment in the Department of the Treasury shall be invested in any security representing an equity interest in or a debt or other obligation of Texaco Incorporated or any wholly owned subsidiary of that corporation. If, on the effective date of P.L. , c. (C. ) (now pending before the Legislature as this bill), any such assets are invested in any such security in violation of the provisions hereof, the State Investment Council and the Director of the Division of Investment shall take appropriate action to sell, redeem, divest, or withdraw that investment. Such sale, redemption, divestment, or withdrawal shall be effected in strict accordance with the principles of prudent financial management and in such manner as shall best protect the interests of the public and of the active and retired members of the several State-administered retirement systems of this State, but shall in any case be completed not later than six months following that effective date.

    2. This act shall take effect immediately.

STATEMENT

    This bill provides that no assets subject to investment by or under the jurisdiction of the Division of Investment in the Department of the Treasury shall be invested in the corporate stock or debt obligations of Texaco Incorporated or any wholly-owned subsidiary thereof. If any such assets are invested in any such Texaco security when the bill takes effect as law, the State shall dispose of that investment. Such disposition is to be effected in strict accordance with the principles of prudent financial management and in such manner as best protects the interests of the public and the active and retired members of New Jersey's several State-administered retirement systems, but must be completed within six months following that effective date.

    This bill responds to the recent disclosure of the intolerant remarks uttered by Texaco executives against the African-American and Jewish communities. This incident revealed the apparent practice of active discrimination as a part of the company's corporate culture. In the past, the State divested the assets of its pension funds out of companies doing business in South Africa. Similarly, because of the severity of the Texaco incident and the negative publicity that has resulted, Texaco is no longer a good investment for the State. The State must protect the fiduciary obligation of its pension system while ensuring that the firms in which the State invests maintain standards and practices consistent with the public policies of the State.

Prohibits investment of State funds in equity or debt of Texaco Inc.