Gov. Arnold Schwarzenegger said Monday he would sign legislation to end state investment in companies that do business with Iran in an effort to pressure the nation to crack down on terrorism.
The Republican governor issued a statement while attending a summit at the United Nations where Iranian President Mahmoud Ahmadinejad was scheduled to give an address Tuesday.
"California has a long history of leadership and doing what's right with our investment portfolio," Schwarzenegger said.
"Last year, I was proud to sign legislation to divest from the Sudan to
take a powerful stand against genocide. I look forward to signing
legislation to divest from Iran to take an equally powerful stand
The bill imposes a narrow ban on the portfolios of the nation's two largest public pension funds - the California Public Employees Retirement System and the State Teachers Retirement System.
It would ban them from investing in companies that work on defense or
nuclear projects or are involved in developing Iranian petroleum or
natural gas resources.
CalPERS estimated the ban would require them to divest an estimated $2 billion from 10 companies. Pension fund officials had opposed the legislation, which they said would reduce investment options, increase earnings volatility and possibly reduce the earnings of the fund.
The bill will require the pension funds to hire a research firm to determine which companies should be taken out of the retirement accounts of California's teachers and other government employees.
Schwarzenegger spokesman Aaron McLear said the governor would sign the bill as early as this week.
California, which passed a similar law last year regarding investments in Sudan, is among several states to take financial action against Iran.
Similar legislation is pending in Congress.
The Bush administration has accused Iran's government of supplying insurgents in Iraq with weapons to kill U.S. troops, and is also leading a push in the U.N. Security Council for economic sanctions against Iran over its refusal to suspend uranium enrichment.
Iran insists its nuclear program is for peaceful purposes.