CommentaryMax Croes [Advocacy Associate, Sudan Divestment Task Force]: "On December 31, 2007, President Bush, with unanimous support from Congress, signed the Sudan Accountability and Divestment Act into law. The law is a landmark establishment of standards for policies of targeted divestment from Sudan. The operative provisions are fourfold.
First, the law authorizes states and local governments to adopt policies of targeted Sudan divestment absolving contentions of constitutionality pertaining to Article 6 Clause 2 of the US Constitution. These actions are authorized only if states limit the scope of divestiture to companies involved in Sudan's oil, mineral extraction, power production and military sectors, and provide targeted companies the opportunity to address their Sudan operations prior to divestment. Secondly, the law effectively prohibits corporations operating in these targeted sectors from receiving US government contracts. It also authorizes states and local governments to pursue their own policies of contract prohibition. Third, the legislation provides legal protection for asset managers that pursue policies of Sudan divestment within the specified sectors. Lastly, the law establishes a sense of Congress that private pension funds may implement targeted divestment from Sudan without violating the Employee Retirement Income Securities Act (ERISA).
Since 2005, 22 states have adopted divestment policies from Sudan. Fifteen of these states have adopted the Sudan Divestment Task Force model of targeted Sudan divestment which, like the Sudan Accountability and Divestment Act only targets companies involved in Sudan's oil, mineral extraction, power production and military sectors and provides targeted companies the opportunity to address their Sudan operations prior to divestment.
In February 2006, U.S. District Judge Matthew F. Kennelly ruled a broad Sudan divestment statute in Illinois to be unconstitutional. The Sudan Accountability and Divestment Act provides clarity and constitutional protection from similar challenges for the 15 states that have already adopted the Sudan Divestment Task Force's divestment model and the 14 states that will be considering the model in 2008.
The Sudan Accountability and Divestment Act has already affected corporate operations in Sudan. Sudan's government is overwhelmingly reliant on foreign direct investment, specifically in the country's oil sector, and has shown an historic responsiveness to economic pressure. Since the introduction of the legislation, nine companies have either withdrawn from Sudan or substantially altered their business operations and corporate governance policies in the country. Pressure placed on these corporations and the Sudanese government is expected to increase significantly with the impending federal contract prohibition and threat of potential state contract prohibition."
