Democratic California Assemblyman Alberto Torrico has withdrawn AB 1967, a bill that would prohibit all state pension funds in California from investing directly in a private equity company that is owned in whole or in part by a sovereign wealth fund, or in a private equity fund managed by a firm owned by a sovereign wealth fund, if the sovereign wealth fund is associated with countries that are not a signatory to at least five of six international human rights treaties.
The bill was scheduled to be considered in committee today but has been delayed following opposition from California Governor Arnold Schwarzenegger.
![]() ![]() |
Arnold |
Torrico said in a statement: “Although I remain committed to pursuing this issue during this legislative session, I have decided that it would not be beneficial to move forward with the bill today. This delay will give us time to properly address some of the concerns that have been raised and to continue to work with other group affected by the legislation.”
The Schwarzenegger administration has rarely commented on legislation prior to the passing of a bill. In an interview with PEO on 6 March, Torrico said, “Our Governor makes a practice of not letting anyone know whether or not he would support or oppose a bill until it actually reaches his desk, so I have no idea what he’s going to do.”
The governor made an exception to the rule in speaking out over this bill. In a Los Angeles Times op-ed article printed this morning, Schwarzenegger said: “This measure, AB 1967, is an ineffective way to demonstrate California’s concern [about human rights]. It would not lead to the kind of change its proponents hope for – and it would cause a deep wound to out retirement funds and government programs when we can least afford it.”
Arnold Schwarzenegger |
In recent years, California has divested from Sudan in opposition to the ongoing genocide in Darfur and banned investment in Iran due to its nuclear program. Of this bill, Schwarzenegger said, “It does not send the same powerful signal to the world, would do little to address human rights and would impose a costly burden on California.” He views the measure as futile in achieving its goal.
“This bill would also involve risk to our state services,” said Schwarzenegger. California Public Employees’ Retirement System, the largest public pension fund in the United States, owns stakes in the management companies of Apollo Management and The Carlyle Group, both of which are partially owned by sovereign wealth funds potentially affected by the bill.
CalPERS estimates that the bill could cost the pension as much as $12 billion (€7.6 billion) over the next 10 years in lost revenue. The California State Teachers’ Retirement System estimates losses of up to $5 billion over five years.
The damage to the private equity firms impacted would also hurt the state, said Schwarzenegger calling private equity “an important economic engine for jobs and the economy”.
No announcement has yet been made as to when the bill will now be considered.