Enlisting American investors in the fight against WMD proliferation

Just when it appeared that neither intelligence operations nor inspections nor international arms and export control regimes can be relied upon to protect us from the nexus of terror and WMD proliferation, concerned citizens have received some important words of encouragement – from an unlikely source: CBS’ popular TV news magazine, “60 Minutes.”

On Sunday night, “60 Minutes” called the attention of its millions of American viewers to a dirty little secret: “Just about everyone with a 401(k) pension plan or mutual fund has money invested in companies that are doing business in so-called rogue states. In other words, there are U.S. companies that are helping drive the economies of countries like Iran, Syria and Libya that have sponsored terrorists.”

Citing a powerful commercial data base developed by Conflict Securities Advisory Group (CSAG), the news program established that roughly 400 publicly traded companies – some headquartered in this country, many more overseas – are effectively enabling terrorism. One of those who told “60 Minutes” he felt “anger” that investors were unwittingly helping our enemies was William Thompson, New York City’s comptroller, a job that makes him responsible for $80 billion in city workers’ pension funds.

Reporter Lesley Stahl spoke to Thompson about Iran, whose leaders he notes earn “most of their revenues through their oil industry.” She asked: “So what is the connection between that oil business and terrorism and weapons of mass destruction?” The Comptroller responded: “The Iranian Government is receiving dollars from it. And then turning around and exporting terrorism around the world. It benefits terrorism. At least that’s our belief.”

With the help of CSAG’s software, Thompson was able to determine that several prominent American companies held in his pension funds’ portfolios had subsidiaries in countries like Iran. As “60 Minutes” noted, he began to investigate their activities “at the request of New York City’s police and firemen, who were outraged when they learned where their retirement money was going.” Thompson said, “The members of the Fire Department and the Police Department, after September 11th, given the fact that hundreds of them died in the World Trade Center as a result of a terrorist attack, had greater sensitivity than almost anybody. And they were the ones who kind of took the lead on this.”

American investors – both individual and institutional – have a further, compelling reason for following the lead of New York’s heroic police and firefighters: CSAG’s President, Roger Robinson (a colleague and friend from the Reagan White House) warns that investors could see share value seriously depressed by the negative publicity and popular hostility that ensues as companies’ ties to terrorist regimes come to light.

Robinson told “60 Minutes,”: “We’re certainly alerting investors to a genuine new risk category in the markets, every bit as legitimate as environmental risk was through Three Mile Island, Exxon Valdez and superfund legislation….Investors, we think, have a right to know. Remember, this is their retirement dollars. They should have a sense [from] those who invest on their behalf: Are there genuine risks there?”

In short, Americans with funds in the stock market have an opportunity to do well while doing good. They can reduce material risk to their retirement funds while signaling to companies that seek to secure or retain their investments not to do business – either directly or through cut-outs – with terrorist-sponsoring and/or proliferating regimes.