Government Accountability Office (GAO) Releases Report on Sudan Divestment
September 22, 2010
The Government Accountability Office (GAO) on Monday released a report requested by Representatives Barney Frank (D-MA), Mike Capuano (D-MA), and Barbara Lee (D-CA) entitled "Sudan Divestment: U.S. Investors Sold Assets but Could Benefit from Increased Disclosure Regarding Companies' Ties to Sudan." In December 2007, Congress enacted the Sudan Accountability and Divestment Act (SADA) which safeguards states and investment companies that choose to divest from companies with business ties to Sudan.
The GAO report, which can be viewed at: http://www.gao.gov/new.items/d10742.pdf, examines steps taken since the passage of SADA by private investment companies and states with Sudan-related investments and discusses the factors they considered when making these decisions. The GAO's report is published in advance of a hearing to be held in the House Financial Services Committee that will further examine the Sudan divestment legislation and its impacts.
"I appreciate the excellent report by the GAO," said House Financial Services Committee Chairman Barney Frank, whose committee led the effort in 2007 to move the Sudan divestment bill through the House. "I'm encouraged by the level of attention and engagement by states and companies and the pressure they have brought to bear on the terrible tragedy in Darfur. The ability to punish bad behavior through divestment is clearly a strong and essential tool, and I think we should now explore using this mechanism to also encourage engagement with companies committed to doing positive things on the ground for the people of Darfur."
"SADA represented a major milestone for those who want to ensure their investments do not fund genocide or mass atrocities," said Sudan Caucus Co-chair Mike Capuano. "We say 'never again' but we must take the necessary actions to ensure that our investments aren't inadvertently financing criminal behavior and this includes making it easier for investors to divest in cases of extreme violence or crisis. The GAO's work on this subject will help inform responsible policy-making and show us where further transparency and clarity are needed. I look forward to addressing this in the Financial Services Committee hearing later this session."
"Although the GAO's report demonstrates that SADA has had a measurable impact on businesses operating in Sudan, it is clear that more can still be done to ensure that our financial assets are not funding genocide," said Rep. Barbara Lee. "The SEC must now follow the GAO's recommendation and take appropriate action to require companies to provide full disclosure regarding their business operations in Sudan. In addition we must continue to pressure the regime in Khartoum to fulfill its obligations towards Southern Sudan and to seek a just and lasting peace among all parties in Darfur."
Among its observations and recommendations, the GAO found that since 2006, states and public pension funds have divested approximately $3.5 billion in Sudan-related assets. In addition, 35 states have laws or policies regarding investments in Sudan. The GAO suggested that the Securities and Exchange Commission require disclosure of business operations with Sudan or other possible state sponsors of terrorism ties by companies that trade on U.S. exchanges.