Brad Sherman

Mr. SHERMAN

Mr. SHERMAN. Madam Speaker, I rise today to honor the life and public service of Los Angeles City Police Officer David Rodriguez of the San Fernando Valley, whose achievements merit our recognition. After graduating with honors from Van Nuys High School, he entered California State University Northridge, where he received a bachelor of arts in political science. During college he held several jobs, including an internship in my district office. I was honored when I had the opportunity to recommend David for the Los Angeles Police Department Academy. I was proud when in 2003 he entered and graduated. David earned a reputation as an aggressive but by-the-book patrol officer and was recently promoted to the anti-gang unit. At 6 feet 2 and weighing 270 lbs he was a gentle and dedicated family man who took care of his ailing mother. On July 29th, while on duty, Police Officer Rodriguez died during an automobile accident when his patrol car skidded off the Ventura Freeway. Words cannot express the sense of sadness we have for his family. David Rodriguez was a model first responder, whose bravery in death merits our admiration and respect.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2347) to authorize State and local governments to direct divestiture from, and prevent investment in, companies with investments of $20,000,000 or more in Iran's energy sector, and for other purposes, as amended.

Mr. SHERMAN. I yield 1 minute to the gentleman from Massachusetts (Mr. Frank).

Mr. SHERMAN. Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. SHERMAN. Mr. Speaker, I reserve the balance of my time.

Mr. SHERMAN. I'll yield to the gentlelady from Texas (Ms. Jackson- Lee).

Mr. SHERMAN. I thank the gentleman and agree with him completely. I believe that divestment is already clearly authorized in the terms of the fiduciary trying to meet their fiduciary obligation. Investing in terror is bad business for States. I don't think they have an obligation to, in making their own investment policy, to conform to some Federal foreign policy. But if they do, Federal foreign policy for a long time has been very clear: don't invest in Iran. That's why we've had the Iran-Libya Sanctions Act, now the Iran Sanctions Act for quite some time. So this bill will eliminate an excuse for those who do not want to, that have not yet, divested. It will provide a safe harbor, and it will provide guidance for those who want to use their investments to get multinational corporations to take the actions that will be most effective. It provides a list of companies not to invest in, and it provides a standard to define what particularly it is we want the business community worldwide to desist from doing.

Mr. SHERMAN. Mr. Speaker, I ask unanimous consent to reclaim my time.

Mr. SHERMAN. Mr. Speaker, I yield 2 minutes to the gentlewoman from Texas (Ms. Jackson-Lee)

Mr. SHERMAN. I yield to the gentleman from Massachusetts.

Mr. SHERMAN. Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous materials on the bill under consideration.

Mr. SHERMAN. Mr. Speaker, I yield myself so much time as I may consume. Mr. Speaker, at Natans, the centrifuges are turning. Iran is perhaps half a decade away from a nuclear weapon. Iran, however, is not without its Achilles heels. The mullahs have mismanaged the economy to the point where they are rationing gasoline in Tehran. Iran has a vibrant political culture in which the behavior of the elites and the behavior of the people can indeed be influenced by outside information. The key is to be able to broadcast into Iran on RadioFarda a message. That message is that Iran will be diplomatically and economically isolated around the world, and especially from the United States, unless it drops its nuclear weapons program. The problem is, I can't lie that well in Farsi. The fact is we have not yet begun to use the economic and diplomatic levers available to the United States. And it is not yet true that Iran's nuclear program subjects it to the possibility of economic and diplomatic isolation. The bad news, Mr. Speaker, is that we have not had the political will to reach into our economic and diplomatic tool box. The good news is we've still got a lot of tools lying there in the tool box. One of the best is divestiture. Divestiture needs to be part of a bigger economic and diplomatic strategy to isolate the government in Tehran. If we can dry up, however, Iran's access to foreign investment, if we can sever the ties between the multinational corporations and the government of Iran, we may be able to increase the cost of Iran's behavior and put enough pressure on that regime so either it decides, or its people insist, that it abandon its nuclear program. Now, the key is to change the behavior of these multinational corporations, and the best way to do that is with American policies that make them choose between the benefits of doing business with the American people, American investors on the one hand, and the so-called benefits they might get from doing business with Tehran on the other. So what does this bill do to begin and continue the divestment process? The bill mandates nothing except for the creation of a list by the administration, which I will get to in just a second. It provides a clear authorization from Congress for States to divest from companies conducting the certain identified activities in Iran, and it would shield both private pension plan managers, mutual funds and public sector pension plan managers from harassing lawsuits should they decide on their own initiative to divest from those companies carrying out certain activities in Iran. In doing so, this bill sweeps away an excuse from those investment managers who, up until now, haven't wanted to be bothered to divest, even though their beneficiaries are demanding it. This bill also provides some standards. I mentioned this in the discussion of the Sudan bill. First, people want to know what activities should cause them to divest. Now, I have more than sympathy with those who say one penny of activity, sell one candy bar in Tehran and I don't want my money invested in your company. That's a purist approach. That's an approach some may choose to take. I think the better harnessing of America's economic power and the power of individual investors, individual decisionmakers, pension plans, mutual funds, et cetera, is to focus on three activities, and that is what this bill does. It requires that 6 months after enactment, the U.S. Government, the administration, probably the Treasury Department but whichever department is identified by the President, produce a list of those international corporations that engage in any one of these three activities. The first is to invest $20 million in the energy sector of Iran. That is a standard we have adhered to for a long time since the adoption of what was then called the Iran and Libya Sanctions Act, now the Iran Sanctions Act. The second are those firms selling munitions to the government in Tehran. And the third are those who extend credit of $20 million or more to the Iranian Government. And at this point, let me pause, because the question arises, what is it to extend credit to the Iranian Government when the Iranian Government issues a long-term bond? Is it just the company that buys the bond or the financial institution that buys the bond, or is it directly from the Iranian Government, or is it those that provide a secondary market by buying those bonds from the original purchaser?

Mr. SHERMAN. Mr. Speaker, on that I demand the yeas and nays.

Mr. SHERMAN. Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. SHERMAN. I yield to the gentleman from Massachusetts (Mr. Frank).

Mr. SHERMAN. I thank the gentleman and agree with him completely. This bill is designed to cause the list prepared by the administration to include those who invest in bonds issued by the Government of Iran. I should point out that in identifying the three activities that are going to cause multinational corporations to be listed, that we are paralleling what we did just last week when this Congress passed the bill dealing with the Overseas Private Investment Corporation, which also focused on pretty much the same standards and said those multinational corporations engaged in those activities with the Government of Iran would not be able to be partners of OPIC in its activities around the world. Now, the bill also provides that any State statute enacted prior to the publication of the first list of firms by the administration would be grandfathered. States do not have to wait and should not wait for the publication of this list by the administration. States such as Florida, Ohio and California, which are proceeding with divestment measures, and any other States which might consider a divestment program need not wait for the Federal list, and whatever they choose to do will be grandfathered in this legislation. Now, this bill states explicitly what I think was clearly true of both the Sudan bill we just discussed and this bill, and that is it provides a safe harbor but does not imply that that which lies outside the safe harbor is somehow forbidden. Section 7 of this bill would make it clear that the authorization that's been provided by this bill is just that, a safe harbor, that this bill in no way implicitly restricts or takes away whatever authorities the States, the pension managers and mutual funds already have

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, we talked earlier today about the Iran Sanctions Enabling Act. The purpose of that bill and the purpose of this bill is to change the behavior of multinational corporations so as to change the behavior of the Iranian Government. This effort began perhaps with the Iran-Libya Sanctions Act over a decade ago. It worked so well vis-a-vis Libya, that we have renamed it the Iran Sanctions Act, as Libya has, indeed, changed its behavior. It is important that we clarify the law. The sponsor of the bill, the gentlelady from Florida indicated that this bill makes a number of important improvements to the Iran Sanctions Act. The first is to indicate that it covers financial institutions, insurers, LLCs and other business entities; second, that when we talk about investments in the petroleum sector, that term includes refining petroleum and it includes development of liquefied natural gas. Finally, I want to thank the gentlelady from Florida for including language in this bill that I had previously gotten into the Iran Freedom Support Act that was passed last year but which was dropped in conference. I want to thank her for putting it in this bill. That language deals with subsidiaries of U.S.-based multinationals. We currently have a ban on U.S. companies doing business with Iran, a ban on most transactions and investments. But some U.S.-based multinationals have used as a loophole through those regulations, through existing law, their foreign subsidiaries. What this bill would do is apply basic U.S. sanctions to all the entities controlled by multinational corporations based in the United States. As to contracts existing on May 22, 2007, those contacts would have to be wound up at the earliest opportunity and could not be extended to cover additional activities. We then face the issue of what happens when a U.S.-based multinational buys a company that is incorporated abroad and that company already has preexisting contracts with or in Iran. The activities of such subsidiaries would have to be wound up at their earlier possible opportunity, but furthermore, the U.S. buyer could not even buy that foreign company if the U.S. buyer knew that the company had contracts with the Government of Iran. The message is clear: If you are building a company abroad and you think you might want to sell it to a U.S.-based multinational, do not have that company do business with Iran; otherwise, it will not be a company that can be easily acquired by a U.S.-based multinational. This bill is an important part of an overall effort to put economic pressure on the Government of Iran and to let the Iranian elites and people know that they need to desist from their nuclear weapons program. Also coming before this Congress, I hope soon, will be H.R. 1400, the Iran Counterproliferation Act, which also strengthens the Iran Sanctions Act and whose sponsor is sitting right here with us, the chairman of the Foreign Affairs Committee, Mr. Lantos. We have to call upon the administration to actually enforce the Iran Sanctions Act. Since 1998, despite overwhelming evidence, no company has been identified by the United States Department of State as having $20 million of investment in the Iranian oil sector which triggers the Iran Sanctions Act. It is time for the administration to stop ignoring existing law. It is time to strengthen existing law

Mr. SHERMAN

Mr. SHERMAN. I thank the gentleman for the time. Madam Speaker, we have already banned U.S. companies from conducting business operations in Sudan. Now we need to enlist American investors to change the behavior of foreign-based multinationals, to make it clear that they cannot have the capital of well-meaning Americans and the supposed benefit of cozying up to the government in Khartoum. The way to do this, the way to change the behavior of the Government of Sudan, is to change the behavior of multinational corporations. The way to change the behavior of multinational corporations is to change American investment policies. Scores of private organizations in this country, including the University of Southern California, have already divested; some 19 States have already adopted divestment policies. This bill helps divestiture in two ways. First, it provides some critical guidance to those who want to divest. Those who want to divest are faced first with the issue of what standards to apply: Do I want to divest in any company that sells a candy bar in Khartoum, or do I only want to divest against those companies selling guns to the Government of Sudan? This bill focuses on those companies providing the strategic assistance that helps the Khartoum Government and empowers that government. It identifies the key investment sectors of the Sudanese economy that government relies upon. It draws the line that establishes a clear standard. Others may depart from that standard and have an absolute rule: I don't want to invest in anything, any company doing business in Sudan. But this bill provides guidance to those who want one. Second, the issue is which companies do I not want to invest in. Here the bill provides a list published by the Secretary of the Treasury of those companies violating the standards identified in the bill. As the chairman of our committee points out, investors already have the right to divest. They shouldn't wait for us to pass this bill. The fiduciary duty to protect one's beneficiaries is enhanced if you divest from those businesses doing business in Sudan, because investing in terror is bad business and the sign of bad management; it exposes a corporation to reputational risk. Likewise, our cities and States have the right to decide for themselves how to invest their money. But even if you buy the constitutional view, and I don't, that they can only divest when consistent with American foreign policy, you don't have to wait for this bill. Sudan is on the terrorism list. There is no clearer statement of American foreign policy that we want all Americans, and all cities, counties and States, to join with the Federal Government in carrying out the Federal policy to put economic pressure on the government in Khartoum. So I hope people will act now. To some extent, what this bill does in stating that fiduciaries are free to divest is simply provide an end to an excuse. They don't need the excuse. They ought to divest

Mr. SHERMAN

Mr. SHERMAN. Mr. Chairman, I supported the Hunter/Kaptur amendment because we should not be funding the Security and Prosperity Partnership until the White House tells us what it is and what their plans are. The Security and Prosperity Partnership of North America website says that its goals are about eliminating red tape and increasing security. Those are noble goals. But unless the White House is willing to tell us what they really have in mind, we shouldn't have them spend money on it.

Mr. SHERMAN

Mr. SHERMAN. I thank the gentleman from Indiana, particularly for noting the ongoing efforts of the Indian Government to deal with this issue. I believe that this resolution should be regarded as one where we will work with the Government of India to deal with what both countries acknowledge to be an ongoing problem. Mr. Speaker, I reserve the balance of my time.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I rise in strong support of this bill, and I yield myself such time as I may consume. I would like to thank the many colleagues who have been involved in crafting this legislation, including Chairman Lantos, Ranking Member Ros-Lehtinen, Ranking Member Royce, Mr. Manzullo, Ambassador Watson and others. Their assistance was critical in the bipartisan effort of making the Overseas Private Investment Corporation even more effective. As I proceed, I will point out that the Overseas Private Investment Corporation is saddled with the most unfortunate acronym in Washington, OPIC. Let us hope it is not confused with that other, nefarious organization, OPEC. OPIC's mission is ``to mobilize and facilitate the participation of United States private capital and skills in the economic and social development of less developed countries and areas.'' Since its creation in 1971, the Overseas Private Investment Corporation has generated $71 billion in U.S. exports, supported over 271,000 U.S. jobs, and supported projects in over 150 developing countries. OPIC uses a nimble, private-sector model to accomplish its important public-sector goals, to further development in poor countries, including unstable countries, and to support the goals of American foreign policy. It supports targeted investments in some of the world's poorest countries, many of which would otherwise not benefit from American private-sector projects because the private sector would be otherwise unwilling to take the risks involved. OPIC, being part of the Federal Government, is uniquely qualified to carry out this mission. There are private sector organizations which will sell on rare occasions expropriation insurance, but they often refuse to sell such insurance or refuse to finance projects in difficult and problematic countries because if expropriation did occur, they would only have their private-sector contacts to persuade the foreign government to relent. In the case of OPIC, it is able to rely on the United States State Department to convince foreign countries not to expropriate projects and assets funded by or guaranteed by the United States agency. OPIC has a sophisticated system that reviews applications and funds projects in some of the places where companies are least likely to get the very kind of insurance they are most likely to need; namely, insurance for political risk. In fact, OPIC requires applicants for assistance to seek insurance in the private market and certify that it was unavailable before OPIC will offer its services. OPIC operates at no net cost to the United States taxpayer. Amazingly, it has turned a profit in every single year of its operations and now has reserves of $5.3 billion on deposit in the U.S. Treasury. Despite working in some of the least developed countries of the world, it has amassed this $5.3 billion in reserves. If all of our government agencies ran this way, perhaps even those on the other side of the aisle would be more favorably disposed to Federal programs. Today's bill not only reauthorizes OPIC but improves both its strategy and oversight to make it the most responsible investor it can be. With this bill, the new and improved OPIC will work in countries and with companies, private sector companies, in a manner which provides greater protection for international worker rights. The new and improved OPIC will take additional steps to guarantee that its projects do not damage the environment and, in fact, move toward a greener economy. The new and improved OPIC will be as transparent as possible and more transparent than any Federal agency I am aware of. I want to especially focus on section 10 of the bill because it contains a provision that is unique as to bills that have come to this floor, but which is being talked about in a wide variety of our other bills, designed to focus on using the economic power of the United States to deal with terrorist countries, particularly those who are committing genocide, such as Sudan, or developing nuclear weapons, such as Iran and North Korea. If this bill is enacted, this provision would be the only statute requiring a screen for companies doing business with a U.S. government agency that requires the private sector companies to certify that neither they nor any entity, as part of their affiliated group of corporations, is engaging in an enterprise which is helping terrorist states as defined in the bill. Now, one of the toughest issues for anyone trying to use the economic power of the United States to achieve our foreign policy objectives must ask is, what types of investments are we trying to discourage? The broader the definition of what we're trying to discourage, the less focused the pressure that we put on private sector entities. In this bill, and this is a bill that I hope will form a template for the divestiture movement in the United States, for procurement laws that come before this Congress, et cetera, we focus rather narrowly the economic pressure of the United States. We tell these multinational corporations that we're not going to bar you from dealing with OPIC if you sell a candy bar to a private store in Tehran or you sell paper clips to a stationery store in Khartoum. Rather, you must certify that your corporation and all its affiliates have abstained from two very important actions: first, that you have made no loan to the terrorist government; and, second, that you are not investing significant assets in the oil and energy sector of a terrorist State, particularly no more than $20 million. This builds on what used to be called the Iran-Libya Sanctions Act, now the Iran Sanctions Act, which draws the line and finds the pressure point for both Iran and Sudan, and probably Syria as well, in stating that our goal is to prevent investments of more than $20 million in the terrorist states' oil sector. Also, OPIC would not be able to approve an application if the applicant company has an outstanding loan or extension of credit to one of the state sponsors of terrorist governments. Sales of goods other than food and medicine on anything other than a cash basis would constitute U.N. extension of credit for these purposes. Now, section 10 of the bill would apply these prohibitions, as I've pointed out, to foreign subsidiaries of the applicant. In order to benefit from partnering with OPIC, the entire group of affiliated corporations would have to make the certification. Section 10 of the bill would require the CEOs of any applicant and the CEO of the applicant's ultimate parent corporation to certify that none of the affiliated groups have engaged in the prohibited activities. Section 10 is also narrowly targeted with regard to the geography of the Sudan in that it does not prohibit activities in those regions of Sudan not under the power of the Khartoum government. For 35 years, OPIC has funded and ensured the type of infrastructure- building that no one else would do in some countries where no private corporation would otherwise go. OPIC has paved the way for roads and bridges, buildings and energy facilities in countries marked by conflict and war. For these reasons, we should reauthorize OPIC. Mr. Speaker, I reserve the balance of my time.

Mr. SHERMAN. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks and include extraneous material on the bill now under consideration, and on the next three resolutions that the House will consider, H. Res. 521, H. Res. 380, and H. Con. Res. 139.

Mr. SHERMAN. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2798) to reauthorize the programs of the Overseas Private Investment Corporation, and for other purposes, as amended.

Mr. SHERMAN. Mr. Speaker, I have no requests for time. Let me yield myself just a couple of minutes and reemphasize, this is an agency that has conducted its activities at no cost to the Federal Treasury and, in fact, made a profit. It is appropriate that we reauthorize OPIC. Second, this bill is, I believe, the first to come before this House which defines what precisely it is that we want international corporations to stop doing, and that is, investing in the oil sector of terrorist states, and, second, making loans to terrorist states. That is why I think that this bill may be an important template for other legislation, and I hope it will become a guide for what we expect of companies in procurement legislation, Ex-Im Bank, et cetera.

Mr. SHERMAN

Mr. SHERMAN. Mr. Speaker, I move to suspend the rules and agree to the resolution (H. Res. 380) commending Idaho on winning the bid to host the 2009 Special Olympics World Winter Games.