60 Minutes Segment Raises Awareness of Links Between Terrorism and American Investors; Pension, Retirement Plans Affected

1/23/2004

From: Conflict Securities Advisory Group, 202-223-8034

WASHINGTON, Jan. 23 -- Many Americans may be surprised to learn that their retirement dollars are invested in publicly traded companies that have been linked to terrorist- sponsoring states or the proliferation of weapons of mass destruction and ballistic missiles. They may be even more surprised to learn that such ties could end up hurting the value of their investments. A report scheduled to air this Sunday, January 25, at 7 p.m. EST on the CBS news broadcast, 60 Minutes, will focus national attention on these little known facts.

"While 60 Minutes addresses the big-picture dynamics, this remains fundamentally a local issue. Are teachers, fire fighters, police officers and other public employees aware that their retirement dollars may be funding companies that invest in Iran, Libya, Syria, North Korea, Sudan and, earlier, Saddam Hussein's Iraq?" said Roger W. Robinson Jr., President and CEO of Conflict Securities Advisory Group (CSAG), a Washington-based firm that is prominently featured in the report and dedicated to tracking -- and informing investors about -- such "global security risk" factors. "Average Americans may want to ask, 'Does my local pension system invest in companies that are conducting business in terrorist-sponsoring states? Are my investments indirectly funding terrorism? Can my money manager identify which investments might be at risk from such business ties?'"

Robinson went on to note, "As the 60 Minutes report indicates, this is not only an ethical issue. At CSAG, we focus on the proven fact that investments in companies that partner with terrorist-sponsoring countries can negatively affect the stock price and image of a company. Regrettably, at this time, most state, city, and police and fire fighter pension systems have not taken steps to understand the extent of their exposure to global security risk." The Securities and Exchange Commission, which recently called global security risk a "crucial issue for investors," has publicly confirmed that companies maintaining substantial business relationships with these governments can represent a material risk to investors.

"Global security risk" is defined as the negative impact on a public company's stock price and reputation that can result from its business activities in terrorist-sponsoring states or association with the development and proliferation of weapons of mass destruction and ballistic missiles.

"While it is difficult to estimate how much average Americans have invested in companies exposed to global security risk, it is safe to say that the roughly 50 percent of Americans that are in the markets are likely invested in at least a handful, if not scores of these companies. For example, we know that the New York City Employee Retirement System (NYCERS), which invests over $85 billion on behalf of some 300,000 New Yorkers, has utilized CSAG's Global Security Risk Monitor on-line product to identify City investments in over half of the 400 companies profiled by the product. NYCERS has used this information to implement non- disruptive strategies that protect the assets of their beneficiaries. Based on our experience, we believe that most public pension funds and private asset managers have invested funds in many companies exposed to global security risk," said Robinson.

Despite the proven risk to share value, the 60 Minutes segment underscores that most public pension systems, mutual funds, and other companies that invest on behalf of average Americans have not even taken the first step of identifying what portfolio companies may be exposed to global security risk. To combat this shortcoming, a number of state governments are taking action to require the identification of such links. For example, Arizona Treasurer David Petersen is introducing legislation this month that would require any entity managing state funds to research and report on global security risk. In Connecticut and Florida, state officials are likewise requiring state asset managers to report on investments in companies with ties to terrorist-sponsoring states.

While most Americans leave the management of their portfolios to professionals, they can be proactive on this issue. "The surest way to understand this risk exposure is to request that your state, city or police and fire fighter pension systems, or their asset managers, provide you with a list of portfolio companies doing business in U.S. State Department-designated terrorist-sponsoring states and explain what steps they are taking to mitigate global security risk," said Robinson.

CSAG provides impartial, independent research, and market-wise analysis of global security risk for institutional and individual investors. Its online subscription product, the Global Security Risk Monitor, identifies and profiles over 400 large publicly traded companies with ties to terrorist-sponsoring states or the proliferation of weapons of mass destruction.

CSAG executives may be reached at 202-223-8034 to discuss how global security risk can affect local pension systems and related issues. For more information on global security risk and Conflict Securities Advisory Group, visit http://www.conflictsecurities.com.