Calif. Treasurer Bars Tobacco Investment
SACRAMENTO, Calif. (Reuters) - California Treasurer Phil Angelides on' Thursday slapped a moratorium on state investments in tobacco securities, saying ``the extraordinary and unprecedented barrage of litigation'' surrounding tobacco companies made them i
``The Treasurer's Office will not acquire any new securities in tobacco companies, and will not add any tobacco companies to the list of eligible securities,'' Angelides' office said in a statement.
California's $33 billion Pooled Money Investment Account (PMIA) does not currently contain any tobacco securities, but did as recently as 1995 under Angelides' predecessor.
Angelides also said he would use his additional position as chair of the Corporate Governance Subcommittee of the California State Teachers Retirement System (CalSTRS) to ask that fund's board to consider a similar moratorium, as well as divestiture, of tobacco holdings in its portfolio.
CalSTRS currently holds $324 million in tobacco stocks, California Deputy Treasurer Cathy Calfo told Reuters.
``In evaluating the prudence of investing in tobacco companies and in taking action, the Treasurer took into account the extraordinary and unprecedented barrage of litigation and regulatory action surrounding the tobacco industry, as well as negative market trends,'' Angelides' statement said.
He said that, as an indicator of market concern regarding the tobacco industry, Philip Morris shares have lost more than 50 percent of their value since Jan. 1., 1999. The S&P Tobacco Index has lost 53.9 percent of its value for this calendar year versus the S&P 500 Index, which has returned 16.7 percent for the same time period, the statement said.
``The Treasurer's decision was based on his conclusion that a moratorium would be fiscally prudent, that there are sound alternative investments available, and that the state's investment portfolio would not be negatively affected,'' the statement said.
Among litigation faced by the tobacco industry is a civil suit filed by the U.S. Justice Department in September to recover the $20 billion the federal government spends each year on smoking-related illnesses.
The tobacco industry agreed in November 1998 to pay 46 states $206 billion in a broad civil settlement deal involving state outlays to treat smoking-related illnesses.