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PROVIDENCE â€“ In a move General Treasurer Gina Raimondo said started back in December after the deadly shootings at Connecticutâ€™s Sandy Hook Elementary School, the State Investment Commission voted unanimously Wednesday to divest all of the stake the state pension fund has in a gun distributor.
As a result, the fund will sell all of its $20 investment in Wellspring Capital Partners IV, which has about $2 million in state money in United Sporting Companies, and it will request that Summit Partners remove the approximately $2 million it has in United Sporting Companies and reinvest it elsewhere.
Raimondo said Wednesday, â€śWe asked our pension consultant to do a full review and what they found were two instances where we had a stake in a gun distributor, so we took action today to sell those interests.â€ť She said the fundâ€™s pension advisors said they would try to complete the sales by the end of the year. Unfortunately, it canâ€™t be done overnight; weâ€™ll hold their feet to the fire and make sure it can be done as quickly as practical.â€ť
Raimondo said Wednesdayâ€™s vote concerns the stateâ€™s â€śactively managed portfolio. Obviously the bulk of the stateâ€™s equity investments are in index funds, so itâ€™s certainly possible that one of the index funds we own contain stocks of Wal-Mart, etc. (which sells guns). Over that, we really canâ€™t exercise control. But in the actively managed portions, these are the only two stakes that our advisors found we were invested in any aspect of the gun industry. â€ś
Raimondo quickly took heat for making the change.
â€śGenerally speaking, the treasurerâ€™s job is to make the best investments for our pension system,â€ť said Rep. Michael Chippendale, who represents parts of Glocester, Foster and Coventry. â€śIf we start to use that position as some sort of bully pulpit for political activism on causes, then I think that could fall under an improper use of the power of that office.
â€śI am positive that if you were to look into all of the diversity of the various investments our treasurer has put together,â€ť he added, â€śyouâ€™d find companies like cigarette manufacturers, you would probably find chemical companies that have had issues, you would find alcohol companies whether they were distributors or distilleries or whatever.
â€śHow far do you want to take it?â€ť Chippendale asked? â€śHow far does the treasurer want to take her activism in her position?
State Republican Chairman Mark Smiley posed similar questions.
â€śWhat will she decide to divest of next, companies that manufacture and distribute soda and potato chips because of obesity?â€ť he asked.
â€śPerhaps she will divest of fertilizer manufacturers because she sees them as harming the environment. Given Rhode Island is ranked at the bottom for business do we really want to banish certain industries that we should be working to attract to our state in order to provide jobs?â€ť
Raimondo, Smiley said, â€śclearly has her priorities all wrong.â€ť
Itâ€™s a good question,â€ť she allowed when asked about the criticisms about where the investment commission might decide to divest next. â€śWeâ€™re always trying to balance our fiduciary duty to make good long-term investments and doing what is right and staying true to our core values.
Ken Block, so far the only announced candidate for governor, took an even harsher tone.
â€śThis is an irresponsible and misguided decision by the treasurer, who is now politicizing the investment decisions of our retirement system,â€ť Block said. â€śShe is using pension assets to score political points and pander to certain constituencies.
â€śWhatever you think about gun control, this is the wrong approach,â€ť the Moderate Party of Rhode Island founder said. â€śThe Rhode Island Treasurerâ€™s office is getting involved in a public policy decision for which it has absolutely no responsibility.â€ť
â€śInvestment decisions should be based on what is in the financial interest of the retirement system,â€ť Block said. â€śTreasurer Raimondo should stopping using the pension fund as a political football.â€ť
â€śAbsolutely not,â€ť Raimondo said when asked whether her decision was affected by political concerns and her possible run for governor next year. â€śI took action immediately after Sandy Hook and it is the right thing to do.â€ť
â€śThis one is important to me,â€ť Raimondo said in a telephone interview. â€śIâ€™m a mom, I have two little kids in the public school, I worry about them and their safety. Our streets need to be safe; it is unacceptable, the level of gun violence in this state and in this country. We had to take a stand.
As a mother, as a public official, I am so deeply troubled by gun violence and I am confident this is going to be the right decision for our fund over time. There are better ways, less risky ways, to invest our assets. So this was an easy one.â€ť
The GOPâ€™s Smiley wasnâ€™t buying it.
â€śTreasurer Raimondo is pandering to a constituency in order to garner votes for the upcoming governorâ€™s race. Clearly the pension fund should not be used in this manner.â€ť
A phone call to United Sporting Companies in Chapin, South Carolina, on Wednesday drew no response.
Follow Jim Baron on Twitter @Jim_Baron