San Francisco State Foundation Divests from Tobacco, Student Group Demands More

San Francisco State Foundation Divests from Tobacco Holdings, but Student Group Demands More
By Mike Ilich

San Francisco, June 24, 2002

Student activists at San Francisco State University (SFSU) won a major victory in their fight against campus associations with the Tobacco Industry last week when the Board of Directors (BOD) of the SFSU Foundation Inc. (SFSUFI) unanimously passed a resolution that would add tobacco companies to their list of prohibited investments.

However, TACTIC (Together Against Campus Tobacco Investments Campaign) sees the policy as only a partial victory. TACTIC is a grass-roots, student-led coalition of students, student groups, faculty, and community advocacy agencies whose goal is to end the financial ties between SFSU and socially unethical industries, the particularly its demon poster child, the Tobacco Industry. While TACTIC agrees that banning the Foundation from investing in tobacco stocks is a crucial first step, there is much more to do.

Indeed, if the SFSUFI is truly make a commitment to the principles of social justice, it must create a comprehensive “socially responsible investment (SRI)” policy that would prohibit investments in other industries and/or corporations that contribute to socio-economic injustice and inequality.

Whereas the current SFSUFI policy of “prohibited investment” now includes the oil and tobacco industries, there are a number of other industries left out that are part of the typical SRI policy, such as sweatshop industries and military contractors. A long list of other notable public-interest and university Foundations including the Tides Foundation, United Way, Needmor Fund, L.B. Stokes Foundation, Harvard, Yale, Stanford, Dartmouth, Oberlin, John Hopkins, SDSU, and Columbia University screen out a comprehensive array of undesirable investments. Doubtless, it’s time for the SFSUFI to join them if it is fully follow through in its commitment to social justice.

The students and faculty of SFSU clearly would like to see this happen. As evident by an informal survey conducted throughout last May, over 300 of them indicated a number specific corporations and industries they would like to see screened out of SFSUFI’s investments. These included: military contractors, private-prison industry, and various companies using sweatshop labor .

There is also another piece to this campaign – transparency of information and public accountability. As it now stands, the SFSUFI’s BOD maintains a tight lid on its investment and financial information, “which it considers proprietary,” according to BOD Student Rep., Kirsten Lewis. Thus, those working and studying at SFSU have no way to confirm that donations accepted by the Foundation on their behalf do not find their way to the stock portfolios of corporations and industries of ill repute. There is no system of checks and balances.

This is a tremendous problem given that SFSU is a public university for which the Foundation operates in the interest thereof. As noted by student activist, Celana Ahtye, “SFSUFI seems to have an odd understanding of what accountability means. Its executive director, James Collier, has repeatedly rebuffed inquiries into its finances, stating that the Foundation is meeting the minimum, and thus, enough of its legal obligations to the public. Its Chief of Operations, Karen Clopton, has urged us to take informal assurances that tobacco stocks were being invested in, with no measure of certification other than ‘her word.’ We found this request neither legally sound nor professional.”

The tremendous need for public accountability became apparent eight months ago, when TACTIC began to lobby for divestment of any SFSUFI holdings in tobacco corporations as the first step to a comprehensive SRI policy. Over this period, different representatives of SFSUFI presented TACTIC with different information. Clopton assured us that SFSUFI had and never has had any investment in tobacco stocks. Don Scoble, SFSUFI’s Chief of Staff, told us that the Foundation had held investments in tobacco stocks previously, but had divested before TACTIC had contacted the BOD. Clopton contradicted this claim later, stating that not only had SFSUFI divested from tobacco stocks at the urging of TACTIC, but that the Foundation lost around $100,000 in “realized losses” due to premature liquidation of the stocks. Of course, as noted by an advisor to SFSUFI from Mellon Investment Group, the “losses” were not actually deleterious to the Foundation’s endowment, since the funds invested in the tobacco stocks were immediately invested in other stocks.

The matter could only be officially concluded (partially) once SFSUFI produced a statement from Mellon, one of their investment managers, certifying that tobacco had been taken out of the Foundation’s portfolio. Of course, SFSUFI also uses other investment managers, and no certification was given for tobacco divestment from their portfolios.

Clearly, there is serious need for SFSUFI to adopt policies of transparency of investment and financial information and public accountability. After all, how can an SRI policy, once implemented, be deemed effective if there is no way for the public to evaluate it? SFSU students and faculty seem to agree, as 95% of the 300 surveyed in May indicated that transparency and public accountability should policies of SFSUFI.

As to why SFSUFI’s BOD remains so stalwart in its stance against open books, the reasons given are confusing at best, and misinformative at worst. “SFSUFI BOD members have given us reasons for maintaining secrecy that appear bogus, and actually quite ludicrous,” says TACTIC member Erin Yoshioka. “After the faculty representative of the BOD, Robert Cherny, arranged to give TACTIC the list of investments, he was told by Clopton that a Securities Exchange Commission (SEC) law made it illegal for him to show the list of investments to anyone not on the BOD. When we asked Cherny and Clopton which SEC regulation they were abiding by, there was no response. During a different meeting with another SFSUFI BOD member,” said Yoshioka, “we were told that making the specific investment information public was likely, according to economic analysis, to alert other market speculators, and possibly result directly in devaluations of the stocks held. Needless to say, we found this claim pretty ridiculous.”

The SFSUFI BOD’s reluctance to institute an SRI policy and make themselves publicly accountable is somewhat perplexing. After all, SFSU has a longstanding history of support for social justice and democracy. SFSUFI manages grants for a number of programs that work for these ideals. Even SFSUFI BOD’s Chair, who also happens to be SFSU President, Robert Corrigan, has demonstrated his commitment to democratic ideals by promoting on-campus voter registration. So why won’t the BOD make the business operations of SFSUFI public? What do they seek to hide?

When questioned by TACTIC and its supporters at the June 17th meeting as to why the cling to confidentiality exists, the BOD made no comment, and refused to address the issue when questioning persisted. Robert Corrigan dismissed the public outcry, insisting “the Board will conduct its business according to the agenda of the meeting.”

TACTIC declares that it is time that these demands be added to the agenda. SFSU students and faculty will not idly standby while the SFSUFI BOD undermines the progressive ideals of SFSU with irresponsible and unethical investments and policies of secrecy and misinformation.

Mike Ilich is a student activist at San Francisco State University. He can be contacted at tacticsfsu [at] yahoo.com