TIAA-CREF Proposal Boycott to Israeli Firms Illegal, Says Activist Group

A TIAA-CREF member proposal to divest from Israeli holdings would violate New York and federal law, according to a legal and civil rights organization.

(April 10, 2013) – Asset manager TIAA-CREF has become the latest battleground in the Palestine-Israel conflict.

In February, members of the Palestinian-led Boycott, Divestment and Sanctions (BDS) movement submitted a proposal to TIAA-CREF calling for divestment from companies that it claims profit from Israeli settlements in Gaza and the West Bank. These firms include multinationals such as Caterpillar, Motorola, Veolia Transportation, and Northrop Grumman, among others. The divestment campaign also has an online petition with over 24,000 signatures supporting the proposed boycott.

Now, a Tel Aviv-based advocacy organization has joined the fray. The director of the Israel Law Center (Shurat HaDin), which litigates on behalf of Israeli interests, sent a letter today to TIAA-CREF, expressing “grave concern about an extreme anti-Israel resolution,” and urging the pension giant not to present it at its shareholder meeting.

“If TIAA-CREF adopts this extreme resolution at its annual meeting in July, it will have officially taken a biased and discriminatory position in the landmark political battle of our time,” wrote Nitsana Darshan-Leitner, the activist group’s director. “It would deeply embroil the TIAA-CREF in the Middle East conflict.”

Darshan-Leitner pointed out that New York law defines boycotts as “unlawful discriminatory practice” and said that any decision to “refuse to buy from, sell to or trade with, or otherwise discriminate against any person, because of their…creed…[or] national origin” is unlawful.

The letter stated that participating in or cooperating with an international boycott violates a federal law-the Ribicoff Amendment to the Tax Reform Act of 1976. The BDS boycott of Israel is an extension of the continuing Arab boycott of Israel, Darshan-Leitner claimed.

“If the resolution passes and TIAA-CREF does not expressly disown itself of the results, Shurat HaDin will be ready to immediate bring take action to ensure the enforcement of New York’s anti-discrimination laws, take all steps to ensure enforcement of federal anti-boycott laws and to ensure that Israeli companies are not financially harmed nor discriminated against,” the letter concluded.

A spokesperson for the financial firm said, “TIAA-CREF makes decisions that are guided by our corporate governance policies and the best long-term interests of our customers. We are always listening and determining how best to serve clients according to our guidelines.”

Late last month, TIAA-CREF asked the US Securities and Exchange Commission (SEC) for permission to not send the proposal to vote during its next participant meeting. The SEC has yet to issue its decision. When TIAA-CREF received a similar Israeli divestment proposal in 2011, however, the SEC did grant it the right to refuse a vote.

According to a copy of the decision letter obtained by aiCIO, the resolution “would interfere with CREF’s investment decision making process by allowing shareholders direct or indirect influence on CREF’s selection of portfolio securities.” The SEC said the 2011 proposal “advocates one side in a highly controversial and complex geopolitical dispute, and makes assertions of immoral and illegal conduct that are subject to widespread disagreement.”