In December, Victoria Smith traveled to a Sudanese refugee camp in Chad. A sheik there told her that his village had been attacked by militias several times since 1999. In the fall of 2003, the sheik said, militia members approached on camelback while villagers were harvesting peanuts. The camels began to eat the crops. When the sheik protested, the militiamen replied, "You are our slaves. You do what we tell you to do."

The sheik responded that the men were "slaves of God."

Early the next morning, the militia returned with guns. Helicopters started circling overhead. The village evacuated, and the sheik had been in the refugee camp ever since.

Smith, educational outreach coordinator for Global Grassroots, a Lyme-based nonprofit, remembers the sheik when she advocates for a bill before the New Hampshire Legislature that would require the state to divest its retirement assets from companies doing business with Sudan.

"We know the Sudanese government is funding militia groups, helicopters, weapons to conduct attacks on Darfur," Smith said. "I see this bill as a move to cut off the funding the Sudanese government needs to continue these attacks. It contributes to the possibility for security to return to Darfur so the refugees I met can eventually return to their home."

Smith is one of numerous state activists, including many young people, who have united around a bill that would require the boards of trustees of the state retirement system and the judicial retirement plan to divest assets from companies supporting Sudan's government or military.

The retirement system opposes the bill. Chief Investment Officer Jeff Gendron told a house subcommittee Thursday that the assets must legally be held in trust for the "exclusive benefit" of members and beneficiaries. Complying with a divestment statute could jeopardize the system's tax status, he said.

"It's something we feel we cannot do," he said.

According to a prepared statement from the retirement system, trustees are concerned that complying with divestment would breach their legal duty to invest solely in the interest of the fund's beneficiaries.

"Divestment legislation is a social-investment mandate which does not serve the exclusive interests of the members of the pension fund," it said. The statement also states that public funds "should not be used as a foreign policy tool." It says divestment does not have any financial effect on the targeted companies, because other investors will buy those assets.

The bill uses a method called targeted divestment, a way of divesting from companies that have a business relationship with the Sudanese government or with a government-created project, those that are complicit in the genocide, or those that supply military equipment within Sudan. Companies that provide humanitarian services, in fields like medicine, agriculture, religion, journalism or non-oil-related consumer goods, are excluded.

President Bush in December signed a law authorizing divestment by state and local governments. In 2004, Bush characterized the actions by the Sudanese government and the Arab Janjaweed militias against the African villagers as genocide.

Seven other states use different forms of divestment, and every other New England state has divested from Sudan in some way.

The New Hampshire bill would require the retirement system to identify which targeted companies it has investments in and write to those companies encouraging them to end business operations in Sudan. If the company did not take action, the fund would withdraw its investments.

Gendron said the retirement system has not calculated the financial effect of divestment. Gendron said determining that would require hiring a consultant to do an in-depth analysis. The system has said that administrative costs - hiring a consultant, coordinating the efforts and reporting compliance - could exceed $100,000 in 2009. (next page »)