Sudan Accountability and Divestment Act of 2007 (SADA); Part 1

The International Court of Justice issued an arrest warrant for Sudanese President Omar Hassan al-Bashir on charges of crimes against humanity. This development warrants an examination of U.S. government response to various crisis in Sudan, leading up to and including the Sudan Accountability and Divestment Act of 2007.

In 1997, President Clinton issued an Executive Order imposing a trade embargo against Sudan and freezing the assets of the Government of Sudan as a result of the government’s policy of support for terrorists and persecution of Christians in the southern region. President Bush issued a further Executive Order in October 2007 to exclude the regional government of the Southern Region of Sudan from the restrictions of the embargo. 

Sudan’s crisis moved from its southern to western region. The world learned of the Darfur crisis in 2004 with news stories of systematic killing by the government-backed Janjaweed. Information emerged that the Sudanese government was using funds from contracts with international companies for energy and power production to support its reign of terror in Darfur. Public pressure in the U.S. grew for state pension funds and universities to divest from companies whose activities in Sudan provided the government with money. Harvard was the first university to divest, quoting former Harvard President Derek Bok: "Although trustees have a legal and moral obligation to enhance and conserve the university's resources, there are rare occasions when the very nature of a company's business makes it inappropriate for a university to invest in the enterprise." 

In 2004, President Bush, in a speech to the U.N., declared that the Sudanese government was engaged in genocide. Since foreign policy is constitutionally the prerogative of the Federal government, states are precluded from passing legislation or policies that contradict official foreign policy. States began to view the President’s declaration as notice that “official” U.S. foreign policy continued to oppose the Sudanese government’s actions against its citizens.

Illinois was the first state to pass a law, effective January 2006, requiring all public pension funds to divest themselves of holdings in companies doing business in Sudan. This broadly-worded legislation was challenged by the National Foreign Trade Council, and declared unconstitutional by the U.S. District Court for the District of Illinois. The court ruled that the bill violated the federal government’s authority over foreign affairs and commerce. This ruling prompted divestment action on two fronts.

The non-profit Sudan Divestment Task Force (SDTF) developed model legislation based on selective “targeted divestment” which addressed defects in the Illinois bill. Targeted divestment encourages divestment from industries or companies operating in Sudan that are funding the government, while encouraging investment in companies providing benefits to Sudanese citizens. Companies on the targeted divestment list are assessed quarterly to assure that the reports are current and reliable to investors. Many states used the model legislation to pass divestment bills, as well as simply using executive directives to instruct public pension funds to divest from targeted companies.

Meanwhile, Congress began work on the SADA legislation. SADA specifically authorizes state and local governments to divest from targeted companies, eliminating the threat of state divestment actions being labeled as unconstitutionally usurping federal foreign policy prerogatives. The bill was unanimously passed by both houses of Congress.