Sec. 33-60A. Sudan Investments—Restrictions

   (a)   Definitions. In this Section, the following words have the meanings indicated:

      Actively managed separate account means assets held in a separate account by an investment manager hired by the Board. Actively managed separate account does not include an indexed fund, private equity fund, real estate fund, mutual fund, or other commingled or passively managed fund.

      Board means the Board of Investment Trustees established by Section 33-59.

      Company means any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other entity or business association, including any wholly-owned subsidiary, majority-owned subsidiary, and parent company of any of them, or business association, that exists for profit-making purposes.

      Divestment action means selling, redeeming, transferring, exchanging, or otherwise disposing of, and refraining from further buying of, certain investments.

      Doing or does business in Sudan means maintaining equipment, facilities, personnel, or other apparatus of business or commerce in Sudan, including ownership of real or personal property in Sudan:

      (1)   for the purpose of:

         (A)   engaging in any business activity with the Government of Sudan; or

         (B)   conducting business with any company in which the Government of Sudan has a direct or indirect equity share; or

         (C)   participating in a Government of Sudan-commissioned consortium or project; and

      (2)   if the business operation includes:

         (A)   supplying military equipment in Sudan; or

         (B)   oil-related activities constituting more than 10% of the entity’s operations in Sudan; or

         (C)   mineral extraction activities constituting more than 10% of the entity’s operation in Sudan; or

         (D)   power production activities constituting more than 10% of the entity’s operations in Sudan.

      Government of Sudan means the government in Khartoum, Sudan, led by the National Congress Party (formerly known as the National Islamic Front), or any successor government formed on or after October 13, 2006 (including the coalition National Unity Government agreed upon in the Comprehensive Peace Agreement for Sudan). Government of Sudan does not include the regional government of southern Sudan.

      Marginalized populations of Sudan means adversely affected groups in regions authorized to receive assistance under section 8(c) of the Darfur Peace and Accountability Act (Public Law 109-344) or areas in Northern Sudan described in section 4(9) of that Act.

      Military equipment means:

      (1)   weapons, arms, military supplies, and equipment that readily may be used for military purposes, including radar systems or military-grade transport vehicles; or

      (2)   supplies or services sold or provided directly or indirectly to any force actively participating in armed conflict in Sudan.

      Mineral extraction activity means exploring, extracting, processing, transporting, or wholesale selling or trading any elemental mineral or associated metal alloy or oxide (ore), including gold, copper, chromium, chromite, diamonds, iron, iron ore, silver, tungsten, uranium, and zinc.

      Oil-related activity means exporting, extracting, producing, refining, processing, exploring for, transporting, selling, or trading oil; or constructing, maintaining, or operating a pipeline, refinery, or other oilfield infrastructure. Oil-related activity does not include the retail sale of gasoline or related consumer products in Sudan or leasing or owning rights to an oil block in Sudan.

      Power production activity means any business operation that involves a project commissioned by the National Electricity Corporation of Sudan or any similar Government of Sudan entity whose purpose is to facilitate power generation and delivery, including establishing any power-generating plant or hydroelectric dam, selling or installing components of any such plant or dam, or providing service contracts related to installing or maintaining any such plant or dam.

      Substantial action means:

      (1)   adopting, publicizing, and implementing a formal plan to cease business operations in Sudan within one year and to refrain from any such new business operations;

      (2)   undertaking significant humanitarian efforts in conjunction with an international organization, the Government of Sudan, the regional government of southern Sudan, or a non-profit entity that is evaluated and certified by an independent third party to be substantial in relationship to the company’s business operations in Sudan and of benefit to one or more marginalized populations of Sudan; or

      (3)   engaging the Government of Sudan for the purpose of materially improving conditions for the victimized populations in Darfur.

      Trust funds means the assets held for the Employees’ Retirement System and the assets held for the Retiree Health Benefits Trust.

   (b)   Review of investments. The Board must review the investment holdings in each actively managed separate account of the trust funds and identify each investment in any company that does business in Sudan. The Board must review its investment holdings in these accounts periodically and update the list of companies doing business in Sudan at least every 6 months.

   (c)   Divestment. The Board:

      (1)   must take divestment action with regard to investments in any company doing business in Sudan within 12 months after the Board finds that the company is doing business in Sudan; and

      (2)   must not make any new investments in an actively managed separate account in any company that does business in Sudan.

   (d)   Research. In determining if any company does business in Sudan, the Board may:

      (1)   retain a professional consultant; and

      (2)   review publicly available information regarding companies doing business in Sudan, including information provided by a non-profit organization, research firm, international organization, or government.

   (e)   Exemption. The divestment or investment prohibition under this Section must not apply to a company that can demonstrate that its business operations in Sudan:

      (1)   are conducted under contract directly and exclusively with the regional government of southern Sudan;

      (2)   are conducted under a license from the federal Office of Foreign Assets Control, or are expressly exempted under Federal law from the requirement to be conducted under such a license;

      (3)   consist of providing goods or services to marginalized populations of Sudan for at least 75% of its business operations in Sudan;

      (4)   consist of providing goods or services to an internationally recognized peacekeeping force or humanitarian organization;

      (5)   consist of providing goods or services that are used only to promote health or education; or

      (6)   have been voluntarily suspended.

   (f)   Notice. The Board:

      (1)   before taking any divestment action under this Section, must provide written notice and an opportunity to comment in writing to each company subject to the action;

      (2)   must not take the divestment action until 90 days after written notice is provided to the company; and

      (3)   must not take the divestment action if the company shows that it:

         (A)   is not doing business in Sudan;

         (B)   has taken substantial action, as defined in subsection (a); or

         (C)   is exempt from divestment under subsection (e).

   (g)   Report. The Board must report annually to the Council and Executive on the operation of and compliance with this Section. The report must:

      (1)   identify each investment in a company doing business in Sudan held in an actively managed separate account of the trust funds;

      (2)   list each divestment action taken under this Section; and

      (3)   calculate the administrative cost of compliance.

   (h)   Sunset. This Section expires 30 days after the President of the United States certifies to Congress that the government of Sudan has honored its commitments to:

      (1)   abide by United Nations Security Council Resolution 1769 (2007);

      (2)   cease attacks on civilians;

      (3)   demobilize and demilitarize the Janjaweed and associated militias;

      (4)   grant free and unfettered access for delivery of humanitarian assistance; and

      (5)   allow for the safe and voluntary return of refugees and internally displaced persons. (2008 L.M.C., ch. 2, § 1.)

   Editor’s notes—2008 L.M.C., ch. 2, § 3, states: Initial review. The Board of Investment Trustees must complete its initial review of the investment holdings in all actively managed separate accounts of the trust funds and identify all investments in companies doing business in Sudan within 90 days after the effective date of this Act.

Sec. 33-60B. Emerging Investment Managers.

   (a)   Legislative findings.

      (1)   Emerging investment managers, including businesses owned by women, minorities and disabled individuals, should receive an equal opportunity to provide investment management services to the Board of Investment Trustees.

      (2)   The Board of Investment Trustees has adopted a policy requiring its staff to identify qualified emerging investment managers to participate in an investment manager search, including regular monitoring of investment managers.

      (3)   Expanding opportunities for emerging investment managers will increase competition.

   (b)   Definitions.

      As used in this Section:

      Assets means total client assets managed by an investment manager.

      Emerging investment manager means:

      (1)   an investment manager with assets or product assets below the 75th percentile of their respective peer group; or

      (2)   a new or developing investment manager.

      New or developing investment manager means an investment manager:

      (1)   raising its first or second private institutional investment fund; or

      (2)   creating its first institutional product.

      Product Assets means client assets managed by an investment manager in a single strategy.

   (c)   Consistent with the fiduciary duties established in Section 33-61C, the Board must make a good faith effort to remove any barriers that limit participation by qualified emerging investment managers to manage funds for the Employees’ Retirement System.

   (d)   The Board must adopt guidelines to identify and evaluate qualified emerging investment managers. The guidelines must include procedures for:

      (1)   identifying possible firms;

      (2)   reviewing, evaluating and interviewing emerging investment managers on an ongoing basis; and

      (3)   maintaining research files on emerging investment managers.

   (e)   The Board must report annually to the Council and the Executive on compliance with this Section on or before September 1 for the prior fiscal year. The report must:

      (1)   identify each emerging investment manager used during the fiscal year;

      (2)   list the percentage and dollar value of the assets of the trust fund, by investment sector, managed by each emerging investment manager; and

      (3)   describe the good faith effort made to include qualified emerging investment managers in the procurement process during the fiscal year. (2012 L.M.C., ch.; 3, § 1.)

Sec. 33-61. Custodian.

   (a)   The director of finance is the custodian of the retirement system assets. The director must give bond with such surety and for such periods and in such amount as the board determines. All payments from the retirement system assets must be made by (i) the director of finance, (ii) a designee of the director of finance, or (iii) two (2) persons designated by the board, acting jointly. The board must file a duly attested copy of the resolution of the board designating the two (2) persons, with specimen signatures of those persons, with the director of finance to indicate their authority for making payments.

   (b)   If the board approves, the director of finance may make written contracts with banks, trust companies, insurance companies or investment companies authorized to do business in any state for the safe custody of investments, banking services, the payment of benefits and expenses and any other function necessary for the management and safeguarding of the assets of the retirement system. The contract may provide that a bank, trust company, insurance company, or investment company may invest assets of the retirement system in:

      (1)   Money market funds;

      (2)   A short-term investment fund of a bank, trust company, or insurance company; or

      (3)   Their substantial equivalent. As soon as possible after all members of the board have accepted the trust, the board must approve a written contract for the investment purposes described in this subsection.

   (c)   If the board approves, the director of finance may direct the payment of benefits and expenses from a trust account of the board.

   (d)   Chapter 11B does not apply to the procurement of goods and services for the retirement system by the director of finance. (1987 L.M.C., ch. 29, § 11.)

Sec. 33-61A. Indemnification of trustees.

   (a)   Authorized. The County must indemnify every member of the Board who is or may become a party to any action, suit, or proceeding, including administrative and investigative proceedings, because of service as a member of the Board, including any action taken to comply with Section 33-60A, subject to the conditions stated in this section.

   (b)   Standards for indemnification.

      (1)   The county must indemnify a member of the board:

         a.   With respect to civil matters, if the member acted in good faith and in a manner that the member reasonably believed to be in the best interest of the retirement system; and

         b.   With respect to criminal matters, if the member had no reasonable cause to believe that the member's conduct was unlawful.

      (2)   If the county must indemnify a member of the board under this article, the county must indemnify the member for expenses when the member incurs the expense, including but not limited to:

         a.   Reasonably attorney fees;

         b.   Judgments;

         c.   Damages;

         d.   Fines; and

         e.   Settlements.

   (c)   Effect of termination of any suit or proceeding. The termination of any suit or proceeding does not, by itself, create a presumption that a trustee did not act in good faith and in a manner reasonably believed to be in the best interest of the retirement system. The termination of a criminal action or proceeding does not, by itself, create a presumption that a trustee had reasonable cause to believe that the conduct was unlawful.

   (d)   Exceptions to indemnification. The county must not indemnify any member of the board if:

      (1)   The member of the board is found by a court or other tribunal to be liable for gross negligence or willful and wanton misconduct in the performance of a duty to the retirement system; or

      (2)   Liability arises from action that occurred before the date on which all the trustees have accepted the trust in writing.

   (e)   Recovery of payments. If the county attorney determines that indemnification payments have been made that are outside the scope of indemnification, the county attorney must take appropriate action, on behalf of the county, to recover the payments.

   (f)   Insurance provided. The county must provide insurance for each member of the board against any liability asserted against or incurred by the member of the board with respect to service on the board. Premiums for any insurance must not be paid with assets of the retirement system. The county may self-insure for this purpose, wholly or partly. If the county does not provide adequate insurance coverage or indemnification under this section, a member of the board need not pay any amount attributable to liability incurred by serving on the board, and the county must pay any amount due.

   (g)   Defenses. The county may assert the defense of governmental immunity, or any other defense available to the county, in suits or other actions brought against the county.

   (h)   County attorney.

      (1)   The county attorney must make the final determination of eligibility of a member of the board for indemnification with respect to a matter, and of the reasonableness of all fees, expenses, and settlements.

      (2)   Unless the county attorney approves the settlement, a trustee must not use:

         a.   County funds;

         b.   Funds provided by a self-insurance program of the county; or

         c.   Funds provided under a policy the county has with an insurance company; to settle a claim against the trustee. (1987 L.M.C., ch. 29, § 11; 2008 L.M.C., ch. 2, § 2.)

   Editor’s note—See County Attorney opinion dated 11/14/11 regarding the County’s liability for errors in the administration of the pension and retirement funds of employees.

Sec. 33-61B. Accounts and records of the board of investment trustees.

   (a)   Maintenance of records and accounts. The board must keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions, including any specific records that are required by law and any additional records it considers necessary. All accounts, books and records are subject to state law on public records.

   (b)   Annual accounting by board. The fiscal year of the retirement system is the same as the fiscal year of the county. On or before January 1 of each year, the board must file with the chief administrative officer a written account, listing all investments, receipts, disbursements, and other transactions during the preceding fiscal year or during the period from the close of the last preceding fiscal year to any interim date that the board selects. This account must describe all securities and investments bought and sold, with the cost or net proceeds of each purchase or sale, and must list all cash, securities, and other property held at the end of that period. The account must include a list of the retirement system assets and the current fair market value of each asset at the end of that period. If a current fair market value is not available for a particular investment or is not applicable to a particular investment, the board must assign a value to that investment. The board must apply the investment valuation method on a consistent basis. If the board changes the investment valuation method, the board must notify the council of the change.

   (c)   Reporting and disclosure. The board must prepare for the chief administrative officer any documents required by law. (1987 L.M.C., ch. 29, § 11.)

   Editor’s note—See County Attorney Opinion dated 1/7/98 discussing the parameters within which the Board of Investment Trustees may disclose certain employee data to companies providing deferred compensation plans.