Leading US pension funds will today consider cutting links with companies that move offshore to tax havens.
The move is to be debated in New York at a meeting of pension funds holding more than $1,000 billion in retirement savings. It could result in them selling their stock in, and stopping business, with 22 such companies operating through offshore tax havens, including Tyco, the US conglomerate.
The funds will also continue talks on executive compensation and withholding business from companies that do not abide by good business practices.
Pension funds have been leading the charge for better business practice after heavy losses stemming from corporate scandals involving companies such as Tyco, Enron and WorldCom.
The issue of investing in companies that set themselves up in offshore tax havens came to the fore after Mr Phil Angelides, the California treasurer, last month called on the California Public Employees' Retirement System (Calpers), the biggest US public pension fund, and its sister fund the California State Teachers' Retirement System (Calstrs), to ban those companies.
Mr Angelides, who will attend today's meeting, is on the board of both Calpers and Calstrs, whose combined investments in those companies is $735 million.
Calpers said last week that the earliest it would officially consider Mr Angelides' proposal was at its August 19th investment board meeting, but the broader issue of divestment would probably be discussed by the board in September or October.
During the proxy season, Calpers voted against reincorporation offshore.
Calpers's investments in companies that have reincorporated offshore total $334 million in a $150 billion investment portfolio.
Calstrs said its total holdings in companies which have set up offshore headquarters is $401 million in a $97 billion investment portfolio. The investment committee of Calstrs, the third-largest US pension fund, is due to discuss the possible ban at an October 2nd meeting.
Companies at risk of a ban by Calpers are Tyco, Ingersoll-Rand, the security company; Cooper Industries, an electrical products manufacturer and offshore drillers Global Sante Fe, Nabors Industries, Noble and Transocean Sedco Fores.
