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California cries shame over State Farm investments in Iranian business activity.

Thu, 14 Feb 2013 14:35:17 CST
By: Charlie Schlenker

The California Insurance Commissioner is criticizing Bloomington-Based State Farm Insurance for investing in companies that do business in Iran. Government documents show these investments are mainly in oil, gas, and construction firms from India, Russia, and China. California has called for divestiture in that country because of its efforts to gain a nuclear weapon. But, State Farm Spokesman Bob Devereaux says that state is not the appropriate venue for such a question.

   
"While we respect the California Department of Insurance interest, we believe foreign policy and rules on foreign investments can be most effectively addressed by the federal government which regularly deals with matters of foreign policy."

And Devereaux says California even lacks direct jurisdiction.

   
"It is our understanding that domestic insurance regulators take the lead in prudential regulation of their companies. In State Farm's case, its domestic regulator is the Illinois Department of Insurance."

Some of the firms State Farm has invested in are helping Iran develop its petroleum industry, a sector the U.S. has sought to squeeze. Congress passed a U.S. ban on direct investment in Iran 16 years ago. In 2011, Congress also barred foreign financial institutions that do business with Iran's central bank over petroleum products from opening or maintaining correspondent operations in the United States. The Council on Foreign Relations has noted that opposition from China and Russia has watered down sanctions by the U.S. and European nations in the past. Devereaux says State Farm cares deeply about America's Security.

   
"State's Farm's investments are in full compliance with all applicable laws and regulations."

State Farm is not alone among U.S. companies having indirect financial stakes in Iran. Businesses have also successfully opposed congressional attempts to close loopholes allowing foreign subsidiaries of U.S. companies to do business in Iran and third party investment.


         

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