Corporate supporters of terror states under scrutiny.

The flow of investment money to regimes that the U.S. government says support terrorism is coming under increasing scrutiny.

In August, U.S. Sen. Frank Lautenberg, D-N.J., sent letters to governors and state fund managers that decried the funneling of money to such regimes as "unconscionable." In the letter, he asked state pension fund managers to provide details of investments in companies with ties to stare sponsors of terrorism.

The top pension systems in the United States invested an estimated $118 billion in companies with legal sales or projects with nations such as Libya, Syria, Sudan and Saddam Hussein's Iraq, according to a Center for Security Policy study.

A grass roots organization headed by Frank Gaffney, the founder and president of CSP, is aiming its effort at creating legislation prohibiting state and local public money from being invested in companies that do business with terrorist-sponsoring governments.

The legislation would be similar to an amendment Lautenberg introduced to a corporate-tax bill this year that would have blocked subsidiaries of U.S. companies from operating in terrorism-sponsoring nations. However, the measure failed.

The group, Divest Terror.org, said it is emulating a model introduced in the 1980's to end apartheid in South Africa. The targets then, as now, are large institutional investors, especially American public pension systems and Wall Street asset managers, who pump clients' money into companies that prop up terror sponsors. Such firms, the group says, include Hyundai, Siemens AG and Swiss bank UBS, as well as hundreds of other American and international companies.

The National Association of State Retirement Administrators complains the accusations imply that institutional investors knowingly support terrorists. The group adds that critics are not acknowledging how difficult it is to determine which companies or their subsidiaries are doing businesses with such regimes.