Addendum to new Russian law orders divestment of pension funds
BOSTON (SHNS) – Treasurer Deb Goldberg, who oversees the roughly $104 billion state pension fund, said she needs new legislation to join the effort to divest from Russian interests, and now she has one.
As President Joe Biden promotes efforts to rattle Russia’s economy and ‘make Putin’s pain worse’, a directive slipped into a mid-year spending bill last week forces the pension fund to divest, part of a push to weaken Russia due to its invasion and ongoing war against Ukraine.
In the face of growing calls for divestment, Goldberg said in a March 1 letter to lawmakers that “as treasurer, I do not have the legal authority to act unilaterally to dispose of the holdings of the PRIT fund,” but said said she welcomed the opportunity to work on divestment legislation. with the legislature.
Pressed on what prevented the fund from acting without a specific order from the legislature, a spokesperson for the pension fund said that “any divestment by PRIM solely because of Russia’s invasion of Ukraine would go to contrary to PRIM’s fiduciary obligations as prescribed by PRIM’s enabling statute. [Chapter 661 of Massachusetts Acts of 1983]that is to say, to act “for the exclusive purpose of providing benefits to members and their beneficiaries…”
These obligations, he said, were the reason the legislature had previously passed investment laws relating to activities linked to Iran, Northern Ireland, Sudan, South Africa and the United States. tobacco industry.
Section 64 of the new law sets out the divestiture directive for the Pension Reserves Investment Management Board, where officials said they oversee a fund with an estimated $140 million “exposure” to Russia .
The law requires the fund, in conjunction with a research firm, to identify within 90 days “controlled companies” – those sanctioned by the US government following the invasion of Ukraine or incorporated in the Russian Federation – in which the fund has direct interests or indirect holdings. The list of companies reviewed would be updated quarterly and the law requires full divestment of companies on the list over a 12-month period, “subject to market availability”.
“MassPRIM is working with our investment managers to implement all guidelines relating to Russia-based investments under Chapter 42 of the 2022 Laws, in accordance with the provisions of Chapter 42 on market availability and the timetables established under the laws,” a board spokesperson said. the press service on Tuesday. On Thursday, MassPRIM Executive Director Michael Trotsky said the agency would implement the legal directive “in accordance with its provisions on market availability and the timelines established by law.”
“The value of investments covered by Chapter 42 is difficult to accurately determine at this time because markets are closed to foreign investors and there is no reliable price discovery,” Trotsky said.
On Wednesday, Biden said the actions taken against Russia to date are expected to reduce Russia’s gross domestic product “by double digits this year alone.”
The United States will impose “full blocking sanctions” on major Russian financial institutions Sberbank and Alfa-Bank, Biden said. The president also announced he would sign an executive order banning all new US investment in Russia, and highlighted 600 companies, from Exxon to McDonald’s, that he says have “left the Russian market on their own.” .
The state divestment directive was based on a proposal unanimously approved in the Senate, after House Democrats rejected a divestment amendment during that chamber’s deliberations on the $1 spending bill. $.6 billion.
“There is nothing we can do to completely erase the pain and suffering caused by this immoral and unnecessary military action, but we can insist that Massachusetts take steps to disengage from Russian interests and support the Ukrainian people. “, Senate Speaker Karen Spilka said of the Senate measure.
Signed into law by Gov. Charlie Baker on Friday, the bill also allocates $10 million to the Office of Immigrants and Refugees to support the resettlement of international evacuees, including Ukrainian evacuees.
The pension fund’s next public meetings are scheduled for early May, according to the fund’s website.