Ohio leaders call for pension funds to pull investments in Russian-backed assets
But a pension fund expert said there's a crucial step that needs to be taken to guarantee that's what happens.
There’s new movement by state government to show support for Ukraine as it battles an invasion by Russia.
Attorney General Dave Yost has asked Ohio’s five public pension funds to pull all $112 million in their Russian-based investments out. He writes in a letter: "This is a matter
of moral imperative, for Russia's aggression must not be supported with Ohio capital--
particularly the retirement assets of Ohio public employees, some of whom are of [Ukrainian] descent”.
Yost said if all states did the same, billions would be taken from Russia’s economy. And he said if the funds don’t divest, those securities will continue to lose value as they have over the last week.
But requiring those funds to make the decision to divest their Russian-backed assets isn't as simple as demanding it.
“As repugnant and abhorrent and Hitler-like Putin's aggression to Ukraine is – it offends everybody – but there would have to be legislation to do that," said Aristotle Hutras, who headed the Ohio Retirement Study Council for more than two decades.
The 14-member Ohio Retirement Study Council includes state lawmakers from both parties, leaders from the five pension systems and members appointed by the governor. The panel advises and informs the legislature about issues related to the five pension systems.
Hustras said this situation with Russian reminds him of past calls to pull investments with Iran, Sudan, and South Africa. But he said elected pension fund boards of trustees make decisions in consultation with their investment experts, which is how they would have invested in the funds in the first place.
“The code clearly sets that responsibility with the trustees, the fiduciaries of the pension fund. They're sensitive to all that and rightfully so," Hutras said. "But it's something that the legislature would have to introduce to make those changes in the statute.”
Divestment from South Africa in the 1980s was credited for bringing down that government's legal and political system of racial segregation known as apartheid.
A proposal to ban investment with Iran and Sudan was proposed in 2007 by Josh Mandel and Shannon Jones, both Republican state representatives at the time. The pension funds didn't have direct investments in Iran, but had investments in companies that did business with Iran. Sudan was added to the bill because of the genocide and human rights violations in Darfur in the early 2000s.
The bill passed the House in 2007 but not the Senate.
Meanwhile, the House and Senate both unanimously passed resolutions condemning the Russian invasion.
Over the weekend, Ohio became one of the first states to stop both the buying and selling of Russian-made vodka. And there were demonstrations showing support for Ukraine throughout the state, including at the Statehouse.