New Mexico making moves to divest from Russian investments

SILVER CITY – New Mexico will join other states making moves to cut state investment in funds that might benefit Russia, as that country's invasion of Ukraine continued into its second week.

Moments after signing a landmark free college tuition bill into law at Western New Mexico University, Gov. Michelle Lujan Grisham's office released a letter to the New Mexico State Investment Council, which manages over $36 billion in funds including the state's Land Grant Permanent Fund and other permanent funds, and $1.84 billion in other investments.

Those assets include $7.9 million in Russian stocks and bonds, the governor's office said.

"Russian President Vladimir Putin has directed his forces to invade the sovereign nation of Ukraine without justification," Lujan Grisham wrote in the letter. "Thousands of Ukrainians have been senselessly murdered, and many more will likely perish in the upcoming days, weeks, and months. I stand with the Ukrainian people and wholeheartedly condemn these egregious acts of violence, which cannot go unchecked. The State of New Mexico has substantial investments that may be directly or indirectly aiding the Russian invasion. This is unacceptable."

The letter calls on the council to scour its portfolios "for any investments that may benefit the Russian government and its supporters in its war against Ukraine" and divest from them.

More: Residents gather in support of Ukraine at New Mexico State University

Investment Council spokesman Charles Wollman said the council has been examining the portfolio's ties to Russian companies since invasion began on Feb. 24. He said the investments are diverse, suggesting they were not limited to the petroleum and related services sector, but details were not available.

Of four securities held by the state with exposure to Russian funds, Wollman said two might be eliminated on their own as index fund managers restructure them to remove Russian investments.

A "miniscule" portion of the portfolio consists of a bond due to mature later in 2022, Wollman said, and pointed out that at present it is illiquid, meaning it cannot be sold immediately, as the Moscow Exchange has remained closed to trading for a week and will remain so at least into next week.

Two of the four securities might require directives from the council to investment managers, Wollman said, but further details were not yet known.

Wollman said it was not clear whether the governor's reference to Russia's "supporters in its war against Ukraine" was intended as a reference to Belarus, a bordering state aligned with Putin which had announced it would assist in military operations in Ukraine. On Friday, Belarusian President Alexander Lukashenko walked that commitment back, saying Belarusian armed forces would not participate, Reuters reported.

Also unclear in the short term is whether there might be legal obstacles to divesting targeted holdings from pension funds, since retirement funds may be bound to a fiduciary duty to act in the best interests of the investment rather than for political objectives.

That issue has previously challenged efforts in New Mexico to exclude private prison companies from pension funds.

On the other hand, with the effect of wide-ranging global sanctions that have effectively isolated the Russian government and many of its wealthiest citizens and political figures from much of the global financial system, the value of those holdings may make divestment simpler.

Algernon D'Ammassa can be reached at 575-541-5451, adammassa@lcsun-news.com or @AlgernonWrites on Twitter.

This article originally appeared on Las Cruces Sun-News: State moves to divest from Russian investments amid Ukraine invasion