Quarter of council pension funds invested in Russian companies – Byline Times

Sascha Lavin examines the extent to which British advice supported companies linked to Vladimir Putin’s war effort

At least a quarter of UK city council pension funds have recently held shares in Russian banks and companies that have been sanctioned by the West following Vladimir Putin’s invasion of Ukraine, the Byline Intelligence Team can reveal.

The analysis found that 26 of the 99 schemes held investments in controversial Russian banks and companies through local government pensions in the 2019/20 financial year – either directly or through investment funds. The data was obtained through freedom of information requests from Platform and Friends of the Earth.

In addition, more than £44m of investments in Russian oil and gas companies were directly held by 11 local government pension schemes.

Many local council investment programs have now divested from Russian companies as Putin’s attacks on Ukraine have intensified.

But it has been eight years since Russia first attacked Ukraine and annexed Crimea, while council pension funds have continued to be invested in controversial Russian funds. Meanwhile, the Russian government supported fighting in eastern Ukraine, where 14,000 people were killed.


Swimming in troubled waters

The results show how investments from local councils have contributed to Vladimir Putin’s war machine, with campaigners warning that cutting support was now “too little, too late”.

Robert Noyes, Platform activist and author of the analysis, said: “Putin’s war is built on oil and gas money, and local government programs have strengthened his hand.

Energy giants with over £44m of UK municipal investment have helped support the Russian state: they have paid at least £31bn in taxes and other payments to the Russian government in 2020.

Some of that taxation has been funneled to Russia’s armed forces, with £41.7bn of the state budget spent on Putin’s military muscle in 2019.

Lukoil held the most investments from local council pension funds, with £23.6million in holdings in the 2019/20 financial year.

Council pension funds have also invested £19.3m in Kremlin-linked oil giant Gazprom, the world’s largest natural gas company. Oil companies Rosneft and Tatneft each received £600,000 from local government pension schemes.

The role of these companies within Putin’s regime has been known to the public for many years.

Igor Sechin, CEO of Rosneft, a former intelligence officer and close confidant of Putin, has been sanctioned by the US since Russia invaded Crimea in 2014. The EU has also targeted Rosneft, Transneft and Gazprom Neft, l Gazprom oil unit, with time sanctions.

Yet, five years later, British councils held tens of millions of pounds in investments in these companies.

Countries with human rights problems receiveTwo-thirds of UK military export licensesSince 2010

Three municipal pension funds – West Midlands, Kent and Durham – accounted for more than three quarters of all direct investment in Russian oil and gas companies by local government schemes.

The West Midlands pension fund had invested £19m in Russian oil and gas companies, with Kent and Durham holding £7.6m of investments.

In other words, each of the 343,000 people who depend on the West Midlands local government pension fund have invested £55 in now sanctioned Russian oil and gas companies.

A spokesman for the West Midlands pension fund said they had “actively reviewed” their holdings in Russia and that “investments in this area have always and continue to represent a very small component of the fund’s portfolio, measures have already been taken to reduce exposure.”

Kent and Durham County Councils have pointed out that the size of their pension funds means they should be expected to hold larger assets than other councils’ pension funds.

Both councils have divested from Russian companies since the 2019/20 financial year.

A Kent County Council spokesman said: “At the start of this month the fund’s exposure to Russian assets was very limited at 0.3% of the fund’s total. This percentage has since been significantly reduced as fund managers work at pace to reduce remaining Russian exposures where possible.

Durham’s pension fund sold its stakes in Gazprom ahead of Putin’s invasion of Ukraine this year and suspended further investment in Russia.

Platform’s Robert Noyes calls for careful scrutiny of councils’ previous investments in controversial Russian companies.

“Rather than congratulating the funds for pulling out now, let’s ask why they were invested in the first place,” he said. “Banks, oil companies and pension funds have happily profited from Putin’s Russia, long after his authoritarian and imperial ambitions have come to the fore.”

Those figures are probably just the tip of the iceberg, as 12 councils, with £53billion in stakes, refused to provide a full list of companies they had directly invested in.

This article was produced by the Byline Intelligence Team – a collaborative investigation project formed by Signing time with Citizens. If you want to know more about the Intelligence team and how to finance his work, click on the button below.

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