NY pension money ‘held hostage’ by Russia’s Vladimir Putin

New York workers and taxpayers unknowingly fund Russian companies and Vladimir Putin’s oligarch friends with at least $519 million invested in assets now frozen by the warlike dictator, The Post has learned.

City and state pension systems have promised to sell the shares in protest against Russia’s attack on Ukraine, but Moscow has banned foreign investors from dumping the shares.

“Putin is a thug and he’s holding our money hostage,” said Gregory Floyd, Teamsters union leader and administrator of the New York City Employee Retirement System, NYCERS.

New York City’s five retirement plans — for teachers, police, firefighters and other city workers — have invested a total of $284.5 million in 33 publicly traded Russian stocks, according to data released to The Post by City Commissioner Brad Lander’s office.

As of Feb. 25, the market value of Russia’s assets was $185.9 million, nearly $100 million less than the purchase price, the latest available data shows.

Lander’s office says it can’t put a finger on what Russian stocks are worth today.

“The market remains closed to all non-Russian investors,” spokeswoman Shaquana Chaneyfield said. “Severe sanctions are in place prohibiting us from trading Russian securities. Given that context and constantly evolving rules in the Russian market, an accurate assessment of their current value is not available at this time.”

Sberbank is the largest state-owned banking and financial services company in Russia.

The list of Russian investments reveals involvement of a rogue list of billionaire oligarchs and close Putin associates, including:

  • Herman Oskarovich Gref is a close confidant of Putin and CEO of Russia’s largest financial institution, Sberbank. The US sanctioned Sberbank on April 6, barring US citizens or institutions from most transactions with the bank in order to economically hit Russia after the unprovoked invasion of Ukraine. Gref is also an executive officer in the Russian government.

New York’s pension systems have invested most of their Moscow investment, $133.3 million, in Sberbank.

  • Alexei Miller, CEO of Gazprom, a Russian state energy company and the world’s largest natural gas company, called on workers to rally around Putin in mid-March to maintain Russia’s power.

NYC pension systems invested $6.4 million in Gazprom.

  • Vagit Alekperov, a billionaire and close ally of Putin, resigned on April 21 as president of Lukoil, Russia’s second-largest oil company, after the US and other countries imposed crippling sanctions.
A view of fuel tanks of the Russian multinational energy company Lukoil at its headquarters in Brussels, Belgium.
Lukoil, a Russian energy company, is headquartered in Brussels, Belgium.

NYC’s retirement investment in Lukoil totaled $22.7 million.

  • Oleg Deripaska, a Putin ally and billionaire oligarch who founded Norilsk, a nickel and metal mining and smelting company. The FBI raided two homes connected to Deripaska in Washington, DC and New York City last October.

NYC’s Norilsk Retirement Investment: $14.2 Million

  • Said Kerimov, the majority shareholder of Polyus Gold, Russia’s largest gold producer. His father, billionaire Suleiman Kerimov, resigned from the Polyus board in April. The elder Kerimov, an alleged money launderer, is known as the “Russian Gatsby” for throwing lavish parties at his villas on the French Riviera. Fiji seized his $300 million yacht on May 5 at the request of the US Treasury Department.

The father was sanctioned by the US in 2018, under several oligarchs who took advantage of the Kremlin “through corruption and its malicious activities around the world, including the occupation of Crimea,” the FBI accused.

NYC retirement systems investment in Polyus: $3.8 million.

  • Nicknamed ‘Darth Vader’, Igor Sechin was Putin’s right-hand man as Deputy Prime Minister. He is chairman of Rosneft, a Russian state oil company. French authorities seized a $120 million superyacht owned by Sechin in early March in the wake of the invasion of Ukraine.

NYC retirement investment in Rosneft: $4.6 million.

Putin will meet oil producer Rosneft Igor Sechin's chief executive in Moscow in February 2021.
Putin will meet the chief executive of oil producer Rosneft Igor Sechin in Moscow in February 2021.
Sputnik/Mikhail Klimentyev/Kremlin/REUTERS

In addition to NYC retirement systems, the New York State Common Retirement Fund held an estimated $110.8 million in publicly traded Russian securities as of March 1, when state auditor Thomas DiNapoli ordered a review.

On March 25, he called for the divestment of the ‘unacceptably high investment risk’. A spokesperson did not provide the current value of the securities.

The New York State Teachers’ Retirement System, NYSTERS, which represents public school teachers outside of NYC, passed a resolution on March 4 to divest Russia-related assets worth $125 million. It did not give the current market value.

“They’re just trapped,” John Murphy, former NYCERS director, said of the pension systems. “There is a risk that they will lose all their money to these companies.”

Even if the pension systems could divest: “They wouldn’t be able to sell at a reasonable price. There is no market for the securities due to the global outcry over the war,” said Edward Siedle, a former attorney and investigator for the Securities and Exchange Commission.

The city and state’s $519 million is just 0.1 percent of the total $263.2 billion administered by the city’s pension systems in March.

The $110.8 million in Russian shares of the state’s employee pension system, estimated as of March 1, comes to 0.03 of the $279.7 billion in assets. And the state teachers’ pension system on March 4 had Russian stock worth $125 million — or 0.08 percent of its $152.4 billion in assets.

A Russian ruble coin is depicted with US dollar
NYC’s five retirement plans cover teachers, police, firefighters and other city employees.
AFP via Getty Images

But listed Russian investments are likely “just the tip of the iceberg,” Siedle said.

City and state pension systems, hoping to make a profit, enter into secret contracts with private equity, hedge funds and real estate investment companies that don’t reveal where they end up in hundreds of millions of dollars.

“Given the lack of transparency, I seriously doubt their Russian holdings are limited to the publicly traded securities they have disclosed,” Siedle said.

The New York Auditor’s Office makes public the names of private investment firms and the amount of money they manage, but not the specific investments. A request from the freedom of information law for Russian investments managed by the companies was rejected.

Matthew Sweeney, a spokesperson for DiNapoli, said as part of the review “we have communicated our concerns to managers (including private equity managers) not to invest in Russia.”

Police officer in front of Oleg Deripaska's house while it is being robbed.
The home of Russian oligarch Oleg Deripaska was raided on October 19, 2021.
Tom Brenner/REUTERS

Councilor Ron Kim, D-Queens this month introduced a bill requiring state officials to disclose the contracts that govern how the outside companies manage money from New York’s pension systems.

Floyd, president of Teamsters Local 237, which represents school security officers, housing and hospital workers, said the pension system will sue Russia or private companies that pumped city pension money into the country if the investments fail due to a crime.

“This isn’t going to put the funds out of business, but you never want to lose money,” he said.

New York’s state and city pension systems have invested a total of $519 million in Russian securities. In NYC, five employee pension schemes invested at least $284.5 million in Russian companies, including many ties to Vladimir Putin’s oligarchic allies. Amongst them:

Sberbank / Herman Gref / $133.3 million

Lukoil/ Vagit Alekperov/ $22.7 million

Norilsk/ Oleg Deripaska/ $14.2M

Gazprom / Alexei Miller / $6.4 million

Rosneft/ Igor Sechin/ $4.6 million

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