Dunleavy admin wants to keep the door open on Russian investments

The Legislature is considering legislation that would force the state to divest with few exceptions. The Dunleavy administration previewed legislation that would only clamp down on a fraction.

Good evening, Alaska!

It’s day 52 of the legislative session.

In this edition: As the House considers legislation ordering a near-total divestment of Russian assets, the Dunleavy administration is hoping to keep the door open for a rebound; and the House Finance Commitee hears legislation that would defend the state’s university scholarship program from the annual budget fight with several “sheets of armor.”

Spice level: 😬

Something fun: The superstar, the veteran, the doofus: Meet 5 of the dogs racing in this year’s Iditarod

Hoping for a Russian rebound

Legislators in the House are considering legislation that would require the state of Alaska, the Alaska Permanent Fund and several other funds to divest from direct investments in Russia and Russian companies with few exceptions, but it appears Gov. Mike Dunleavy’s administration might not be fully on board.

In a hearing today to explain the state’s investments in Russia, state officials said the state had about $333 million invested in Russia or Russian companies. With the collapse of the Ruble, the closure of the Russian stock market and other international sanctions and pressure, the state estimates they may now be worth around $18 million.

Department of Revenue Commissioner Lucinda Mahoney said that absent legislative intervention officials overseeing those investment funds—specifically the Alaska Permanent Fund’s Board of Trustees and the Alaska Retirement Management Board, of which she is a member of both—would likely opt to hold onto Russian assets hoping for a rebound.

“There’s different perspectives potentially by the trustees for the ARM board and for the Permanent Fund. Some trustees may believe the prudent course of action is to hold onto the investments rather than conduct what is frequently called a fire sale,” she said, noting others might consider recouping whatever value before they become completely worthless, but said “I would venture to say a majority of the trustees would suggest to hold in anticipation of a recovery.”

Some legislators seemed taken aback by the position, with Rep. Geran Tarr noting that “We’re talking about the invasion of a democratic nation.” Several legislators asked if there was any instance where the investors would take into consideration such conflicts or war in how it drives its investments.

The answer was no, and Mahoney said the state’s investors have a sole focus of maximizing profits. She suggested that the Legislature’s decision to withdraw from Russia would be making a political statement and not in the funds’ best interest.