How we’ve written off money invested in Russian businesses

FORUM: Pensions chief Councillor Paul Convery explains how Islington has turned its back on investing in Russia

Friday, 11th March — By Paul Convery

Paul Convery

Paul Convery

ISLINGTON Pension Fund is no longer invested in Russia.

Until last week, Islington’s Pension Fund held investments worth £2.64million in Russian-based businesses.

Not any more. These investments have now been written-off as “stranded assets” at zero value.

The Putin regime’s brutal military attack on Ukraine has horrified the world. After Putin declared war on 24th February, economic sanctions were declared by EU, US and UK authorities.

Islington Council immediately began an urgent review of all Russia-related investments.

This revealed that we had shareholdings in a number of Russian listed companies held indirectly through two investment funds: A pooled emerging markets fund managed by LGIM (Legal & General) which was valued at £1.14m and an “arms-length” investment in the Moscow stock market held through another fund manager, BMO (Bank of Montreal), worth about £1.5m.

Both these investments are now considered to be worthless. They cannot be sold because the Russian stock markets are closed; any sale receipts would be denominated in Roubles, a currency which has collapsed; furthermore it is not possible to repatriate any money from Russia.

In response to Islington’s requests both fund managers have now written-off these investments. This will have an impact on the overall Pension Fund value.

But these holdings were a very small element in the whole portfolio. Our Fund is worth £1.66billion so the Russia related write-offs represent just 0.16 per cent of the whole Fund.

Islington’s Pension Fund is a very diversified set of investments in many different asset classes, financial instruments and markets. I am confident that we have identified all investments that are located within the Russian Federation.

But over the coming weeks, Islington will further check if any other holdings are connected to businesses held outside Russia by “Oligarchs” who are sanctioned by EU, US and UK governments.

There is a period of worrying economic uncertainty ahead for us all; Putin’s war against Ukraine may intensify and the Europe-wide refugee crisis will undoubtedly worsen. But no one wants the conflict to escalate and widen.

Economic sanctions are an effective way to exert pressure. The sanctions are already having a powerful effect although it will ultimately be the Russian people who suffer.

Islington Council stands in solidarity with everyone in Ukraine and the many people who have been forced to leave their country.

We will play our small part in applying economic pressure on Russia’s leaders to stop their war. In doing so, we are also protecting the reputation and integrity of Islington’s pension fund.

• Paul Convery is a councillor for Caledonian Ward and is chair of the Islington pension scheme’s investment committee

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