NZ Super Fund and ACC to sell out of investments linked to Russian state

Thursday, 3 March 2022

Investment funds all over the world are selling their Russian investments.

New Zealand’s government wealth funds are all selling investments linked to the Russian government.

The NZ Super Fund, Accident Compensation Corporation (ACC), Government Superannuation Fund (GSF) and National Provident Fund (NPF) have agreed to cease investing in bonds issued by Russia, and the shares of most Russian state-owned enterprises.

Russia is attempting to block asset sales by foreign investors, but the four investors said they would sell their assets as market conditions permitted.

Each have responsible investment policies, which no longer permit them to invest with the Russian Government after the invasion of the Ukraine.

* NZ investment funds had more than $100 million invested in Russia

Large bank KiwiSaver schemes own investments in Russian government bonds, and in the Putin-controlled Sberbank.

* Why NZ Super Fund must dump Sberbank of Russia over Ukraine invasion

“The policies provide for sovereign bond exclusions when there is widespread condemnation or sanctions by the international community and New Zealand has imposed meaningful diplomatic, economic or military sanctions aimed at that government,” the four investors said in a joint statement.

“The New Zealand Government has strongly condemned Russia’s invasion of Ukraine, and implemented a range of measures in response to Russia’s actions,” they said.

“The Prime Minister has also stated the Government is looking at other moves it could make in response to the aggression.”

Sberbank of Russia is 50 per cent owned by the Russian government, which also has majority voting rights over it, giving it control.

The funds took longer than many KiwiSaver funds to exclude investments in Russia.

BNZ, ANZ, and Westpac have all moved to get out of Russia.

The NZ Super Fund was first challenged on its Russian investments on February 23.

The fund owns shares in Sberbank of Russia, Russia’s largest bank, which is now subject to sanctions from countries including the US and UK, following Russia’s invasion of Ukraine.

Sberbank is an organ of the Russian government, which owns 50 per cent of its shares, and has an extra voting right, giving it absolute sway over it.

The four investors’ statement said: “Given the serious nature of the issues, widespread condemnation of the invasion from the international community and by the New Zealand Government, and the close association of the companies to the Russian state through its majority ownership, the four investors considered exclusion the appropriate course of action.”

The decision did not mean the funds had to sell all their investments in Russia, just those that were linked to the aggression of the Russian state, the statement said.

“The investors do not apply country-wide company exclusions, and companies are not excluded based solely on their Russian domicile as they may have no links or contribution to the aggression of the Russian state,” it said.

Investments would be judged on a case-by-case basis, they said.