MSP pension fund has shares in Russian bank 3

MSP pension fund has shares in Russian bank

The pension fund for Scotland’s MSPs has shares in a Russian bank called Sberbank which has been sanctioned following Russia’s invasion of Ukraine.

A freedom of information (FoI) request by The Ferret has revealed that the Scottish Parliamentary Pension Scheme (SPPS) has holdings in Sberbank worth £299,571.

Sberbank — listed on the London stock exchange — is Russia’s biggest financial institution. Around one in two Russians have an account with Sberbank, which is state-owned.

Both the Lib-Dems and Scottish Greens have now called on the MSP fund to pull out of its Sberbank investment.

Following Vladimir Putin’s decision to attack Ukraine, US President Joe Biden cut off Sberbank from the US financial system, amid global calls for punitive economic sanctions on Russia. 

Cutting Sberbank’s access to dollar transactions will have a severe impact on the Russian economy’s ability to do business outside its borders. 

Within 30 days, all US financial institutions have been instructed to close any Sberbank accounts they maintain and reject future transactions involving Sberbank or its subsidiaries.

The UK Government also acted against Russian financial institutions but stopped short of sanctioning Sberbank. The sanctions included freezing the assets and imposing a travel ban on eight named individuals and 11 businesses, including six banks. Hundreds more individuals sitting on Russia’s Duma will also face sanctions.

The MSP pension fund was set up at the same time as the Scottish Parliament in 1999. It is run by Baillie Gifford, an investment manager headquartered in Edinburgh.

The Scottish Parliament said in its FoI reply to The Ferret that Baillie Gifford invests pension contributions in three pooled funds. They are called managed pension fund, diversified growth fund and global stewardship fund. The Sberbank holdings are in the managed pension fund. 

Some trustees of the fund have resisted ethical investment policies for too long but I’m sure most MSPs and former MSPs will want this urgently addressed.

Ross Greer MSP

The FoI reply said: “Under this arrangement the SPPS is one of a number of investors in these pooled funds. It does not own any stocks, nor can the fund trustees determine the holdings within the pooled funds.” 

The Ferret asked the Scottish Parliament if the fund’s trustees would liaise with Baillie Gifford with a view to reviewing the Sberbank investment. 

A Scottish Parliament spokesperson replied: “The trustees agreed in March 2021 all future pensions contributions would be invested in a sustainable, ethical fund that excludes companies that contravene UN principles on human rights, labour, the environment and anti-corruption.

“The SPPS invests in pooled funds with Baillie Gifford. It is one of a number of investors in the funds, therefore beyond these ethical conditions, the trustees cannot direct Baillie Gifford in their investment strategy.”

Baillie Gifford did not reply to our requests for a comment.

The Scottish Lib-Dems economy spokesperson Willie Rennie MSP said: “Scotland needs to play its part in putting the squeeze on Vladimir Putin and his regime and that means using the financial leverage we have. In the grand scheme of things this is not a huge sum of money but it is important to send a message that Putin’s behaviour in Ukraine will not be tolerated or supported.”

Ross Greer MSP, of the Greens, said: “I cannot fathom why the Scottish Parliament Pension Fund has holdings in Sberbank in the first place. But, in light of the Russian invasion of Ukraine it is clearly inappropriate for that to remain the case.

“Some trustees of the fund have resisted ethical investment policies for too long but I’m sure most MSPs and former MSPs will want this urgently addressed and Sberbank immediately divested from.”

Sberbank reportedly said on Thursday that its systems and offices were working as normal and that clients’ funds were wholly available to them.

“Sberbank is closely studying new working conditions amid the sanctions related to correspondent accounts. The adopted restrictions do not affect the safety and availability of client funds,” it said. “Sberbank has all necessary resources, managerial experience and expertise for operating in the current environment.”

A Scottish Government spokesperson said: “The Scottish Government has no involvement in the Scottish Parliament pension scheme. This is a matter for the Scottish Parliamentary Corporate Body and the Fund Trustees.”

Lothian Pension Fund — Scotland’s second largest council fund — has 95,213 shares in Sberbank which are worth £1,326, 845. When asked if the investment would be reviewed, the fund said: “We have no comment on this at this time.”

Scotland needs to play its part in putting the squeeze on Vladimir Putin and his regime and that means using the financial leverage we have.

Willie Rennie MSP

The MSP fund also has holdings worth £299,279 in Norilsk Nickel, a Russian firm that is one of the world’s two biggest nickel companies. Russian billionaire Roman Abramovich invested in Norilsk Nickel.

The fund was previously embroiled in controversy after it emerged it invested over £100,000 in a Taiwanese company blamed for suicides at factories making iPhones.

The scheme was also criticised for investing £2.15m in companies involved in arms production, fossil fuel extraction and tobacco.

A statutory instrument laid before Westminster earlier this month gave the UK government the power to impose sanctions on those “carrying on business of economic significance to the government of Russia” as well as companies supportive of the Russian government, and sectors of strategic significance, including energy, mining and financial services.

The Scottish Greens, Scottish Labour and the Scottish Conservatives were asked to comment.

Photo Credit: iStock and Wrangel

This story was co-published by The Sunday Post on 27 February 2022

1 comment
  1. Great work. The Ferret is doing us all a big favour by exposing what public sector pension funds are doing with PUBLIC money – taxes and central government grant pay all the contributions into these public sector pension funds. It is time for greater public transparency and accountability

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