NYC Comptroller Brad Lander accused of ‘divesting’ pension funds from Israel

A Tale of Two Investment Strategies: The Debate Over NYC Pension Funds and Israeli Bonds

The investment strategies of New York City Comptroller and mayoral candidate Brad Lander have sparked controversy, particularly regarding the city’s pension funds and their ties to Israeli government bonds. This story is a complex interplay of finance, politics, and ideology, with implications that extend far beyond the fiscal realm. At its core, it raises questions about how public pension funds are managed, the role of politics in investment decisions, and the broader debate over Israel and its policies.

A History of Investment in Israeli Bonds

The story begins in 1974, when New York City first invested $30 million in State of Israel Bonds through the Teachers Retirement pension system under Comptroller Harrison Goldin. This marked the start of a long-standing practice where successive city comptrollers, including Bill Thompson, John Liu, and Scott Stringer, reinvested in Israeli bonds as they matured. These bonds were considered a stable and profitable investment, yielding an average annual return of 5%. For decades, this practice was uncontroversial, with no major shifts in the city’s approach to Israeli bonds.

The Shift Under Brad Lander

However, under Brad Lander’s tenure as comptroller, the city’s investment in Israeli bonds has dropped significantly. Currently, only the Police Pension Fund holds a small position of $1.17 million in Israeli Yankee bonds. Lander’s office has stated that the city’s pension funds do not directly invest in foreign sovereign debt, implying that Israeli bonds are no longer part of the portfolio. This change has not gone unnoticed, especially given the city’s historical ties to Israel and its large Jewish population.

Accusations of Politically Motivated Divestment

Critics, including Jeffrey Wiesenfeld, a former CUNY trustee and investor in Israel bonds, have accused Lander of engaging in “passive divestment” by not reinvesting in Israeli bonds when they expire. Wiesenfeld argues that this decision is politically motivated, suggesting that Lander is aligning himself with anti-Israel factions. He also claims that Lander is violating his fiduciary duties by forgoing the proven returns of Israeli bonds, which have historically been a solid investment.

For comparison, Wiesenfeld praises New York State Comptroller Tom DiNapoli, who has maintained a significant investment of $363.9 million in Israeli bonds. This includes $327.1 million in Development Corp. for Israel bonds and $36.8 million in public State of Israel debt. DiNapoli’s stance has earned him admiration, particularly for his steadfast support of Israel during times of conflict, such as the war with Hamas in Gaza.

Lander’s Defense and the Broader Implications

Lander’s office has pushed back against these accusations, emphasizing that the city’s pension funds do not directly invest in foreign sovereign debt. While this may explain the lack of direct investment in Israeli bonds, critics point out that previous comptrollers did invest in such bonds, suggesting that Lander’s approach represents a departure from precedent. Lander himself has denied supporting the Boycott, Divestment, and Sanctions (BDS) movement, which aims to pressure Israel through economic means. However, his spokesperson has noted that the city’s pension funds do invest in Israeli-owned companies, just as they do in companies from other countries.

The debate over Israeli bonds has taken on added significance in the context of the mayoral race. Lander is competing in the Democratic primary, where the votes of pro-Israel Jewish voters, as well as critics of Israel, could play a crucial role. While Lander has declined to comment on whether he or representatives on the pension boards he serves on decided not to reinvest in Israeli bonds, his stance on the issue has already drawn attention and criticism.

Conclusion: The Intersection of Finance and Politics

At the heart of this controversy is the intersection of finance and politics. The management of public pension funds is inherently a fiduciary duty, requiring decisions based on financial prudence and the long-term interests of retirees. However, when investments involve a country as politically charged as Israel, financial decisions can quickly become entangled with broader ideological debates. Brad Lander’s approach to Israeli bonds has sparked accusations of politically motivated divestment, while his office maintains that the decision is based on a policy of not investing in foreign sovereign debt.

This debate raises important questions about the role of politics in public pension fund management, the balance between financial returns and political considerations, and the impact of such decisions on international relations and local communities. As the mayoral race unfolds, the issue of Israeli bonds is likely to remain a point of contention, reflecting the complex and often fraught relationship between finance and politics.