JAMESTOWN — Rep. Bernie Satrom, R-Jamestown, says legacy funds are or have been invested in foreign countries that are against the interests of the United States and North Dakota.
Satrom said investments in legacy funds totaling more than $3.1 billion are hidden from public view as commingled funds.
“We have about $3.1 billion in these hedge-specific types of funds, and we have no idea where in the world that money is being invested,” he said.
Satrom said voters don’t know that the Legacy Fund is or has been invested in more than 60 foreign countries, including Argentina, Colombia, Kazakhstan, Kenya, Mexico, Togo, Turkey and China. .
“We have provided at least $230 million in funding to 89 Chinese companies over the past three years,” he said.
He said some investments are or are being made to Chinese-controlled companies that support the Chinese military and conduct espionage for the Chinese Communist Party.
In 2010, voters in North Dakota approved a measure that created the Legacy Fund, a permanent source of state revenue from the finite national resources of oil and natural gas, according to the state Department of Finance’s website. According to the North Dakota Retirement Investment Authority website, 30 percent of taxes on oil produced and extracted in North Dakota is transferred to the Legacy Fund each month.
The Legacy Fund’s balance exceeded $11.1 billion as of July 31.
The 12th District’s Republican delegation plans to introduce the Legacy Fund Transparency Act in the next Congress, which would require the State Investment Commission to publicly disclose all investments in the North Dakota Legacy Fund.
Bismarck’s attorney, Torrie Jackson, wrote in a column in the North Dakota News Monitor that he requested a list of all domestic and foreign holdings and investments made by each private money manager hired by the state investment commission. Ta.
In his column, Jackson wrote that as of November 30, 2023, the legacy fund’s investment list includes investments of “over $160 million in ’emerging market regions’ and over $520 million in ‘global regions.’ It contains some interesting items, such as: The investment listings of these legacy funds do not indicate the countries in which the asset manager has invested, only that the investments are categorized into “World Regions,” “International Regions,” and “Emerging Markets.” . region. ”
Jean Murtha, executive director of the North Dakota Department of Retirement and Investments, said in response to Sen. Cole Conley (R-Jamestown), who requested records regarding investments in legacy funds, that her office He wrote that he could not provide his “owned assets” to the company. “Level information” for 11 mixed funds. Holdings level data refers to stocks and bonds held by legacy funds.
A commingled fund is a holding within a portfolio, Murtha wrote.
“In a commingled fund, the investment is the pooling of assets from multiple investors into a single account, and the commingled fund holdings are the result of that pooling,” she wrote. “…a commingled fund must comply with all applicable laws and does not invest in securities licensed by the U.S. Treasury.If a Legacy Fund is invested in different types of commingled funds, the Legacy The Fund owns a proportionate share of the Fund; the Legacy Fund does not directly own the securities underlying the Fund’s portfolio.
A total of $3.1 billion has been invested in 24 funds from legacy funds, with the underlying investments hidden from public view, Satrom said.
Satrom said the Legacy Fund invests or has invested in eight foreign government-owned oil companies that compete with producers in the Bakken region.
He said legacy funds are or have been used to invest in banks that have joined the Net Zero Banking Alliance. The Net Zero Banking Alliance is a United Nations-supported group of major World Banks committed to aligning lending, investment, and capital markets activities to net-zero greenhouse gas emissions by 2050. Masu.
“So when we invest in them, we’re basically investing in our own destruction,” he said of investments that compete with North Dakota’s Bakken producers.
Satrom said Legacy Funds are or have been invested in countries declared by the Trump and Biden administrations to be major drug producing and drug trafficking countries.
“Some people here have a headache.While state governments spend millions of dollars every year fighting tobacco use, we invest millions of dollars in four of the world’s largest tobacco companies. “Satrom said. “…It seems crazy to me that we are spending millions of dollars encouraging people to quit smoking and at the same time investing in the same companies.”
The Legacy Fund is invested in or has investments in TD Bank. TD Bank is a Canadian bank that has agreed to plead guilty and pay more than $1.8 billion in fines to resolve a U.S. Department of Justice investigation into violating the Bank Secrecy Act and money laundering, according to the Department of Justice website. did.
Satrom said some of the Legacy Fund’s investments are in derivatives.
“The problem with derivatives is that you’re basically betting on whether the market is going to go up or down,” he said. “You don’t really have anything. You’re just betting that it’s going to go one way or the other. So there’s a chance you could make more money, but you could lose everything. There is a gender.
“What has happened historically seems to be that state investment boards have basically allowed fund managers to invest without much oversight and without much oversight or transparency,” he said. ” he said. “I really think we should be better and I think we can be better.”
The 12th District delegation is also concerned that the State Investment Board is incorrectly treating the Legacy Fund as a pension fund.
“The Legacy Fund is not a pension fund,” said Rep. Mitch Ostry, R-Jamestown. “There will be no pension obligation in the future. It is a affiliated fund.”
Satrom said the state investment commission is targeting a return on investment of about 5% to 7%.
He said: “The problem is that somewhere along the line, at least according to the government, there has been 22% inflation over the past three-and-a-half years, when most people believe it was actually much higher.” It’s about being there,” he said. “So if you’re getting a 5% return a year, you’re barely keeping up with inflation. You might think you’re doing very well, but I think you’re really not doing very well.” I want to claim that.
He said North Dakota’s wealth managers should invest the legacy fund money. He said using in-state investors instead of out-of-state investors could save about $16 million a year in fees alone.
“At the same time, we are supporting North Dakotans who are building their communities and helping pay taxes here,” he said. “Another thing that is frustrating to me is that there are some trust companies in the state that believe they have the qualifications and the technical expertise. We’re investing tens of millions of dollars in it. I think we should clear the way and remove obstacles and roadblocks so they can try it, too.”
