State pension investment under attack

  • Article by: BAIRD HELGESON , Star Tribune
  • Updated: December 17, 2011 - 7:26 PM

A Minnesota human rights group filed a lawsuit last week to stop the state from investing pension money in Israeli construction bonds, a move that offered an interesting chance to peek inside the state's investment portfolio.

Minnesota Break the Bonds Campaign alleges that state investment in Israeli bonds is not legal and claims the State Board of Investment is financing construction of Israeli settlements, which the group says involves the wrongful moving of Israelis into the occupied Palestinian territories.

A look at state investments reveals a vast portfolio with money in areas likely to raise the eyebrows of Minnesotans of any political persuasion.

"I am sure people have personal feelings about a lot of things we own," said State Board of Investment chief Howard Bicker. With a portfolio as large as the state's, "everybody's got warts someplace."

Minnesota's $53.7 billion portfolio includes investments in oil and gas companies, mining companies and a fledgling electric car maker. The state invests in Las Vegas casinos, defense contractors and health food grocers such as Whole Foods.

"Our job is to try to make money," Bicker said.

The Board of Investment hires more than 70 financial firms to handle the state's pension money. These brokers and financial managers are focused on making money, not appeasing the political tastes of the moment or showing loyalty to hometown companies.

The state invests tens of millions of dollars in Minnesota favorites like Medtronic, Target Corp. and Best Buy.

The pension system invested at least $45 million in Minneapolis-based Target, for instance, but it owns far more stock in Wal-Mart Stores Inc., an amount surpassing $77 million.

Apple Inc., the maker of the iPhone and the iPad, has $295 million of Minnesota's pension money. Oil and gas producer Chevron Corp. has $171 million of state money. Minnesota has invested $120 million with Pfizer Inc., the maker of Viagra.

While political leaders have turned back gambling-expansion proposals in Minnesota for years, the state has invested $16.7 million with worldwide casino developer Las Vegas Sands Corp.

Even with such a diverse portfolio, Bicker is seldom questioned by elected leaders bothered by investments.

"I don't hear about it very often," he said. "I am not a politician; I leave that to other people."

The group that filed the lawsuit says that the state's Israeli bond investment totals about $18 million, a tiny fraction of the Minnesota portfolio.

Because of the lawsuit, Bicker said he wouldn't comment on the investments.

In recent years, legislators have passed bills to discourage investing in Iran and Sudan.

State investors will honor any changes legislators make regarding Israeli investments, Bicker said. "The reality is that, if there was legislation passed, obviously we'd follow the legislation."

baird.helgeson@startribune.com • 651-222-1288

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