Dunleavy uses Russian attack on Ukraine as excuse for trying to 'punish' world banks

Enough already with the Dunleavy administration “profiteering” allegations aimed at financial institutions and the attempt to use the attack on Ukraine as a cover to go after banks that won’t finance oil and gas development on the North Slope.

The Senate Finance Committee held the first hearing Tuesday on Senate Bill 235, the Dunleavy campaign stunt I wrote about last week.

Part of the bill would require the state to divest a tiny portion of the Russian assets it owns, ignoring the much larger holdings of the Alaska Permanent Fund and the state retirement systems. That part of the bill would be OK if it applied to all state funds, even though all of the Russian holdings are now nearly worthless.

Another part of the bill targets banks and other financial institutions that are “profiteering” from the war, earning “excessive profits,” a term no one will define.

The Dunleavy bill is myopic on the real topic of profiteering.

Dunleavy doesn’t seem aware that pulling in extra billions of dollars in oil revenue because of the war is profiteering on a large scale.

People in Norway, another country that has seen a financial windfall, are starting to recognize that they are profiting on the misery of others.

“There’s a big debate going on right now, over how we should think about that money,” Karin Thorburn, professor of finance at the Norwegian School of Economics told Time Magazine. “Some have questioned ‘if it’s a moral obligation that money that comes from the war should be used to help Ukraine,’ she adds. ‘Or is it just that we are another player in the oil industry and anyone who has oil and gas resources benefits?’”

The part of the Dunleavy bill targeting profiteering doesn’t raise those questions or deal with moral obligations. And it’s dishonest.

Dunleavy and Revenue Commissioner Lucinda Mahoney made it clear at a March 8 press conference that the Russian war has little to do with their desire to go after Goldman Sachs and JPMorgan Chase.

Mahoney concealed her real motivation in the Senate hearing, where she put up a front that this was a high-minded effort to create “policies relating to companies that could potentially be profiteering from buying and selling Russian securities on the secondary market.”

Mahoney claimed the state would create a questionnaire for “companies that are reportedly profiteering, based on the media” and use the answers to decide if the state should stop doing business with them. Goldman Sachs and JPMorgan Chase are “reportedly” profiteering, she said.

The goal is “that we could potentially move to someone else who wasn’t profiteering.”

But at the March 8 press conference, Dunleavy and Mahoney spoke about the overwhelming desire to stop doing business with financial institutions—such as Goldman Sachs and JPMorgan Chase—that oppose financing oil and gas projects in Alaska.

“Unfortunately, many global financial institutions have made decisions to block the financing of Arctic projects and fossil fuel investments,” Mahoney said.

“In my opinion these policies are discriminatory toward Alaska,” she said.

The governor and his revenue commissioner, thinking they know more about running giant banks than the bankers, don’t accept the idea that the banks may be making a sound business decision based on research and analysis.

The opposition to Arctic oil and gas development falls under the “Environmental Social and Governance” criteria applied to investment decisions.

She mentioned the news reports that said Goldman Sachs and JPMorgan Chase had decided to buy distressed Russian debt and make a profit. She said it is hypocritical for them to try and make a profit that way and ignore Alaska.

“It is my opinion that the state of Alaska should not work with companies that discriminate against Alaska in the name of climate change and ESG and then choose profits over the human rights of the people living in Ukraine. So the governor has a bill that will be addressing this,” said Mahoney.

Dunleavy said he wants to cut ties with banks that won’t finance Alaska oil and gas projects, an idea he’s been talking about since 2019.

“Now we’re at the point where we feel to need to pull the trigger, especially after dialog that occurred with some of our staff with some of those investment concerns such as Goldman Sachs,” he said.

That dialog had nothing to do with Ukraine.

“We feel that this has reached the point where we can no longer have a relationship with some of them. Their mission is to stop Alaska. At the same time, for lack of a better expression, investing in blood oil, dirty oil in other parts of the globe.”

“It would be one thing if some of these investment houses really believed in what they were saying, that Arctic oil and exploration and drilling is bad. It’s an ESG issue for Alaska, not for the Russian Arctic.”

“So we’re at the point now that this is matured. And we’re gonna go through the process of divesting.”

Before going any further with this crusade, Dunleavy and Mahoney should show that Alaska will not lose financially if it adopts his plan. I suspect this scheme would be far more costly for the state than for the banks.

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