And here’s the statement delivered to the Oregon Investment Council by JVP-Portlanld:
The problem: The Oregon Investment Council (OIC), overseeing the Public Employee Retirement System (PERS), fails to recognize the inherent risk in investing in companies or funds that are complicit in human rights violations. And thus the OIC also fails to align investments of public funds with Oregon’s values. We became acutely aware of this issue when we learned that OIC invested in a private equity fund that held controlling interest in the Israeli spyware firm, NSO Group, beginning in 2014. Public records obtained by the media have disclosed that OIC’s private equity manager knew that the Novalpina Capital Fund had a controlling 90 percent investment in NSO Group even though NSO Group had been publicly accused of selling its Pegasus software to authoritarian governments that used it to spy on journalists, human rights activists, trade union organizers, and political dissidents.
The total PERS investment in Francisco Partners and Novalpina Capital Fund came to nearly $300 million, a substantial amount that jeopardizes the state’s return on public employee pensions due to the fact that the Biden Administration has blacklisted the NSO Group thereby prohibiting U.S. technology firms from doing business with it. The Biden Administration cited the NSO Group’s role in “transnational repression.” In addition, the U.S. Justice Department opened a criminal investigation into NSO. Moreover, the NSO Group faces major lawsuits from such technology giants as Apple, Microsoft, and Facebook due to the use of Pegasus software to hack their software applications. The Moody credit rating agency has now downgraded NSO Group to “below investment grade,” further risking the PERS investment.
The problem, in sum, is that the OIC did not meet its legal and fiduciary responsibility to seek the best possible return on its investments because it failed to recognize the inherent risk in investing in a known human rights violator. The problem is further complicated by the fact that current state law does not require the OIC to make its private equity investments transparent so that the public and especially the PERS recipients can discover how their pension funds are being invested. Nearly 25 percent of OIC’s investments are in private equity funds, a rate that exceeds that of any other state pension fund. It is also notable that Oregon is the only state pension fund that invested in NSO Group.
The Solution: Therefore, we propose that the solution to these failures is a state law requiring the Oregon State Treasury to develop, publish, and implement a policy that incorporates a human rights assessment into investment decision-making regarding all public funds under its control. Under this proposed legislation, the OIC’s managers would be responsible to ensure that they have considered and fully understand the human rights implications of any investment before making recommendations. Further, all PERS investments in private equity funds must be fully transparent and reported annually.
