Fund manager BlackRock – which oversees 10 million British pensions – has helped Putin build his war chest by investing heavily in Russia’s biggest companies, the Bureau of Investigative Journalism told City A.M. this morning.
While those investments have strengthened Putin, they have also generated a fortune for BlackRock’s clients, the group said.
Since 2014, when Russia invaded Crimea, BlackRock made $1.3bn, or about £1bn, in dividend payments for its clients from 10 of Russia’s biggest companies.
“The findings shed light on how pension fund holders unwittingly emboldened Putin to invade Ukraine this February, after eight years of investing in his most important energy, banking and mining companies,” the BIJ wrote in an email.
The following chart shows the amount of dividend payouts BlackRock got from the Russian companies for its clients between 2014 and the beginning of 2022.
The level of BlackRock’s investments in Russia stand in contrast to CEO Larry Fink’s pronouncement in the wake of the Crimea invasion he “would not invest in Russia at this time” and that Russia needed to start obeying international law before it became the beneficiary of pension fund money, the BIJ added.
The group pointed to a statement by Félix Boudreault, managing partner at the research firm Sustainable Market Strategies: “It is just like what tobacco is doing, and Big Oil. You pay for the investors to forgive your sins […] They need to reward you, so you don’t think too much about what you’re investing in.”
BlackRock told the BIJ: “BlackRock has never prioritized Russia as an investment market for our clients’ portfolios, nor has BlackRock ever had an office or any staff in Russia.”
“For some clients, who wanted exposure to Russia, BlackRock – as a fiduciary – invested on their behalf, primarily through index funds selected by those clients.”
A spokesman added: “Prior to the Russian invasion of Ukraine, the exposure to Russia in our clients’ portfolios represented less than 0.2 per cent of BlackRock’s assets under management. Following the invasion, BlackRock moved quickly to suspend the purchase of any Russian securities. BlackRock is monitoring the direct and indirect impacts of the crisis and working with our clients to understand how to navigate this new investment environment.”