“Many Americans do not even realize that fund managers have placed their money in these Russian companies. My bill would change that, protecting American retirees and denying Russian companies a critical source of capital”
Senator Mark Rubio introducing his IMPAIR Russia Bill 2nd March, 2022
On Saturday, as Rubio was drafting his bill and brave Ukrainians held off Putin’s armoured columns on the outskirts of Kyiv, the BBC were televising the highlights of that day’s football (soccer) matches. First up was Burnley and Chelsea. Although you may not have heard of Burnley (a small town in the old industrial north of England) you will know that Chelsea is owned by the Russian oligarch, Roman Abramovich. Banks of largely home supporters held blue and yellow banners aloft to mark their “solidarity” with Ukraine. This collective “virtue” was then rather undermined by fond chants of “Roman Abramovich” from the Chelsea faithful, grateful for the hundreds of millions he has lavished on the club and the success it has brought the club on the field.
Whilst it might be a stretch to convince the average Chelsea fan that he is complicit in money laundering, the BBC (and the British Government) should appreciate the concept of KYC: Kremlin! Your Client!!
Outside of Chelsea’s fanbase, however, favourable views of Russia and its oligarchs are thin on the ground. Sanctions, that were initially seen as inconsequential, have been ramped up in their severity. In the eleven days since the Russian invasion, we have watched as governments and international companies have closed their doors and their pipelines to Russian business.
The Big Four Accounting firms have cut off their Russian operations (they employ approximately 15,000 people between them). Amex, Mastercard, Visa and Paypal have suspended the use of their services to Russians wishing to use them outside of Russia. Tiktok is no longer available to Russian users. Nike, Prada and a swathe of clothing brands no longer sell their products and cars made by Mercedes Benz, Ford and BMW are no longer available.
There are now strong demands for divestment of any exposure to Russian markets. Rubio’s Bill will turn these demands into legislation. Many institutions are grasping the nettle and making preemptive changes. Last Friday, the Washington State Investment Board announced it would withdraw from its equity exposure in Russia. Yesterday, the State of Wisconsin Investment Board followed suit. Many more will follow.
EM funds with Russian exposure are hamstrung: with the Russian market closed their managers cannot sell and off markets sales pending the market reopening are difficult to imagine. Consequently, US investors wishing to be able to comply with the sanction on Russian equity ownership will need to redeem these funds.
Aubrey’s GEMs fund has owned no Russian companies since Q2 2018. This is not virtue signalling on our part. Rather the result of a process that has found far better companies situated in better governed countries elsewhere.
Although I did not watch the match, sadly Burnley went down 0-4.
