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Santa Monica Has No Direct Russian Investments, Finance Official Says

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By Jorge Casuso

April 13, 2022 -- Santa Monica's government has no direct investments in Russian assets that the City can pull to protest Vladimir Putin's invasion of Ukraine, the City's finance director said last week.

It would, however, stand to lose nearly $3.5 million if it chooses to sells its investments in entities that conduct business in Russia but have already taken steps to sanction the country.

The findings -- detailed in an information item to the City Council -- renders the Council's March 8 unanimous vote to punish Russia financially as strictly symbolic ("Council Votes to Support Ukraine," March 10, 2022).

"The City of Santa Monica holds no investments in any Russian companies or Russian sovereign debt," Finance Director Gigi Decavalles-Hughes wrote to the Council.

"The City does own bonds in companies that had business operations in Russia at the time of the Ukraine invasion."

"Due to business entities’ actions to alter their business with Russia, the City of Santa Monica will not be divesting from these companies at this time," she wrote in an email to The Lookout.

If the City were to sell off its investments in those entities, it would stand to lose a total of $3,479,129 due to diminished bond values, Decavalles-Hughes wrote.

Of the 18 companies in the City's portfolio, 12 "have publicly announced either a termination, suspension, or limiting of business activities in Russia," she wrote in the memo to the Council.

Selling the City's investment in Toyota -- its largest with a market value of about $12.3 million -- would represent a loss of nearly $750,000.

Selling its second largest investment of $10.6 million in Apple would result in a loss of about $325,000.

Toyota has stopped production at a plant in Russia and shipments to that county. Apple has stopped selling products in Russia and "restricted access to Russian state media applications" outside the country, Decavalles-Hughes wrote.

Four pharmaceutical companies -- with City investments totaling more than $13.5 million -- have stopped clinical trials in Russia.

City finance officials were "unable to determine Russian exposure" for four insurance companies with City investments totaling nearly $21.5 million.

Two of the companies in the City's investment portfolio do not appear to do business in Russia, and another two are university endowment funds that have announced plans to pull all investments in Russian entities.

"The two business sectors with the most exposure to and business relationship with Russia are the oil and banking sectors," according to the information item.

"Since the City has already divested from fossil fuel companies and banks lending to such companies, the current investment portfolio has no investments related to Russia from these sectors."

Decavalles-Hughes recommended that "no new investments should be made in companies that have not announced a termination, suspension, or limitation of business in Russia," until Russia pulls out of Ukraine or the U.S. revokes all sanctions.

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