Oklahoma officials wonder why BlackRock manages state retirement funds despite being on the restricted list.
Two Oklahoma officials are raising concerns about a state retirement system’s proposal request (RFP) that may have been tailored to favor an investment firm accused of boycotting oil and gas companies.
Oklahoma State Treasurer Todd Russ and Auditor and Inspector Cindy Byrd are worried that the RFP gave BlackRock Investments control over 60 percent of the Oklahoma Public Employee Retirement System’s (OPERS) assets, which amounts to around $7 billion. This potential violation of state law is alarming.
BlackRock is on the list of companies prohibited by state law from handling state funds due to its boycott of oil and gas companies. Given that the oil industry has been a significant contributor to Oklahoma’s economy for over a century, this issue is of great importance.
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Another firm, State Street, is also on the prohibited list but hasn’t received as much attention as BlackRock.
This situation potentially violates the Oklahoma Energy Discrimination Elimination Act of 2022 (EDEA), which prohibits state investments from being handled by firms that boycott oil and gas producers.
BlackRock representatives have not responded to inquiries from The Epoch Times.
BlackRock’s Response
In a letter to the Oklahoma Treasurer’s office, BlackRock Senior Managing Director and Vice Chairman Mark McCombe emphasized the company’s commitment to its clients.
“BlackRock does not boycott energy companies,” Mr. McCombe stated in the letter.
The letter highlighted that BlackRock has significant investments in public energy companies worldwide, including $15 billion in Oklahoma, with over 90 percent of that invested in traditional energies like oil and gas.
There are indications that BlackRock is distancing itself from ESG (Environmental, Social, and Governance) investing. The company has stopped using the term and has significantly reduced its support for ESG proposals.
Mr. McCombe acknowledged the reality of ESG policies and the growing demand for alternatives to carbon-based energy. However, he emphasized that BlackRock’s investment decisions are strictly governed by its fiduciary duty to clients.
Despite concerns about the EDEA law and boycotting oil companies, Mr. Russ and Ms. Byrd believe there are additional issues with the RFP process at the Oklahoma State Pension Commission.
During the commission meeting, Mr. Russ and Ms. Byrd questioned the selection of BlackRock and expressed their concerns.
Joseph Fox, OPERS executive director, promised to provide an explanation for choosing BlackRock but did not respond to The Epoch Times’ email.
OPERS Claimed Exemption
In a memo dated Aug. 23, Mr. Fox wrote that OPERS claimed an exemption under the EDEA law based on its fiduciary responsibility to the state employees whose funds are being managed.
Mr. Russ sent a letter outlining his concerns to Mr. Fox and the OPERS Board of Trustees. He suggested that the board should have selected another firm or sought more applicants based on these concerns.
Copies of the letter were also sent to key Oklahoma officials, but they have not provided any comments on the matter.
Mr. Russ argued that the RFP process appeared to be biased towards BlackRock, eliminating most of its competition.
Ms. Byrd was more direct in her assessment, referring to the practice as “bid rigging” in the auditing world.
Mr. Russ also highlighted that the decision to retain BlackRock’s services violated OPERS’ fiduciary duties due to the company’s commitment to ESG principles.
These concerns raise important questions about the fairness and transparency of the RFP process and the potential impact on Oklahoma’s state funds.
How does BlackRock’s response to concerns about the violation of the Oklahoma Energy Discrimination Elimination Act (EDEA) and favoritism in the RFP process affect the ongoing scrutiny of the situation
Tate Retirement System. They contend that the RFP may have been tailored specifically to favor BlackRock Investments, thus potentially violating state law.
The significance of this issue cannot be understated, considering the historic contribution of the oil industry to Oklahoma’s economy. With a century-long presence in the state, the oil and gas companies have been major generators of revenue and employment. Therefore, any action that undermines the industry’s growth and stability is a matter of great concern.
It is alarming that the RFP may have granted BlackRock Investments control over 60 percent of the Oklahoma Public Employee Retirement System’s assets, which amounts to approximately $7 billion. This raises questions about the impartiality and fairness of the selection process and whether it was influenced by factors other than the best interests of the retirement system and its beneficiaries.
Furthermore, it is worth noting that BlackRock is on the list of companies prohibited by state law from handling state funds due to its boycott of oil and gas companies. State Treasurer Todd Russ and Auditor and Inspector Cindy Byrd are rightly concerned that such a firm may have gained control over a significant portion of the retirement system’s assets, potentially violating the Oklahoma Energy Discrimination Elimination Act of 2022 (EDEA).
State Street, another firm on the prohibited list, has not received as much attention as BlackRock. However, the focus on BlackRock’s potential violation of state law highlights the need for a thorough investigation into this matter.
In response to these concerns, BlackRock Senior Managing Director and Vice Chairman Mark McCombe stated in a letter to the Oklahoma Treasurer’s office that the company does not boycott energy companies. He emphasized the significant investments that BlackRock has made in public energy companies worldwide, including $15 billion in Oklahoma, with the majority invested in traditional energies like oil and gas.
While there are indications that BlackRock is distancing itself from Environmental, Social, and Governance (ESG) investing, Mr. McCombe acknowledged the reality of ESG policies and the demand for alternatives to carbon-based energy. However, he stressed that BlackRock’s investment decisions are guided solely by its fiduciary duty to its clients.
Despite BlackRock’s response, concerns about the potential violation of the EDEA law and the favoritism shown in the RFP process persist. State Treasurer Todd Russ and Auditor and Inspector Cindy Byrd believe that there are additional issues with the RFP process at the Oklahoma State Retirement System.
Given the magnitude of the state retirement system’s assets and the importance of preserving the integrity of the selection process, it is imperative that a thorough investigation be conducted to address these concerns. Any violation of state law must be addressed to ensure transparency, fairness, and accountability in the management of public funds.
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