Gov. Mike Dunleavy seeks to cut ties with American banks that have Russian investments

JUNEAU — Alaska Gov. Mike Dunleavy has proposed legislation that would allow state officials to end some relationships with banks that invest in Russia. The governor’s proposal, introduced Wednesday, expands ideas already under discussion in the Alaska Legislature that are intended to financially punish Russia for its invasion of Ukraine.

Talking to reporters before he introduced his proposal, Dunleavy said it is unacceptable for financial institutions to invest in Russia but refuse to finance oil and gas development in Alaska.

“We feel that this has reached the point where we can no longer have a relationship with some of them, that their mission is to stop Alaska,” Dunleavy said, “at the same time, for lack of a better expression, they’re investing in blood oil and dirty oil in other parts of the globe.”

An official with the Alaska Department of Revenue specifically identified the investment banks JP Morgan Chase and Goldman Sachs as targets for divestment under the administration’s criteria.

Both institutions are among a lengthy list of investment firms that have pledged to not finance oil and gas development north of the Arctic Circle.

After JP Morgan announced its pledge in 2020, Dunleavy said his administration would introduce legislation in 2021 that would require the state to cut ties with financial institutions that refuse to finance Arctic oil.

That legislation was never introduced, but Dunleavy and administration officials said it remained a topic of discussion.

“We’re at the point now that this is mature, and we’re going to do that. We’re going to go through the process of divesting,” Dunleavy said.

Since last year, the commissioners of Revenue and Natural Resources, as well as other administration officials and Sen. Peter Micciche, R-Soldotna, have lobbied financial institutions to change their policies, but haven’t had success.

In the meantime, oil drilling projects on both state and federal land have struggled to find financing.

The language of the governor’s bills does not mention the Arctic or oil and gas development in Alaska. Instead, it says in part that the commissioner of the Alaska Department of Revenue or a financial manager of the state “may not conduct business with a financial institution that has been identified as profiteering from the Russian Federation’s invasion of Ukraine.”

The bill specifically exempts the Alaska Permanent Fund Corp. and the state’s public employee pension fund. Other relationships — such as bond issues — could end.

Both JP Morgan Chase and Goldman Sachs have publicly announced that they will wind down their businesses in Russia and leave the country, but both intend to keep their licenses in Russia and continue some operations. On Thursday, JP Morgan Chase processed a $117 million Russian debt payment, allowing the country to avoid default.

Administration officials said the company is acting as a “market maker” by allowing payments to take place while Russian markets remain closed to the general public.

An official with the Alaska Department of Revenue said Wednesday that the agency does not yet have a firm list of companies it considers “profiteering” from the war.

“As we identify more of those banks, that list could grow. Or, if these banks decide to reverse their position and decide that they no longer want to act as a market maker for Russian securities, they may find themselves off this list,” the official said.

The Senate Finance Committee is scheduled to hear the governor’s proposal on Tuesday. The bill has no other committee assignments in the Senate, traditionally a sign of quick-moving legislation.

The House State Affairs Committee is also scheduled to hear the bill on Tuesday, but the House version has been referred to two committees for analysis and discussion.