The North Dakota Legacy Fund has been called the “People’s Fund”. It’s filled with our tax dollars, over $ 8 billion, but that tax money is pouring into investments in North Dakota and our country.
It is governed by the State Investment Board of North Dakota, or SIB, and advised by the consultancy firm Callan which has no offices in North Dakota. Thanks to monthly taxes on the state’s oil production and returns on investments, the Legacy Fund has grown for over eleven years.
And the taxpayers weigh heavily. In a statewide survey by WPA Intelligence, a leading national research firm, taxpayers, with a 10-to-1 margin, want more of the legacy fund invested in North Dakota .
And by an 8 to 1 margin, they want North Dakota advisers to decide how to invest the money, not out-of-state or Wall Street consultants.
The overwhelming support of the legislature for a bill to reinvest in the state shows that most lawmakers agree that North Dakota would be better served if more money from the legacy fund was used in our own state for things. such as economic development.
In the first part of this series, we explore how the will of the public and the legislature is factored into the way the fund is invested? And, if it’s open to debate, then who’s in control?
In July 2020, Fargo Forum investigative reporter Patrick Springer published an article describing the Legacy Fund’s investments in foreign entities. This caught the attention of prominent Fargo lawyer Luke Heck.
“It prompted me to apply for a freedom of information law or to open a case with the State Investment Board,” Heck said.
Heck retrieved a spreadsheet from the State Investment Board showing all of the Legacy Fund’s investments in fiscal year 2019/2020.
“To the sheer volume and breadth of investments we have out-of-state and out-of-country, and in some of the shady places we invest in, in businesses and government entities across the world, ”Heck explained.
66 small print pages showing foreign investment in 89 countries. 37 different Chinese investments alone, most of which are linked to the Chinese Communist Party (CCP).
An investment that stood out for Heck: a $ 12 million investment in Tencent, the Chinese company that makes the WeChat social media app.
“What’s relevant about this is that the app has been used or assisted by the Chinese government to track the Uyghur Muslim ethnic minority population in China, and for those who don’t know, the Uyghur population has been , for lack of a better term, essentially kidnapped and transported to concentration camps and being housed and forced into forced labor. And, in essence, state funds get used to investing in a business that helps the Chinese Communist government to commit potential genocide, ”Heck explained.
In addition to China, SIB documents show that Legacy Fund dollars are invested in Russia, Venezuela, Saudi Arabia, and other government entities and businesses located in countries on Human Rights Watch’s list.
Not only is much of the capital in the legacy fund invested outside of our nation’s border, it is essentially invested everywhere except North Dakota. Just ask the president of the North Dakota Bankers Association, Rick Clayburgh.
“There are literally billions of dollars, North Dakota dollars, being invested outside of ND state. Why couldn’t some of those dollars be managed here in ND with banks that have trust powers? Clayburgh remarked.
Clayburgh says he has worked with lawmakers since 2012 to try to get some of the Legacy Fund funds managed by North Dakota banks with trust powers.
“Our banks never really got a chance to bid to manage one of the dollars. And that’s one of the frustrations we’ve had. We really appreciate what the legislature did with the governor signing 1425, ”Clayburgh explained.
In a written testimony for House Bill 1425, Heck asked the State Investment Board to consider the benefits of investing Legacy Fund capital locally before investing outside of the state or country. “Instead of examining the merits of investing in the state,” Heck wrote, citing: “the board hired 32 Wall Street fund management firms to invest our capital everywhere except in Dakota from North.”
Last summer, North Dakota Insurance Commissioner John Godfread proposed to the State Investment Board, which oversees Legacy Fund investments, to reinvest 10% of the Legacy Fund in the state. Godfread’s plan didn’t even get a board vote. It was at this point that Godfread partnered with Rep. Mike Nathe to turn his proposal into Bill 1425. The campaign for the bill shed light on the Legacy Fund’s foreign investment. It received great attention in the legislature, and HB 1425 gained overwhelming support with the House vote 85-8 and the Senate 47-0.
“They saw public support for the bill. They saw the legislature’s support for the bill and they tried to get ahead of this thing, ”Rep. Mike Nathe said.
Here’s the problem: Representative Nathe said that as HB 1425 gained momentum in the legislature, the State Investment Board established its own investment program in the state knowing that the legislature had broad support for investment in the state.
SIB minutes, memos and documents obtained by KX News show that during the legislative campaign for HB 1425, between late September and late October, the State Investment Board created its own state investment program. .
SIB asked out-of-state investment firm Callan to seek out fund managers for the state’s investment program. ahead of HB 1425. Callan presented four companies, none from inside the state, and SIB chose the Chicago company, 50 South Capital, again frustrating state banks.
“The action taken by the advisory board and by RIO and the people involved up to naming Callan and 50 South, you’re right. They were trying to get a head start, so they came up with their own in-state investment program while this bill goes through the legislative process, ”Nathe explained.
Join us Sunday on KX News at 10 a.m. for a more in-depth look at the power struggle behind the North Dakota Legacy Fund.
We reached out to Callan for comment on this story, and they responded with a letter, but asked KX News to keep all content confidential.