Friday, June 2, 2023

Pension funds remain loyal to Blackstone despite Trump closeness

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Public pension funds that invest billions of dollars with Blackstone are resisting calls by activists to distance themselves from a company run by one of President Donald Trump’s biggest backers.

Stephen Schwarzman, the billionaire financier who founded Blackstone in 1985, gave rhetorical support to the president at key times and donated $ 30 million to Republican political causes last year, including $ 3 million to a supra-political action committee aligned with Mr. Trump.

Campaigners say Mr Schwarzman’s ties to Trump could become a liability, if not for Blackstone himself, and then for the public pension funds which contribute a large chunk of Blackstone’s $ 584 billion assets.

“Investors should question the judgment of a man who gave millions of dollars to support Donald Trump despite his growing hate speech, calls for violence and authoritarianism,” said Jim Baker, who heads the Private Equity Stakeholder Project activist group.

The reluctance of pension funds to let politics influence investment decisions contrasts with the position dozens of leading American companies who severed ties with Mr. Trump and cut funding to his Republican supporters in the days following the president’s incitement to a violent insurgency in Washington.

A nonprofit group, the Chicago-based Action Center on Race and the Economy (Acre), wrote to 30 pension plans on Thursday demanding they stop investing with Blackstone.

New York state, which has one of the largest public pension funds, will not respond to that call, according to a spokesperson for Thomas DiNapoli, a Democratic official who oversees the state’s pooled pension fund. New York City of $ 200 billion.

“Comptroller DiNapoli strongly disagrees with Mr. Schwarzman’s views on President Trump,” the spokesperson said. “But the fund does not and will not make investment decisions based on political points of view.”

Officials of three other public pension plans have expressed concerns about political violence, but none have said they will change their investment plans.

One of them, the California Teachers’ Pension Fund Calstrs, responded to a question about Blackstone without mentioning the name of the company, stating that it “fervently condemns the recent violence against long-standing democratic processes. our country’s date ”and urging investors to use their funds responsibly.

Calpers, who pays the pensions of other state officials, also condemned “the violence and destruction in Washington DC”.

Supporters of President Donald Trump have invaded the Capitol as lawmakers prepare to confirm Joe Biden’s election © AFP via Getty Images

New York City government pension funds “will monitor investments with Blackstone, such as [with] all risks ”to his wallet, according to a spokesperson for Comptroller Scott Stringer’s office.

Officials of several other larger public pension funds did not respond to questions from the Financial Times on the matter.

In a statement, Blackstone called Acre a “fringe anti-capitalist group” and said its letter to the pension funds contained “completely false” claims and “scandalous distortions”. He added that Mr. Schwarzman had expressed “horror and disgust at the appalling insurgency that followed President Trump’s remarks on January 6,” and had long since “made it clear. . . that President-elect Joe Biden won the election ”.

Inside Blackstone, there has long been a divide between business and politics, according to people who work at the company, which has top Democrats among its top ranks. Mr Schwarzman’s top lieutenant is Jon Gray, who donated millions of dollars to Democratic causes last year, according to data from the Center for Responsive Politics.

“Steve could joke that ‘you Democrats’ are going to force yourself into oblivion, he might have these occasional digs,” said one investor who worked at Blackstone and made no secret of his own tendencies. democrats. “But it’s a diverse company, inundated with talented people who are encouraged to have their own opinions.”

Mr. Schwarzman did not donate to Mr. Trump in 2016, but became a key supporter on Wall Street shortly after the president’s surprise victory.

Blackstone’s founder briefly chaired a White House “strategic and political forum”. The group was disbanded in August 2017, after Mr. Trump said there was violence from “both sides” in Charlottesville in 2017, where torch-carrying protesters chanted against blacks and Jews. Mr. Schwarzman said at the time that he “was not indignantBy the words of the president.

In November, as other top executives gathered to congratulate Mr Biden, Mr Schwarzman told a closed meeting that the president had the right to challenge the election results and to have the judicial process run its course.

On November 23, however, Mr. Schwarzman said he was “ready to help President-elect Biden”Rebuilding an economy hit by a pandemic. He has not spoken to Mr Trump for more than six months, according to a spokesperson for Blackstone.

When a pro-Trump mob stormed Congress on January 6, Mr. Schwarzman said that “the insurgency that followed the president’s words today is appalling.”

Advocacy groups have in the past won victories against private equity groups and other investment firms by putting pressure on public pension funds that provide much of their capital.

In 2018, Bain Capital and KKR contributed $ 20 million former Toys R Us employees, a retail chain they bought in 2005. The move came after Mr Baker attended dozens of pension fund board meetings, saying companies should no longer get money. investment in pension funds unless they compensate for severance payments lost by workers when the chain is liquidated. in 2018.

So far, however, pension funds appear reluctant to join the scramble of companies looking into their financial ties to Mr. Trump and his supporters.

“We haven’t been following this issue,” said John Kuczwanski, an official on the Florida State Board of Directors, who invests with Blackstone. “We are not tracking anything regarding Mr. Schwarzman’s financial support for Donald Trump’s 2020 campaign.”


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