City Comptroller’s Move to Divest from Israel Bonds Sparks Controversy

The New York City Comptroller has come under scrutiny over his decision to withdraw pension investments from bonds issued by Israel, a move critics suggest aligns with the Boycott, Divestment, and Sanctions (BDS) campaign against the country.

In a letter dated July 10, First Deputy Mayor Randy Mastro called for a review of the decision-making process behind the divestment, which appears to be motivated by anti-Israel sentiments. He expressed concern that this move might harm the financial interests of the pensioners, noting that Israel bonds have historically provided strong returns, averaging around 5% annually.

Historically, the city’s pension funds invested significant amounts in Israel bonds, starting with a $30 million investment in 1974. Over the decades, the holdings were maintained and reinvested by several comptrollers, but under current leadership, investments have sharply declined. Now, only the Police Pension Fund holds about $1.2 million in Israeli bonds, a significant drop from previous levels.

The reduction coincides with a shift away from reinvesting in Israel bonds after they mature, which has led to questions about the fiduciary duty owed to pensioners. Critics argue that the move is targeted specifically at Israeli securities, especially since the city’s investment policy claims to avoid sovereign debt, yet continues to hold more than $400 million in Israeli companies.

Mastro highlighted that the decision has impacted the performance of pension portfolios and pointed out that Israel bonds have outperformed other investments in the past. The letter also called for transparency, requesting all communications related to the decision to stop investing in Israeli bonds, including discussions with outside parties.

The controversy is heightened by the political alliances of the comptroller, who is known to oppose the BDS movement, and his close association with city officials and political figures supporting Israel. As mayor Eric Adams runs for re-election, questions about the financial and political implications of this divestment remain at the forefront.