MPLT requests Treasury for release of frozen investment

The Marianas Public Land Trust has requested the U.S. Department of Treasury to authorize the liquidation of MPLT’s investment that are tied up in a Russian banking and financial services company and are frozen due to sanctions imposed by the United States as a result of Russia’s invasion of Ukraine.

MPLT board chair Phillip Mendiola-Long wrote Andrea M. Gacki, director of the U.S. Department of Treasury’s Office of Foreign Assets Control, on Monday to request OFAC’s exemption and/or license approval to liquidate two of MPLT’s accounts so that MPLT can re-invest these funds in interest-earning accounts that are not being sanctioned.

As of Jan. 9, 2024, the impounded total amount of MPLT’s investment with the Central Bank of the Russian Federation (Sberbank) is now valued at $113,446.66, down from its total original book value of $226,492.52, according to Mendiola-Long.

Two MPLT trust accounts—the General Fund and the American Memorial Park Fund—are affected by the U.S. sanctions.

The impounded amount for the General Fund is now valued at $101,154.66, down from its original value of $198,084,04.

The impounded amount for the American Memorial Park Fund is now at $12,292, down from its original book value of $28,408.48.

The General Fund invests the funds from the CNMI’s lease of its public lands, while the American Memorial Park Fund invests the funds to benefit the development and maintenance of the American Memorial Park on Saipan.

MPLT’s General Fund and the American Memorial Park Fund accounts are managed by money manager WCM International through MPLT’s investment consultant, Raymond James.

Mendiola-Long said that MPLT allocated a portion of its investments in the international markets, including Sberbank, pursuant to MPLT’s Investment Policy Statement and as part of its investment strategy.

He said MPLT has investments in Sberbank that were impounded and subjected to sanctions last March 1, 2022, pursuant to Executive Order 14024, which the OFAC regulate and monitor for compliance.

Once impounded, the General Fund and the American Memorial Park Fund accounts were required to be placed in segregated stand-alone accounts. Mendiola-Long said this segregation and restricted status against any action or trading remains in place until such time that OFAC allows the removal of the shares and WCM or James can re-invest the funds or trading can resume.

Mendiola-Long said MPLT is aware of the appropriate justification for Executive Order 14024 regarding the harmful activities of Russia so that its instrumentalities would be subject to the sanctions.

As such, he said, Sberbank and MPLT’s investments in that institution in Russia are deemed appropriate for sanctions.

“Under our Covenant, MPLT recognizes and respects the authority of the United States to engage in such sanctions with respect to matters of foreign affairs,” he said.

However, he said, the sanctions and impounding of MPLT’s funds is detrimental to the CNMI’s ability to earn interest income from such investments. Also, the sanctions have resulted in the depreciation or losses incurred from these investments.

The chairman said the result of such lost opportunity with interest income directly affects MPLT’s ability to earn funds for the U. S. Park Service for the maintenance and development of the American Memorial Park through the American Memorial Park Fund and the CNMI through the continuing income from the General Fund proceeds.

For these reasons, Mendiola-Long requested an exemption or license from OFAC for the liquidation or release of the American Memorial Park Fund and General Fund accounts for their withdrawal by MPLT from Sberbank.

If approved, MPLT will redirect and reinvest those funds in other securities or markets outside of Russia, he said.

The chairman said MPLT will act to reconsider its Investment Policy Statement with respect to Russia, similar to what it has done with respect to the People’s Republic of China.

Mendiola-Long said they realize that MPLT’s request may be no different from other entities whose funds have also been were impounded by the United States. Even so, he said, they request OFAC’s consideration and approval of the liquidation and exemption for the release of the two accounts.

Marianas Public Land Trust office on Capital Hill.