New Jersey’s public worker pension fund sold a stake in the private contractor running the federal ICE immigration detention center in Newark that has drawn protests and a state lawsuit over alleged unsanitary conditions.
The state Department of the Treasury confirmed the pension fund’s sale of Geo Group Inc. corporate bonds valued at more than $800,000 earlier this year in an email to NJ Spotlight News.
Treasury’s “Division of Investment sold its holdings in GEO Group due to financial concerns that changed the company’s investment-risk profile,” spokeswoman Danielle Currie said.
According to public records obtained by NJ Spotlight News, the nearly $85 billion pension fund remains invested in another contractor doing business with U.S. Immigration and Customs Enforcement, or ICE.
The fund’s stake in traded Palantir Technologies was valued at more than $100 million this year.
Palantir, based in Miami, is a longtime government contractor, according to federal databases. Its artificial-intelligence platform allows clients, including military, police and other government and corporate customers, to comb digital data and personal information.
Palantir stays
Like Geo Group, Palantir Technologies Inc. has faced heavy criticism in recent months over its connection to President Donald Trump’s hardline immigration enforcement. Both companies are publicly traded. Palantir has a market capitalization — a measure of the company’s worth — of $308.93 billion, while Geo Group‘s is $3.91 billion.
The criticism, during public comment of New Jersey State Investment Council meetings, includes frequent testimony from residents and activists about ICE’s reliance on Palantir technology.
The company’s products are used by the Trump administration to collect data helpful to ICE agents’ seeking out individuals for deportation, according to published reports.
Rutgers University Newark professor Whitney Strub told members of the investment council during a meeting in late April about “my own neighbors (being) hunted by ICE — the families of my students, detained and deported.”
Strub raised other concerns about Palantir, including its involvement in military conflicts in Iran and Gaza.
“It’s just very upsetting as a state employee that my own — our own — funds are being invested in this,” Strub said. “I don’t want us to profit from this and I don’t want our funds to enable it.”
Potential risks
Many of those speaking against Palantir in recent months pointed to a report published in April by Little Sis, which bills itself as a public accountability initiative. The report contends that New Jersey’s pension fund can divest its Palantir holdings under investment council policy.
More specifically, the report says an environmental, social and governance policy, or ESG, requires the consideration of the “human rights, climate, and labor implications of its investments.”
“New Jersey’s public pension funds are being exposed to a significant number of material, legal, reputational, and human rights risks as a result of these Palantir investments,” the report said.
Though investors have profited from Palantir, concerns about the pension fund’s holdings emerged during a budget hearing in May when state Treasurer Aaron Binder faced lawmakers’ questions on a range of fiscal issues.
The pension fund covers the retirements of hundreds of thousands of current and retired government workers, and is supported by regular contributions from employees, as well as taxpayers through state government’s annual budget.
“Do you believe that (investing) in companies that engage in unscrupulous activities or profit from human suffering is a good policy?” Sen. Nilsa Cruz-Perez (D-Camden) asked during the budget hearing.
In his response, Binder cited the pension fund managers’ general fiduciary responsibilities to act in beneficiaries’ best interests.
Fiduciary duty
“The State Investment Council’s Environmental, Social and Governance Policy was adopted in 2018 to establish policies and procedures for the Division of Investment (DOI) to identify and consider environmental, social and governance (ESG) factors that present material business risks or opportunities as part of its investment process,” Currie, the Treasury spokeswoman, said in a statement emailed to NJ Spotlight News.
“The policy recognizes DOI’s fiduciary duty to manage its investment portfolios in accordance with the best interests of their beneficiaries and public employee retirees, who often rely on their pensions as a primary source of retirement income,” she said. “The policy does not require divestment from any companies,” she said.
State lawmakers, though, can have the final say when it comes to forcing the pension fund to cut ties with companies profiting from activities they deem out of bounds, even if those investments are turning a profit.
For example, the pension fund several years ago was banned from investing in companies doing business with Russia after President Vladimir Putin launched an ongoing war against Ukraine.
Investments in companies with ties to Belarus, a key military ally of Russia’s, are also banned under the same policy, which was signed into law by former Gov. Phil Murphy.
And nearly two decades ago, state lawmakers also prohibited pension fund managers from making investments in companies with ties to Iran. That was in response to that country’s push to develop nuclear weapons, an issue that continues to generate international conflict.
Tolkien inspiration
Legislation introduced this year in both the Assembly and Senate would require the pension fund to sever any ties with “companies engaging in government contracts or business operations infringing on data privacy of individuals for purpose of determining immigration status.”
The bill doesn’t name Palantir, though sponsors have linked to it the concerns that have been raised about the company.
“This bill is about protecting civil liberties and ensuring New Jersey taxpayer dollars are not invested in companies that facilitate warrantless surveillance or the collection of personal data for immigration enforcement purposes,” said Sen. Brian Stack (D-Hudson), a primary sponsor.
“New Jersey has a responsibility to uphold privacy rights and make investment decisions that reflect our values,” Stack said.
Palantir did not respond to an emailed request for comment.
Peter Thiel, a right-leaning political donor and venture capitalist with an obsession with the “Lord of the Rings” books, founded Palantir and owns at least 10% of it, records filed with the Securities and Exchange Commission show.
The company name comes from J.R.R. Tolkien’s fantasy series, in which a palantir is an unbreakable crystal ball that can distort the truth.
The company’s business grew sharply last year, driven by U.S. commercial and government customers, including the U.S. Army, the National Institutes of Health and the departments of Health and Human Services and Homeland Security.
During the legislative hearing in May when the Palantir investment was discussed, Binder was asked about the investment bans currently on the books in New Jersey, and he reminded lawmakers that fund managers must obey them.
“As prohibited investments have been signed into law, that is what they follow,” Binder said.
Benjamin J. Hulac contributed reporting.
This story is made possible in part by the Corporation for Public Broadcasting, a private corporation funded by the American people.
