A human rights group has warned New York state and local officials that investment of public funds in bonds issued by Israel violates both international law and fiduciary duties and may expose officials and beneficiaries alike to “substantial legal, ethical and financial risks”.
The warning, from the human rights group Dawn, was sent on Friday along with a 26-page memo to the New York governor, Kathy Hochul; the state’s attorney general, Letitia James; New York City’s mayor, Zohran Mamdani; and the state and city comptrollers, Tom DiNapoli and Mark Levine, respectively. It calls on them to immediately cease new purchases and divest any current holdings in Israeli bonds, arguing the investments violate “legal obligations not to aid and abet Israeli crimes and their fiduciary duties to taxpayers”, Sarah Leah Whitson, executive director of Dawn, said in a statement.
The letter, which threatens litigation, comes as calls for divestment from Israel have grown in the US following the war in Gaza, and as some elected officials have moved away from once-reflexive support of Israel.
In 2023, the then New York City comptroller, Brad Lander, ended the city’s nearly $40m investment in Israeli bonds, citing legal and financial risks. His successor, Levine, has indicated plans to reinvest in them, putting him in direct conflict with Mamdani, who has opposed the plan. At the state level, the matter is equally divisive, with DiNapoli saying he will maintain the state’s investments and challenger Raj Goyle pledging to end them.
The conflicting positions are yet another manifestation of the ever-widening divide in US politics over Israel, making even technical matters such as the investment of public pension money a contentious one.
In 2024, the Guardian revealed that since the 7 October 2023 attacks by militants on Israel, US states and municipalities had bought at least $1.7bn in Israeli bonds.
Dani Naveh, president and CEO of the Development Corporation for Israel, also known as Israel Bonds, said in a statement that the corporation has sold more than $5.7bn worldwide since the Hamas attacks.
“Israel Bonds offer not only strong, steady returns, but also a meaningful way to stand with and support the Jewish state,” he added. “Despite a small and noisy disinformation campaign driven by antisemitism that seeks to pressure investors to divert investments away from Israel, the continued inclusion of Israel bonds in portfolios represents a tremendous success.”
A spokesperson for Mamdani pointed to comments the mayor made at a press conference earlier this month. “I don’t think that we should purchase Israel bonds,” Mamdani said then. “We don’t purchase bonds for any other sovereign nation’s debt.” A spokesperson for Levine said that Israel Bonds had been a “successful part” of the city’s investment portfolio for half a century but did not address plans to reinvest in the bonds, only saying the city’s comptroller would work with fellow trustees on investment decisions. (The comptroller does not need the mayor’s approval to invest, but he does need the approval of the city’s public pensions boards.) Hochul and DiNapoli did not respond to requests for comment.
Lander, who is now running for Congress, let pre-existing bonds lapse during his term as comptroller, saying at the time that the decision was not political.
“As a Jew, I am proud that we have these investments in Israel,” Lander said at the time. “But I’m not allowed to make investments for that reason. They have to make financial sense to be consistent with our policies and my fiduciary duty.”
Michael Omer-Man, Dawn’s director of Israel-Palestine, said that Israel Bonds openly markets its products to investors as “supporting” the state of Israel. “It’s becoming harder and harder to argue that these investments are being made purely for fiduciary or financially sound reasons,” he said.
Dawn argues that Israeli bonds are not “passive market instruments” but direct loans to the Israeli government used to fund its defense forces, weapons and military operations, among other things. It warned that investment in the bonds enable human rights violations in Palestine and breach fiduciary duties, as officials are bound to invest public funds solely for the financial benefit of beneficiaries.
A nationwide coalition of groups has launched a “Break the Bonds” campaign encouraging advocacy for divestment at the local level, as well as targeting state and union pension funds and universities’ investments in Israel.
In Palm Beach county, Florida – the largest municipal investor in Israeli bonds – a group of residents sued the county last year over the investment of $700m in local property taxes in Israeli bonds, which the group says was carried out in violation of local laws, including requirements that foreign investments meet certain ratings and prohibitions around investing for political reasons. The county did not respond to a request for comment.
“These millions of dollars should be going to local needs,” said Lydia Ghuman, executive director of the Internationalist Law Center, which is representing the plaintiffs in that case. “The fact that they are being invested in bonds that are not beating the rate of inflation and propping up the economy of a foreign government is a sign of the special interests gripping local politics.”