A prominent human rights organisation has issued a stark warning to New York state and local officials, asserting that the investment of public funds in bonds issued by Israel contravenes both international legal standards and fiduciary responsibilities. The group cautions that such investments could expose officials and beneficiaries to considerable legal, ethical, and financial perils.
Legal Memo Targets Key New York Figures
The warning was formally delivered by the human rights group Dawn in a detailed 26-page memorandum sent on Friday. The document was addressed to New York Governor Kathy Hochul, State Attorney General Letitia James, New York City Mayor Zohran Mamdani, State Comptroller Tom DiNapoli, and City Comptroller Mark Levine. The memo explicitly calls for an immediate cessation of new purchases and the divestment of any existing holdings in Israeli bonds.
Sarah Leah Whitson, the executive director of Dawn, stated in an accompanying release that these investments violate "legal obligations not to aid and abet Israeli crimes and their fiduciary duties to taxpayers". The correspondence also carries an implicit threat of potential litigation should the advice be disregarded.
Growing Divestment Calls Amid Political Divides
This legal challenge emerges against a backdrop of increasing calls for divestment from Israel across the United States, particularly following the conflict in Gaza. The issue has revealed deepening political fissures, with some elected officials moving away from traditional, unwavering support for Israel.
The situation in New York itself highlights this internal conflict. In 2023, then New York City Comptroller Brad Lander terminated the city's nearly $40 million investment in Israeli bonds, citing identified legal and financial risks. His successor, Mark Levine, has signalled intentions to reinvest, placing him at odds with Mayor Mamdani, who opposes the plan.
At the state level, the debate is equally polarised. Comptroller Tom DiNapoli has affirmed his commitment to maintaining the state's investments, while his challenger, Raj Goyle, has pledged to end them. These conflicting stances exemplify the widening political divide in the US regarding Israel, transforming even technical financial decisions about public pension investments into highly contentious issues.
Substantial Investments and Counterarguments
Investigative reporting by the Guardian in 2024 revealed that since the October 2023 attacks on Israel, US states and municipalities had purchased at least $1.7 billion in Israeli bonds. Dani Naveh, President and CEO of the Development Corporation for Israel (Israel Bonds), reported that the corporation has sold over $5.7 billion worldwide since the Hamas attacks.
Naveh defended the investments, stating, "Israel Bonds offer not only strong, steady returns, but also a meaningful way to stand with and support the Jewish state." He characterised calls for divestment as a "small and noisy disinformation campaign driven by antisemitism".
Official Responses and Legal Rationale
Mayor Zohran Mamdani's position was clarified by a spokesperson referencing comments from a recent press conference. "I don't think that we should purchase Israel bonds," Mamdani stated. "We don't purchase bonds for any other sovereign nation's debt."
A spokesperson for Comptroller Mark Levine noted that Israel Bonds have been a "successful part" of the city's investment portfolio for fifty years. The statement did not directly address reinvestment plans but indicated the comptroller would collaborate with fellow trustees on investment decisions, noting that mayoral approval is not required for such investments.
Former Comptroller Brad Lander, who allowed pre-existing bonds to lapse during his term, insisted his decision was not politically motivated. "As a Jew, I am proud that we have these investments in Israel," Lander said. "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."
Broader Campaign and Legal Challenges
Dawn argues that Israeli bonds are not passive financial instruments but constitute direct loans to the Israeli government, potentially funding its defence forces, weapons, and military operations. The group warns that investing in these bonds may facilitate human rights violations in Palestine and breach the fiduciary duty officials owe to invest public funds solely for the financial benefit of beneficiaries.
Michael Omer-Man, Dawn's director of Israel-Palestine, pointed out that Israel Bonds openly markets its products 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 contended.
This warning is part of a larger, coordinated effort. A nationwide coalition of groups has launched the "Break the Bonds" campaign, advocating for divestment at local levels and targeting state and union pension funds, as well as university investments in Israel.
The issue has already sparked legal action elsewhere. 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 $700 million in local property taxes into these bonds. The plaintiffs allege the investments violate local laws regarding foreign investment ratings and prohibitions on politically motivated investing.
Lydia Ghuman, Executive Director of the Internationalist Law Center representing the plaintiffs, argued, "These millions of dollars should be going to local needs. 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."
Governor Kathy Hochul and State Comptroller Tom DiNapoli did not respond to requests for comment on the Dawn memorandum, leaving their positions on the escalating legal and ethical debate formally unstated.
