David McCormick, the Republican candidate for US Senate in Pennsylvania, led the largest hedge fund in the world while it managed and advised funds holding hundreds of millions of dollars in Russian debt, documents obtained by the Guardian show.
Filings with the US Department of Labor, known as form 5500s, show that from 2017 to 2021, Bridgewater Associates managed funds holding as much as $415m in Russian sovereign bonds. Since 2019 these types of investment have been subject to increasingly stringent US sanctions, in response to Russian aggression in Ukraine.
Holding such assets is not illegal, but the question of McCormick’s work with foreign investments and how it might influence his political career has already coloured his current campaign, against the incumbent Democratic senator, Bob Casey.
McCormick stepped down as Bridgewater CEO in 2022, in order to run for Congress and a month before Russia mounted a full-scale invasion of Ukraine. But sanctions were first levied three years before that when, according to the firm itself, as co-CEO from 2017 to 2020 and then as sole CEO, McCormick was responsible for “overseeing the firm’s strategy, governance, and operations”.
McCormick himself has said about his time as Bridgewater boss: “Whatever we did I’m responsible for.”
Sovereign bonds are issued by governments to raise money for operations, to pay debt, and for any other spending needs. They represent a major source of government financing.
The value of Russian sovereign bonds managed by Bridgewater between 2017 and 2021 and listed on labor department 5500 forms fluctuated, standing at $415,207,202 in 2017; $234,982,243 in 2018; $36,557,325 in 2019; $80,553,252 in 2020; and $119,884,817 in 2021.
Starting under Donald Trump and continuing under Joe Biden, the US imposed significant sanctions on Russian financial assets and institutions. According to the Congressional Research Service (CRS), sanctions now “restrict dealings with 80% of Russian banking sector assets”.
The CRS adds: “The Biden administration expanded sanctions on Russian sovereign debt … including prohibiting US financial institutions from processing debt payments from the Russian government to foreign investors. As a result, Russia defaulted on its debt in June 2022.”
Bridgewater’s links to Russia have proved persistently controversial. In 2017, founder Ray Dalio appeared at the World Economic Forum in Davos, Switzerland, with Kirill Dmitriev, executive officer of the Russian Direct Investment Fund (RDIF), and Igor Shuvalov, then first deputy prime minister. Referring to US responses to Russia’s election interference in support of Trump in 2016, Dalio said: “It would be better if the sanctions were lifted.”
In 2020, the Wall Street Journal reported that Dalio had met Vladimir Putin “several times in person”. In 2022, the US levied sanctions on Dmitriev and the RDIF, which the US treasury called “a slush fund for President Vladimir Putin … emblematic of Russia’s broader kleptocracy”.
On US shores, to Republicans seeking to retake the Senate, McCormick seems a good bet to take a prized swing state seat. Polling puts him behind Casey but the race is close. The two men recently debated.
It is McCormick’s second Senate run, after losing the 2022 primary to the TV doctor Mehmet Oz. A controversial candidate who alienated some Pennsylvania voters, not least amid claims he actually lived in New Jersey, Oz lost to the Democrat John Fetterman. This year, McCormick has been dogged by reporting about his finances and whether he really lives in Connecticut.
McCormick is a graduate of the US Military Academy and veteran of the first Gulf war, married to Dina Powell, a deputy national security adviser under Donald Trump. On foreign policy, he presents a hawkish aspect.
Blaming Joe Biden and Kamala Harris for showing “our adversaries … a weakening America”, he says this has been seen “first in the botched withdrawal from Afghanistan. Then through an emboldened Russia waging war on Ukraine. And most recently in Israel, where Hamas launched an assault on the Israeli people with the support of Iran.”
Contacted for comment about Bridgewater’s management of Russian investments, McCormick’s spokesperson, Elizabeth Gregory, said: “Given that countless public and private investors across the western world – including the pensions of Pennsylvania firefighters and police officers that [state] treasurer Bob Casey oversaw [between 2005 and 2007] – held Russian debt prior to its invasion of Ukraine, there’s nothing noteworthy here.”
Nonetheless, news of McCormick’s old firm’s links to significant Russian funds may prompt awkward questions – as did previous reporting of connections between Bridgewater and China and Saudi Arabia.
Casey recently told a crowd in Harrisburg: “While I was fighting for union rights and fighting for working families in Pennsylvania, [McCormick] was making a lot of money investing in China. He not only invested in Chinese companies, he invested in companies that built the Chinese military.”
McCormick has said he has “been calling China a threat and adversary for more than 20 years. I’ve negotiated against the Chinese … as part of the national security team [as a deputy national security adviser under George W Bush] and I’m someone who’s had a vision for where we should take our relationship with China …
“As the CEO of a large investment firm we invested 3% of our … portfolio in China. Most Americans have 30% of the products in their house manufactured in China. So I’ve laid out a vision for decoupling from China to make sure we’re not dependent on China for things like pharmaceuticals and semiconductors.”
He has also testified about China in Congress, saying the US should “provide clarity to the private sector on which investments and financial relationships in China are permitted and which are not. Private sector leaders who often lack deep understanding of the national security threat posed by the [Chinese Communist party] and who may be conflicted by near-term opportunities for growth there cannot and should not be left to navigate these choices on their own.”
In the case of Saudi Arabia, in early 2020, amid international anger over the murder of the Washington Post journalist Jamal Khashoggi ordered by the crown prince, Mohammed bin Salman, it was reported that McCormick had urged that Bridgewater show loyalty to Riyadh.
Analysts voiced concern. Last year, Ben Freeman, of the Quincy Institute for Responsible Statecraft, told HuffPost: “The Saudi regime has made clear over and over again that it’s willing to use financial, economic, any sort of business incentive it has to garner influence over American politics.
“So whenever we hear of anybody running for office, I think it’s imperative to know: Do they have business interests in Saudi? Have the Saudis invested in their business here? What sort of interactions have they had with Saudi lobbying or [public relations] firms? It’ll give [voters] a sense of how potentially vulnerable this person might be to Saudi influence.”
Congress has attempted to block arms sales to Saudi Arabia, over its war in Yemen. Freeman said: “If you’re a sitting senator and you have the opportunity to vote on stopping an arms sale but you know you have financial ties in Saudi Arabia, there’s a clear conflict of interest there.”
McCormick did not comment to HuffPost. But if elected as a senator, he could be an influential voice on foreign policy. And earlier this year, after Congress overcame opposition from Trump to approve aid to Ukraine in its fight with Russia, McCormick said he would not have supported the deal.
TaNisha Cameron, a spokesperson for the Pennsylvania Democratic party, said then: “David McCormick sold himself out to America’s adversaries at the expense of Pennsylvanians. When it comes time to stand up for our allies against Russia and China, McCormick has shown once again that he is only out for himself and his bottom line.”
