Montana Attorney General Austin Knudsen filed a lawsuit against the National Association of Attorneys General after the organization invested taxpayer dollars in ESG interests.
NAAG has come under heavy scrutiny from some Republican attorneys general, as they claim the organization has a heavy liberal bias, and documents have shown the group has invested taxpayer money in environmental, social, and governance causes.
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Knudsen is suing NAAG to recover taxpayer funds he says were invested in violation of Montana state law, and is seeking the appointment of a special master to audit the group to determine "assets under NAAG’s management that are Montana’s public funds."
“Montanans deserve a full accounting of their money being managed by NAAG," Knudsen said in a statement to the Washington Examiner. "For the last year, I’ve been raising concerns over NAAG’s financial mismanagement, but they have been unable to account for Montana’s public funds and are not following state law. As promised, I’m taking them to court to hold them accountable to Montanans.”
The lawsuit states Montana's constitution requires "strict accountability" over public funds, the state legislature must provide for an investment program for public funds, and that NAAG, as a custodian of some of those funds, must comply with Montana state law in how those funds are invested.
NAAG told the state the funds it oversees for Montana belong to the state, according to the lawsuit, but Montana does not have oversight into how those funds are invested.
"It is encouraging to see public officials like AG Knudsen taking legal action to hold NAAG accountable," Alliance For Consumers Executive Director O.H. Skinner told the Washington Examiner. "For far too long consumer protection cases have been used for large paydays for trial lawyers and organizations like NAAG, who are supporting left-wing causes and investing in ESG."
Knudsen's lawsuit comes after he delivered NAAG an ultimatum in February, giving the group 90 days to return Montana's funds or face a lawsuit.
Citing the 2022 loss of $37 million in public funds, spending money sending attorneys general and their families on European trips, and the revelation that the group invests public money into ESG interests, Knudsen's letter to NAAG said, "I have come to the conclusion that NAAG can no longer be trusted to hold assets on behalf of Montana."
"There is no doubt in my mind now that NAAG is an unreliable and improper financial steward, and that Montana's share of the money at NAAG needs to come home," the letter continued. "Return the money in your accounts that belongs to Montana within 90 days or I will go to court and sue to ensure that the money is safely and legally brought back within the four corners of Montana law."
NAAG's ESG investments were revealed after Kansas Attorney General Kris Kobach, who is a member of the group's executive committee, sent a letter demanding answers on its involvement with ESG-promoting companies like BlackRock.
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"Make no mistake, NAAG is exactly what’s wrong with government and consumer protection. Stashing cash the way NAAG has is why consumers think consumer protection isn’t working," Skinner said. "These consumer protection funds rightfully belong to the states and consumers they represent. This lawsuit is part of a long needed reform, and this push should not stop until NAAG releases their hold on this money."
Knudsen and other Republican attorneys general have severed ties with NAAG. Alabama Attorney General Steve Marshall pulled the Yellowhammer State's membership in 2021, while Texas Attorney General Ken Paxton, who has since been impeached and suspended for unrelated issues, left in 2022. Former Missouri Attorney General Eric Schmitt and former Arizona Attorney General Mark Brnovich also left NAAG in 2022.