COUNCIL pension funds have invested millions of pounds in Russian firms that are the subject of sanctions, it can be revealed.

Strathclyde Pension Fund (SPF), which has over 200,000 members, has a £27 million stake in Lukoil – an energy giant targeted by the Obama administration.

The Lothians equivalent has a £1m-plus investment in Sberbank, a Moscow-headquartered bank punished by the European Union.

Edinburgh Western Liberal Democrat MSP Alex Cole-Hamilton said: "People whose pensions are dependent on these funds may well be surprised that this is where their money has ended up. The funds should look again at whether these investments are in their best interests."

The US and EU enforced a series of sanctions against Russia following the illegal annexation of Crimea in 2014. EU nationals and companies may no longer buy or sell new bonds, equity or similar financial instruments with a maturity exceeding 30 days that were issued by five Russian banks, including Sberbank. Three energy companies as well as a trio of defence firms and their subsidiaries are also the subject of restrictions.

The US and EU sanctions are not identical – some of the firms that fall under the American system are not on the European list – but there is a strong overlap.

Public sector pension funds, which are responsible for the retirement incomes of hundreds of thousands of individuals every year, are under the spotlight over their financial links to sanctioned Russian firms.

SPF, valued at around £20bn, is one of the largest UK pension funds and is in the top fifty across Europe. It is administered by Glasgow City Council.

According to the SPF list of investments, the fund had £31.6m worth of stock in Lukoil – the second-largest company in Russia after Gazprom – as of September last year.

The oil giant is part of the US sanctions regime and the SPF stake is currently valued at close to £27m. The fund has had a stake in Lukoil since 2013.

Similarly, Lothian Pension Fund, which covers 100 employers and has over 65,000 members, has a £1.1m stake in state-owned Sberbank, which is the largest commercial bank in Russia. It is on the EU sanctions list.

As of July last year Edinburgh University also had a holding in Sberbank, although the value of the investment is not listed.

The stakes do not breach sanctions, but critics have raised concerns about the holdings in light of Russia’s behaviour.

Green MSP John Finnie MSP, a longstanding campaigner on pension fund divestment, said: "Whilst we all might have differing views about what public pension funds shouldn’t be invested in – arms and fossil fuel industries or specific countries with atrocious human rights records such as Russia – I am sure that, with open minds, we could all agree that at least some of the considerable monies those funds hold could be positively invested in things such as housing and renewables, both of which would bring a return to the investor and provide wider community benefit."

A spokesman for SPF said: “The 2014 sanctions target the whole energy sector, in response to action taken at state-level. Lukoil is a private company with significant operations in Europe and the US.”

A spokesperson for LPF said: “The Funds have a holding in Sberbank which was £1,110,340 at 31 December 2017. These shares were issued prior to the sanctions being imposed and therefore are not subject to the sanctions.”