Whose side are you on? It's not too hard for finance directors and pension trustees to find out where their company's fund is being invested, writes Cathy Hayward--but they might not like what they discover.
| Author | Hayward, Cathy |
| Position | City |
The war on terrorism, from Afghanistan to Iraq, is being funded by UK taxpayers via Gordon Brown's war chest. But, while they are paying for the coalition war effort, are UK firms also indirectly funding terrorists?
Despite the best efforts of the terrorist finance team of the National Criminal Intelligence Service and other groups, much terrorist funding still comes through legitimate channels. A report published late last year by the Diamonds and Human Security Project revealed links between Sierra Leone's diamond industry, and global terrorist networks including Hezbollah, Amal and Al-Qaeda. "There is tangible proof of contacts between some Lebanese diamond dealers and Middle Eastern terrorists on the US most-wanted list," it stated.
Meanwhile, the Ukrainian government has been charged with illegally supplying Kolchuga radar systems to Iraq. And during the Gulf war, British firm Wallop Industries was accused of supplying the Iraqi regime with rocket-propelled grenades. Oil company Halliburton, General Electric and Conoco Phillips have all been questioned about their operations in Iran and Syria.
Do finance directors and pension fund trustees know if their corporate pension schemes are indirectly investing in countries and firms that sponsor terrorism? The answer is probably no. Few investment and pension funds pay attention to ethical criteria, let alone issues such as terrorism, says Carol Adams, professor of accounting at Monash University in Australia.
But there are exceptions: two New York City pension funds (for the city police and the firefighters), have demanded that Halliburton, General Electric and Conoco Phillips review their operations in Iran and Syria. William Thompson, the finance director who manages the $31 billion pension funds, said: "We believe their use of offshore subsidiaries to establish operations with countries that sponsor terrorism violates the spirit, if not the letter, of the law".
Thompson intends to put the matter to a shareholder vote, arguing that police and firefighters do not want to invest in a company that has operations in a country that the US government accuses of backing terrorism.
It is not difficult for a finance director or pension fund trustee to find out where their fund is being invested, according to Feargus Mitchell, partner, human capital advisory services, at Deloitte and Touche. "Every UK pension fund has a statement of investment principles, and that includes reference to social...
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