Tuesday, February 13, 2007

More unethical investing

On Friday, we learned that the New Zealand Superannuation Fund invests in companies that manufacture nuclear weapons. But its worse, much worse. In this week's Listener, Matt Nippert details exactly what our tax money is being invested in - and the results are very dirty indeed. $230 million - almost 10% of the amount directly invested in stocks - is invested in companies whose actions are directly at odds with government policy. We invest in tobacco companies. We invest in casinos. We invest in arms companies and uranium mines. We invest in Big Oil. And we invest in genocide:

Holdings totalling $12.4 million in five companies blacklisted by Columbia University's Endowment Fund because of their role in propping up Sudan’s government. Sudan’s Janjaweed militia have committed genocide during a conflict that has led to more than 200,000 deaths in Darfur.

Yet another example of New Zealand being "a strong supporter of human rights", I suppose.

And if that's not enough, just to add insult to injury, we also invest in Halliburton. $10.7 million in the US's biggest military contractor in Iraq, which helped to build the American gulag in Guantanamo Bay, and which is part owned by US Vice President Dick Cheney. So, we're in business with the one of the chief architects of the Iraq war, and directly profiting from it and the US's global policy of rendition and indefinite detention without trial. Nice.

Some of these investments may be illegal. I'm not sure that investing in BAE and Northrop Grumman violates s5 (2) (b) of the New Zealand Nuclear Free Zone, Disarmament, and Arms Control Act 1987 as the Greens allege, but it certainly violates s58 (2) (c) of the New Zealand Superannuation and Retirement Income Act 2001, which requires the Fund to invest in such a way as to

[avoid] prejudice to New Zealand's reputation as a responsible member of the world community.

Many of the other investments fall under the same clause. "Responsible members of the world community" don't support genocide, cluster bombs, gross environmental degradation, or Iraq. But more generally, this is our taxes being invested in this, and I think most of us will be disgusted to learn what it is supporting. It's not good enough to just shrug our shoulders and call it a business decision, when our money is helping to build Guantanamo, or to keep the Sudanese regime in power, thereby aiding and abetting its campaign of genocide in Darfur. It's time we subjected our investments to some proper ethical standards. We should not be supporting our pensioners with blood money.


Ah, so it's unethical for the Cullen Fund to "invest in tobacco companies", but it's not unethical for Clark and Co. to sit around the Cabinet table bidding for hundreds of millions in tobacco excise tax (which happen to make up an overwhelming majority of the retail price, BTW) every year?

I smell something on Clark's breath after reading her faux outrage in today's Herald - and it's sure not uranium.

Posted by Craig Ranapia : 2/13/2007 07:56:00 AM

Good point, the Crown's revenue gained from alcohol and tobacco sales and what they do with it, is very ambiguous.

Posted by Unknown : 2/13/2007 08:14:00 AM


Well, that's a serious question I have about 'ethical investing'. As I/S points out, it is OUR taxes the Cullen Fund is playing with, so exactly whose ethics are in play here?

I'll have to track down the link, but I read a while back about a 'Christian' Fund, that does not invest in companies that (among other things) 'promote or facilitate immoral and un-Christian lifestyles' - including tobacco companies. The downside of that is that they also don't invest in firms that offer benefits to same-sex partners of employees. Now, Brian Tamiki would probably consider that highly ethical investment, I do not. Neither would Mr. Savant or Miss Clark, I suspect.

Posted by Craig Ranapia : 2/13/2007 08:51:00 AM

Why doesn't Cullen invest in NZ? I know he said that the effect all that money (sigh) would have on our markets is blah blah bad. But he can't complain about NZ Investors (high interest offshore cash blah blah, property inflationary spending blah blah) if he demonstrates EXACTLY the same behaviours himself.
Our capital market sucks, why is that?

Posted by Unknown : 2/13/2007 08:57:00 AM

If you invest it all in NZ you're screwed should the New Zealand market take a downturn. The same applies to concentrating it anywhere.

Posted by Anonymous : 2/13/2007 09:20:00 AM

I don't think I said concentrate it all in NZ. Mind you with the PM talking up AirNZ shares, the Crown held to ransom by a NZ software co, the Navman debacle, Telecom, and, and, I probably wouldn't invest here either.

Posted by Unknown : 2/13/2007 09:28:00 AM

MERC: 7.5 percent of the Super Fund is invested in New Zealand.

They own $9.7m in Rakon, and $33m in SkyCity, for example.

Matt Nippert

Posted by Anonymous : 2/13/2007 09:43:00 AM

Nice, arms (Rakon been spending up lately on more arms) and gambling. Also I have real concerns with share holding managers, for example, Auckland City Councillors with AKL Airport shares, how does that work?

Posted by Unknown : 2/13/2007 09:47:00 AM

MERC: Our capital market sucks, why is that?

Because people still remember 1987, when millions of dollars vapourised, and small shareholders were left holding the bag for large, wealthy insiders. It was just a little too much of a glimpse into the true nature of the market, and hence people choose to avoid it and put their money somewhere safer - like houses.

And it doesn't help that so many of those bemoaning the lack of small investor interest are so transparently trying to set up a classic inflationary situation of too much money chasing too few goods (known as a "boom" when it is applied to the stockmarket) - so they as existing owners can profit from it. It's just pump and dump, but on a broader scale.

Posted by Idiot/Savant : 2/13/2007 11:38:00 AM

Thanks for that, makes sense. Though NZ has apparently tightened The Rules, we are still Frontierland.
I prefer that at the start this Govt. was a little naive, (Helen talking up AirNZ shares, whoops), but I prefer that than the blatant robber baronism of some others...who shall remain nameless, but you know of whom I speak.

Posted by Unknown : 2/13/2007 12:10:00 PM

Are those New Zealanders serving in the military and the police armed only with pop-guns and water-pistols?

Posted by Anonymous : 2/15/2007 11:25:00 AM

I think it's fair to say that under Mark Wheldon our captial markets are steadily improving.

As for the NZ Super fund investing in this stuff: whoopdehoosily. They're doing a much more effective job with our money than most of the rest of the government and haven't used it to whitewash corrupt MPs or illegaoly fund election campaigns.

Posted by Anonymous : 2/15/2007 02:12:00 PM