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Drugs, arms, tobacco: British councils’ opaque, unsavory investments exposed

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Published time: June 12, 2015 18:31

Reuters / Valentyn Ogirenko

Concern is mounting over UK local authority investment practices, as scrutiny of council pension fund investments uncovers links to the arms trade, tobacco companies, and the global pharmaceutical industry.

From Glasgow to Hackney, UK local authorities are investing taxpayers’ hard earned cash in unethical sectors of the economy, in a bid to secure stable returns.

This trend shows no sign of abating, with Camden Council among the most recent local authorities to come under fire.

In early June, it emerged millions of pounds of Camden residents’ money is being funneled into the global arms trade, tobacco firms and companies that produce soft drinks. The revelation has angered campaigners who warn these investments contradict the local authority’s self-proclaimed ethical investment policy.

A Freedom of Information (FoI) request, tabled by the local media outlet Ham&High, revealed Camden Council has invested roughly £40 million ($62 million) in tobacco firms and £11 million ($17 million) in the confectionary sector.

It also uncovered Camden Council shares totaling more than £10 million ($15.5 million) in some of the biggest arms firms worldwide.

As it became clear Camden residents’ cash plays a role in the creation and sale of missiles and nuclear weapons technology, anger has grown among anti-arms trade campaigners.

Speaking to RT, Andrew Smith of Campaign Against Arms Trade said a number of local authorities in Britain invest public money in the industry.

Smith said the discrepancy between Camden Council’s investment rhetoric and practices on the ground, reeks of hypocrisy.

“If Camden really did have an ethical investment policy, then it wouldn’t be putting money into companies that arm human rights abusers and profit from conflict,” he said.

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RT contacted Camden Council to inquire about its investment practices relating to public sector pensions.

Camden Councilor Theo Blackwell, a Cabinet Member for Finance and Technology Policy, said the authority has owned shares in tobacco firms for “many years.”

“As a council we do not encourage people to use tobacco, and actively carry out work to discourage its use,” he said.

Blackwell made no direct reference to the council’s pensions fund investments in the arms trade or the confectionary sector.

He hinted, however, the council’s investments are guided by risk aversion in times of “economic uncertainty.”

Blackwell insisted Camden Council’s pension fund has a “legal responsibility” to local taxpayers to “secure the best investment returns available.”

He said the pension fund investments are conducted by “experts” within the financial sector, who operate to “maximize returns.” The framework that governs this process is laid out by the council, he added.

The Committee that manages Camden Council’s pension fund collaborates closely with other public sector pensions funds across the state. Through the Local Authorities Pension Fund Forum (LAPPF), Blackwell said Camden Council aims to bolster ordinary citizens’ interests in the face of profit-seeking firms.

The LAPPF has a total of 64 members boasting £165 billion ($255 billion) in assets. Camden Council said it is committed to ensuring this “financial clout” is employed to encourage corporate social responsibility.

“The pensions fund is managed with a responsibility to get the best return on investments and ensure there is enough money in the pot to fund pensions for current and former employees,” he said.

“Simply refusing to invest in certain sectors of the economy could lead to a serious shortfall in that fund that could see council tax diverted away from providing valuable services.”

CAAT’s Andrew Smith said Camden Council is but one of many local authorities investing in sectors deemed to be unethical.

“We believe public money should be invested for the public good, not in companies that profit from war,” he said.

“Camden, and other councils, should use their influence to set a positive precedent and send the message that the arms trade is an immoral and illegitimate business.”

Other UK bodies investing in the arms trade include Glasgow Council, the Scottish Government, a slew of Scottish public sector groups, Coventry Council, Oxford University, and Hackney Council.

Glasgow Council was aslo found to be investing local residents’ money in the pharmaceutical industry earlier this year.

Meanwhile, more than 430 Scottish public bodies invested in excess of £1.4 billion ($2.1 billion) in fossil fuels, tobacco and weapons in 2014, despite the dangers these industries pose to the environment and human health.

Ethical finance campaigner and researcher Joel Benjamin says virtually all local authorities across the UK are investing in tobacco, the arms trade and big pharmaceuticals.

Benjamin, who is carrying out investigative research into local authority financial activities, said this investment occurs “directly via shares or indirectly in pooled funds which track the FTSE100.”

He acknowledged, however, some exceptions occur if councils issue “specific instruction” to their fund manager not to invest in certain sectors.

Benjamin said the level of financial secrecy surrounding many of these investment flows makes it difficult for taxpayers to hold local authorities to account.

“Taxpayers have a right to know where their funds are being invested, alongside ordinary public workers whose retirement is being provided for by these funds,” he said.

Benjamin argued the funds should only be invested in firms and industries that fund members and taxpayers agree are “socially beneficial.”

He called for greater transparency in the sphere of local authority investments.

“In the Netherlands, all pooled fund investments must be publicly disclosed and the UK should do likewise,” he said.

The post Drugs, arms, tobacco: British councils’ opaque, unsavory investments exposed appeared first on Middle East Post.


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