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FEATURES - FLYING IN THE FACE OF FASHION

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Councils are coming under fire for having huge stakes in arms manufacturers, despite public opinion, says Paul Dono...
Councils are coming under fire for having huge stakes in arms manufacturers, despite public opinion, says Paul Donovan

A number of councils have been found to be among the largest investors in arms companies in the UK.

The Clean Investment Report published by the Campaign Against the Arms Trade shows Glasgow City Council, the City of Bradford MDC, Wolverhampton City Council, Tameside MBC and Camden LBC hold some of the largest shareholdings in arms companies.

Glasgow, via its Strathclyde Pension Fund, was found to hold 1,300,000 shares in BAE Systems, 209,500 shares in GKN and 390,000 shares in Rolls Royce. Further south Bradford has a holding of 4,728,196 shares in BAE Systems and 1,736,102 shares in GKN. Not to be outdone by their Yorkshire compatriots Tameside, via its Greater Manchester Pension Fund holds 4,276,510 shares in Rolls Royce, 3,828,978 shares in BAE Systems and 710,000 shares in GKN.

In the Midlands, Wolverhampton stands out with a portfolio comprising 5,137,000 BAE Systems shares, 1,677, 120 Rolls Royce shares and 1,243,999 GKN shares.

Norfolk CC holds 1,429, 122 shares in BAE Systems and 520,000 in GKN while neighbouring Essex CC retains a holding of 1,823, 323 shares in Rolls Royce and 571,743 shares in BAE Systems.

In the capital, Camden LBC holds 1,072,607 shares in Rolls Royce and 315,050 shares in BAE Systems.

The authors of the report were surprised to find local authorities investing so heavily in arms companies. 'It is hypocritical for organisations who purport to provide for welfare and personal development at home to invest in companies that deny these opportunities to those living abroad,' says Richard Bingley, press officer at CAAT.

He went on to illustrate the point with reference to BAE Systems recent record of selling£1.5bn worth of Hawk trainer aircraft and Gripen fighter jets to South Africa. 'They sell these planes to a country that is not at war with anyone, but has 4.5 million people suffering with HIV aids - is this really the sort of business that councils should be investing in?' says Mr Bingley. The company is presently seeking to sell£1bn of Hawk aircraft to India.

Among the other companies quoted Rolls Royce provides aero-engine facilities to 135 different countries including human rights abusers such as Turkey, China, Indonesia and Saudi Arabia.

Alvis produces armoured vehicles including Scorpions, Stormers and Saladins which have been sold to Indonesia, a major human rights violator.

Barry Coates, director of the campaigning non-governmental organisation the World Development Movement, believes councils are doing a disservice to the public and their pension fund members by adopting investment strategies that are neither ethically or economically sound. 'There are increasing numbers

of the public who do not want to see their money going into arms and other unethical industries. Councils

should be looking not to invest in things that are going to kill people or adversly effect the environment,' says Mr Coates.

Critics point to a correlation that sees arms

companies fuelling conflicts around the world that then create refugees who come to this country and are dispersed among the local authority areas. Latest Home Office figures show some 5,000 asylum seekers dispersed to Scotland, 2,600 to Manchester, 1,630 to Bradford and 1,270 to Wolverhampton up to the end of last year.

Amnesty International confirms the link exists. 'Among a number of recent examples of the 'globalisation effect' of arms and asylum, has been the licensed production of British equipment in Turkey, a country that regularly 'supplies' asylum-seekers to the UK,' says a spokesman for Amnesty International. 'Politicians in the UK repeatedly fail to point out either that Britain accepts only a tiny fraction of the world's refugees or that refugees might actually be fleeing dangers that include human rights abuses carried out with equipment supplied (or licensed) by Britain.'

Glasgow strongly defended its decision to invest in the arms trade. 'Most, if not all, of the companies listed do business in areas other than the arms trade. It is almost impossible to pick and choose, we have to invest in FTSE 100 companies to guarantee good returns. There is little leeway in the companies we can invest in,' says a spokesman for Glasgow.

Citing a Rolls Royce factory in Glasgow, the council further justifies their investment decisions on the basis of supporting British industry. 'On the contrary it would be unethical for us not to invest in companies that are investing in thousands of British people, many living in our own area,' says the spokesman.

Peter Morris, head of pensions at the Greater Manchester Pension Fund feels constructive

engagement is a better solution. 'I recognise that arms exporting companies are particularly sensitive and the fund's ethics and audit working group have considered this specific issue at some length. The fund has received

a report of the arms trade produced by PIRC - a specialist adviser on ethical issues and investment.

This was also considered by the working group and it

was not supportive of a policy of disinvestment,' says

Mr Morris.

So while the councils remain heavily committed in terms of their investments in the arms industry there does appear to be an active evaluation going on as to the justifications for such a policy.

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