University shares in arms company exposes impotent ethcial policy
YORK UNIVERSITY’S ethical policy has been thrown into serious doubt by the discovery that the University has a substantial number of shares in the arms company BAE systems.
The information obtained through the 1998 Freedom of Information Act shows that York has 115,000 direct shares in BAE Systems, as well as further shares in the company held through investment funds managed externally.
BAE Systems is the result of the 1999 merger between British Aerospace plc and the American electronics company Marconi. It is now the fourth largest arms exporter in the world, and a substantial number of its products are produced in the UK.
Since its creation in 1999 BAE has been linked to a number of scandals and unsettling business practices, as reported by the Guardian, Financial Times and the Campaign Against Arms Trade group (CAAT). CAAT’s spokesperson Mike Lewis revealed: “80% of BAE Systems’ products are exported abroad, where it seeks new markets experiencing military build-ups or recently emerging from arms embargoes. The results are devastatingly clear: from the BAE Hawk jets sold to Indonesia and reported in use in a brutal 2003 attack on Aceh that killed at least 2000 (mainly civilian) people; to the sale of head-up displays for F16s destined for Israel, despite international condemnation of Israeli military violence against civilians.
“Add to this recent press allegations that the company paid £1m to Chilean dictator Augusto Pinochet, and an ongoing Serious Fraud Office investigation into allegations (denied by BAE) that they operated a £60m ’slush fund’ for Saudi Arabian officials involved in a giant UK-Saudi arms deal, which led to the arrest of a former BAE executive only last month.”
In its own website BAE describes itself as “innovating for a safer world”, paraphrasing President Bush’s words on the ‘war of terror’ and therefore identifying itself as politically compromised. By having shares in BAE York is indirectly profiting from war.
Through the People and Planet Society, Nouse asked York to comment on its shares in BAE. The University Payroll and Pensions manager, Bill Hemmingway, admitted that the situation was problematic and that the ethical investment policy had left the “trustees in a catch 22 situation”.
“They [the University trustees] felt that their first duty was to the Scheme members and they would not be fulfiling their duties if they did not secure the best investment possible for the fund. Had they decided not to invest in the above shares they could have been accused of misadministration,” he added.
It is a turbulent time for university funding, as this year’s freshers will be only too aware of with the introduction of top up fees. It is therefore understandable that York University should want to invest in a reliably profitable company, and they are not alone. Other respectable institutions such as Birmingham University and Cancer Research UK also invest in BAE.
However, there are some British universities who choose to invest ethically, such as UEA and Edinburgh. Beth Stewart from People and Planet argues that this is a credible alternative: “Independent studies from organisations such as the Ethical Investment Research Service have already shown that ethically led investment agreements are no less profitable than their more dubious equivalents.”
Ironically it was a report co-published by York University in 2001, which concluded that Britain’s economy would not suffer if its UK arms companies no longer exported abroad. The report, co-produced by the University’s Center for Defense Economics, further concluded that “the balance of arguments about defense exports should depend mainly on non-economic arguments”.
