UCL HOLDS nearly £1.6 million in the defence industry, meaning our university is top of the list of UK higher education institutions investing in arms. This was discovered when Campaign Against the Arms Trade (CAAT), under the Freedom of Information Act, asked various universities about their investments in arms companies. UCL holds investments in two major UK arms manufacturers, Cobham Plc and Smiths Group. As well as a large number of ethically questionable shares, UCL also hold a stake in the London University Superannuation Agreements. This is a pension scheme for university staff which has so far invested £1 million in BAE systems, a company well known for supplying military hardware to various buyers around the world.
Dirty Dealers
So what of these companies? Although Cobham Plc may have civilian sector activities, the company originally made its name pioneering mid-air refuelling technology used in long-range bombing raids. Now Cobham make a large profit producing weapons release systems for air-to-ground missiles. Up until last month, the Smiths Group produced a wide range of components for military aircraft, including the trigger systems and gun turret components which among other things helped Israeli Apache helicopter crews accurately target errant Palestinians and Lebanese in recent conflicts. Smiths are now in the process of selling their aerospace division to General Electric and will soon no longer be directly involved in arms dealing. This said; the two companies are still planning a joint venture for the future. The most famous of the three, BAE produces everything from warships and nuclear-capable submarines to armoured vehicles and tanks. One of BAE’s pet projects is the Eurofighter Typhoon. The which although sounding like a slogan for a Gillette razor, might just be referring to the hit count it has achieved on missions. Clearly then all these companies have had serious involvement in the arms and defence industries, yet why does UCL continue to invest in them?
This may seem counterintuitive, but it makes sense when you look at the facts. UCL lacks any form of ethical guidelines that prohibit investment in arms manufacturers. The only companies deemed beyond the pale are those directly involved in the tobacco industry and this is partly due to the fact that Cancer Research UK would probably review their funding of any university with such links. Otherwise the task is trusted to Newton Investment Managers Ltd, a company responsible for picking out stocks which fit the ethical policy of the client concerned. Although Newton uses EIRIS (Ethical Investment Research Service) for data on any questionable ventures, this doesn’t nies. When the whole matter of UCL being a bedfellow of arms companies came to a head, several staff posed enquiries to Malcolm ‘Slasher’ Grant. Grant then stated in his Provost’s Newsletter that EIRIS advised UCL “that Cobham and Smiths Group are ethically acceptable investments.” This led EIRIS to write to Grant complaining that the he was being “inaccurate and misleading” – they were obviously too polite to use the phrase “talking bullshit”. As if this wasn’t embarassing enough, Grant then had to sit through the humiliation of the whole thing being made public via London Student. The reality is that EIRIS simply provide data and do not make the decisions as to which investments might be ethically acceptable. So despite using this resource, UCL still lacks a full ethical screening policy with regards to arms companies.
So should UCL really be concerned over the activities of the companies that make up its share portfolio? The answer is reveals just how ethically-challenged they are. BAE Systems have been only too happy to sell arms to Turkey and Zimbabwe, both of which have very dubious human rights records, and also sells arms to corrupt governments and poverty-stricken countries. Some of these countries are unable to fulfil the basic needs of their population and so why exactly they need a multimillion pound arms deal remains to be seen. A notable example saw BAE selling nearly £4 billion of arms to South Africa at a time when the South African government was refusing to pay for anti-retroviral drugs for millions of AIDS sufferers. Worse still, until recently, the company was being investigated by the Serious Fraud Office after allegations that a £60 million slush fund was used to bribe Saudi officials. This eventually led to the acceptance of a £43 billion deal, whereby the Saudis would receive arms from BAE in exchange for oil supplied to the British government. However, it didn’t take long for the government to swept the whole inconvenient mess under the carpet. Clearly it was in the interest of a certain few for BAE remain unpunished, and to be able to continue to make a killing in the arms industry. It would seem that, like UCL, BAE have no problems throwing morals out the window if it means more profits.
Naturally, profit is another reason for College’s continued investment in the arms trade. UCL has stated that in the last ten years, the aerospace and defence sector has performed well and yielded a good return. Perhaps, but this hasn’t always been the case. At the start of the 1990s, the fall of the Soviet Union meant that an investment in a military business could prove less profitable than more ethical choices. Up until the start of this decade, the Charities’ Avoidance Index, a set of stocks excluding amongst other things the defence sector actually proved to be a safer yet equally lucrative choice. The recent rise in returns from arms companies is quite blatantly due to the use of their wares in the increasing number of conflicts during the last five years. Cobham Plc makes nearly £50 million each year from the sale of military equipment and services, with Smiths Group making a similar figure despite branching out into other areas. War is great for business, and UCL has reaped the rewards.
Of course, through investing in Cobham and Smiths, UCL also stands to gain more than just profit. In the classic back-scratching manner, UCL’s investments are rewarded with funding and other help. Smiths Group pays the £150,000 annual cost of the Portex ® Chair of Anaesthesia and Critical Care at UCL, which also has the added bonus of improving the company’s public image.
Interestingly, Monty Mythen, the first professor to hold the chair, also sits on an advisory panel at Smiths – it is obviously a reflection on modern society that even an anaesthesiologist has to hold onto two jobs these days. He’s not the only staff member with arms trade links; Keith Robinson, (see CG Issue 7) held a directors position at Lockheed Martin for six years and is still Professor of Integrated Systems at UCL. Arms companies have also funded courses at UCL; the MSc in Systems Engineering has had help from BAE systems, who are also involved with research groups within the Department of Electrical and Electronic Engineering. How-
Clockwise from bottom left: manufactured by BAE Eurofighter Typhoon, Challenger II Tank, Hellfire missiles - components manufactured by Cobhams. BAE designed gun emplacements ever UCL has also collaborated with QinetiQ for a research project on carbon fibre mirrors despite the fact UCL holds no investment in QinetiQ. So do universities actually have to invest in a company in order to receive research help?
UCL is very reluctant when it comes to the idea of disinvesting its shares. College Finance Committee first faced the problem of disclosing UCL’s arms investments in January 2006, but then passed the issue off to College Council. After a debate in March and another meeting in June, the Council concluded that, as a charity, it was the duty of UCL Investments Ltd to maximise profits instead of taking action on moral grounds. The decision seemingly ignored the fact that the Charities Commission actually allows charities to avoid investments that would conflict with the charity’s aims or alienate supporters and beneficiaries, while also allowing the charity to alter their investments to accommodate those who think that the investments lack ethical or moral integrity. The only way UCL can avoid this irksome loophole is to assume that disinvesting would lead to ‘a risk of significant financial detriment’. This argument holds no water however as the shares in question make up only 1.7% of UCL’s total investments and with the continued existence of the rest of the stock market, there are plenty of alternatives. In fact, UCL risks losing out because of their arms shares, they are simply high risk investments. Furthermore, several UCL alumni have made their dissatisfaction with this situation clear and are considering withdrawing their support for the university.
Even senior members of College have voiced concerns over whether arms investment was at odds with UCL’s liberal culture and that investment in controversial companies might have a potential impact on the university’s public image. UCL is therefore quite aware of the potential consequences of their investments but Grant and Co seem happy to sit this through and hope all the fuss dies down. It is left up to the students and staff at UCL to point out that such unethical investments are wholly at odds with the principles of UCL and are not made any more acceptable by the fact that the university needs more funding, which could be obtained through more ethical means anyway. As Symon Hill of the Campaign Against the Arms Trade puts it, “It is time for Malcolm Grant to listen to his students and staff and to cut UCL’s links with arms companies.”