Pension funds in Scotland have £420 million worth of investments in arms companies including nearly £12m in a US arms giant in Fife linked to allegations of war crimes in Yemen.
The arms firms backed by 11 council pension funds include Northrop Grumman which trains the Saudi military, Honeywell which makes Reaper Drones and Lockheed Martin which sells arms to Bahrain, Egypt and Saudi Arabia, among other nations.
These two funds also support Raytheon, a US multinational with a factory in Glenrothes at the centre of controversy for making laser guided systems for Paveway IV bombs used in Gaza and Yemen. The above two funds have £11.6m jointly invested in Raytheon.
Critics of the arms trade have called on Scots pension funds to divest from the arms trade, accusing councils of arming dictatorships and profiting from war and human suffering.
LPF has £168m invested in arms firms. These include investments worth £8m in Raytheon and £79m in Lockheed Martin, the world’s largest arms company which sells arms to Saudi Arabia, Israel, Bahrain and Egypt.
LPF has £26m invested in Northrop Grumman which is involved with nuclear weapons and worked on training programmes with Saudi Arabia.
"Local authorities all across Scotland are investing millions of pounds in companies that have armed dictatorships and fuelled the terrible destruction of Yemen." Andrew Smith, Campaign Against Arms Trade.
Fife Council has £1.8m invested in Honeywell, which produces systems for tanks and drones, while Dundee City Council has £27.4m invested in total. That sum includes £4.1m in Airbus and £3.6m in BAE Systems.
Andrew Smith of Campaign Against Arms Trade said: “Local authorities all across Scotland are investing millions of pounds in companies that have armed dictatorships and fuelled the terrible destruction of Yemen. Thousands are being killed, while companies like Raytheon are lining their pockets.
He added that Scotland’s councils should “use their influence to set a positive precedent” and send the message that the arms trade is an “immoral and illegitimate business”.
“Businesses in the UK’s internationally successful defence and security sectors make a vital contribution to keeping our country safe, as well as delivering more than 240,000 jobs and £10bn exports." ADS, an organisation supporting the UK's arms sector.
Green MSP John Finnie echoed CAAT’s concerns and said people in Scotland will be “shocked and appalled to learn about some of the horrendous industries that their pension money is being invested in”.
He added: “I believe most people, especially those with a chosen a career in public service, don’t want to be bankrolling the arms industry.
“These 11 pension funds must do the right thing and change course for an ethical investment policy that takes money out of the weapons industry, as well as fossil fuels giants and tobacco companies, and puts it into socially useful activities like clean energy and social housing instead.
“There can hardly be a more selfish act than profiting from human suffering.”
In reply, a spokesperson for LPF directed The Ferret to a statement on its website regarding responsible investment.
It says that Lothian Pension Fund is a multi-employer pension scheme, with a fiduciary duty to its members and employers, so it does not disinvest from companies for purely non-financial reasons, “not least because this could lead to legal challenge”.
The statement continues: “The Pensions Committee and Pension Board do, however, take their stewardship responsibilities seriously and they discuss them regularly. The Fund believes that its policy on responsible investment, which involves engaging with companies, is preferable to a policy of divestment.
“This is because engagement, particularly in collaboration with other asset owners, can lead to positive change in corporate behaviour and strategy.
LPF believes that divestment is less ‘responsible’ in the sense that if all responsible investors divest their shares, then there will be no-one challenging boards on their strategies.
A spokesperson for ADS, a body that supports the UK’s arms industry, said that businesses in the UK’s defence and security sectors make a “vital contribution to keeping our country safe”, as well as delivering more than 240,000 jobs and £10bn exports.
ADS added: “The UK’s defence industry works within an international framework of treaties, and our export control regime is one of the most robust and transparent in the world.”
There has been strong criticism of Britain’s role in Yemen’s war and its backing for a Saudi-led coalition fighting Houthi rebels backed by Iran.
The conflict has left more than 8000 people dead and there have been scores of allegations of war crimes by the Royal Saudi Air Force, accused of targeting civilians.
As a result of intensive lobbying by human rights groups, the UN last week established an expert body to investigate war crimes allegations in Yemen, a move that Amnesty International described as “momentous”.
The resolution was passed by the UN Human Rights Council after several years of lobbying by various parties.
In a new development on Yemen this week, it emerged that the Saudi Arabia-led Coalition in Yemen has been included in the UN’s annual ‘List of Shame’ of child killers.
The text of a draft UN report said the coalition’s actions have resulted in 683 child casualties during 2016, and accused the Saudis of carrying out 38 attacks on schools and hospitals.
Yemeni government forces, which the coalition is supporting, and the rebel Houthi movement are also on the list.
The coalition has denied intentionally targeting civilians or infrastructure. More than 8,530 people, 60 per cent of them civilians, have been killed and 48,800 injured in airstrikes and fighting on the ground since March 2015, according to the UN.
Save the Children welcomed the UN Secretary-General Antonio Guterres’ decision to add the Saudi Arabia-led Coalition in Yemen to the annual list of parties that commit grave violations against children in conflict.
Debra Jones, Director and United Nations Representative for Save the Children, said: “Every party fighting in Yemen has failed to respect international law, and continues to do so. Save the Children has seen no sign of effective measures to protect children from harm.
“Even as Yemen faces famine and disease, they continue to be bombed in their homes, schools and are forced to fight on the front lines.
“This report identifies the darkest crimes against children in conflict. All parties in Yemen must sit up and take notice and take action, as must those countries that are supporting or arming them. The world must make sure the violations end.”
War Child UK also commented on Saudi Arabia being blacklisted and said the UK Government should cease arms sales to its ally.
Rob Williams, CEO of children’s charity War Child UK, said: “Now that the UN Secretary General has blacklisted the Saudi-led coalition the UK government must do the right thing and suspend arms sales to Saudi Arabia immediately, and not back away from its obligations to children because of threats or bullying from the Saudis.”
Raytheon was contacted for a comment but had not replied at time of writing. Neither had the SPFO.