What’s a good investment? It seems a simple enough question, really. But quite apart from the financial uncertainties associated with investments these days; there are a couple of other issues that need careful consideration before handing over your dough.
The recent avalanche of finance company and bank crashes reminds us of another consideration which in simpler times never crossed our minds; the possibility that a bank can go belly-up.
Add to that the increasing numbers of that (now) none too exclusive club who have been dipping their little pinkies into the piggy banks that held our money, and you have enough worries to consider slitting open the old Sealy Posturepedic. It’s times like this I don’t feel so bothered about not having anything to invest.
But this week my attention has been drawn to yet another hazard of investing thanks to the vigilance of Greens co-leader Russel Norman. I guess I always knew there was a chance the company you entrusted your investments to might invest those funds in something you didn’t approve of. It stands to reason that if you invest with a bank or finance company you are hardly likely to know about every investment they make. Hopefully they disclose to you where they have stashed your cash, but they are unlikely to divulge every investment they make in the normal course of events.
But what Russel has discovered is very unsettling. He has found the New Zealand Superannuation Fund (I thought the cupboard was bare) has purchased shares in a company based in Mumbai called Larsen & Toubro. That in itself might not sound too worrying, but L&T is a multi-billion dollar company which according to its website “is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector.”
Now that sounds quite promising, but of course a closer inspection of what this PR means reveals they construct equipment for use in the petro-chemical industry, ammonia based fertilisers, nuclear power plants, and most important of all, they are involved in the death trade. That is to say they also manufacture weapons systems and are apparently currently working on a contract to supply nuclear submarines to the Indian Government.
Now call me a sandal wearing old hippie if you like, but I would just be appalled to think any of my money was helping to bolster the petro-chemical industry or the chemical fertiliser industry, and I’d really lose the plot if I found my money was being directly used to kill people or at least develop the means for doing so.
I realise that as a mug taxpayer (or constitutional hold-up victim, if you like Graham), that some of my tax money is already going towards such causes albeit not nuclear ones. However, for the time being, I am neither able to definitely confirm or deny this nor prevent my money being taken in the first place.
However with an investment that would normally be a different situation. I could choose to not invest with companies that do that sort of thing, always providing I can trust their disclosure information. The situation with the New Zealand Super Fund, is a hybrid of the two; I can’t stop the bastards taking my money, but I am now acutely aware of how they are investing it and I don’t like it one little bit.
Hopefully the Greens will be able to shame the NZSF and JiangQi’s ragtag mob into pulling out all funds invested with Larsen & Toubro. They could start with pointing out the inconsistency between the NZSF’s obligations as laid out in S58 (2)(c) of The New Zealand Superannuation and Retirement Act 2001 and repeated in 1.1(c) of their Statement of Responsible Investment Policies, Standards and Procedures dated 19 October 2009.
The Act states: The Guardians must invest the Fund on a prudent, commercial basis and, in doing so, must manage and administer the Fund in a manner consistent with - avoiding prejudice to New Zealand’s reputation as a responsible member of the world community.
Now given our nuke free status and the fact we have made much of our opposition to nuclear power and especially nuclear weaponry, I’d say providing financial investment to a company who is making nuclear subs is definitely prejudicial to our reputation as a responsible member of the world community. (Are there any of those left?)
So we need to see the heat go on the NZSF to do the right thing and after that the Government can do the right thing by firing the idiot directors who obviously thought this was a good idea.