05405
August 5, 2005   

5 corporations selected for talks
about ties to Mideast violence

Church assessing ethics of investments

by Toya Richards Hill

     After several hours of discussion on Aug. 5, the denomination’s Mission Responsibility Through Investment (MRTI) committee unanimously selected the five companies and agreed to begin discussions with them about their involvement in the conflict.

     “I think that we are going to have to be persistent and follow the instructions that we have from the General Assembly … and pray that the corporations will be responsive,” said Carol Hylkema, the MRTI committee chair.

     She said the group’s goal is “to make changes that will work toward peace and justice in Israel and Palestine.”

     The committee is charged by the 216th General Assembly to begin a process of phased selective divestment. MRTI established a set of criteria for evaluating the corporations: support and maintenance of the Israeli occupation; establishment, expansion or maintenance of Israeli settlements; support or facilitation of violent acts by either Israelis or Palestinians against innocent civilians; and support or facilitation of the construction of the so-called “separation barrier.”

     Other U.S. churches have taken similar steps, including the Episcopal Church, the United Church of Christ and two conferences within the United Methodist Church  — assessing their investments in firms that profit from involvement in the Israeli-Palestinian conflict.

     Internationally, the World Council of Churches (WCC) affirmed the action of the PC(USA) and commended it to its 340 member communions. The worldwide Anglican Consultative Council blessed the action of  the U.S. Episcopal Church to assess its corporate investments, and urged its member churches to do likewise.

    The MRTI committee, as part of its regularly scheduled Aug. 4-6 meeting, approached its task cautiously, voting on the selection without knowing the names of the corporations beforehand — a move intended to prevent disclosure of the names of companies ultimately not included.

     “We didn’t want the company’s names bandied about” unnecessarily, Hylkema said.

     The PC(USA) Board of Pensions and Foundation, through trusts, oversee the denomination’s investments, including those in the five chosen companies, all of which have involvements in Israel and Palestine that are substantial or strategic in nature.

     The investment portfolios of the two PC(USA) entities total more than $7 billion.

     The committee's next step is to engage officials of the chosen corporations in talks in an effort to get them to change their business practices. If that fails, MRTI may ask the General Assembly Council (GAC) to authorize the filing of shareholder resolutions to pressure the corporations.

     The final option is for the MRTI committee to request that the GAC ask the General Assembly to put corporations on a divestment list. The Assembly would then have the option of placing the corporations on such a list and asking the Board of Pensions and the Foundation to comply.

     However, Bill Somplatsky-Jarman, the committee’s chief PC(USA) staffer and lead researcher, made it clear that the committee won't necessarily recommend divestment from any company by next year.

     “We do have to have a report on the status of engagement” by 2006, he said, adding: “It’s not a done deal, that you have to have a divestment recommendation by 2006.”

     The process needs to “work its way through,” Somplatsky-Jarman said.

     There has been a lot of controversy over the 2004 GA’s action. Jewish groups have been sharply critical of the decision, and some PC(USA) members have expressed discontent. Some apparently intend to present counter-resolutions when the Assembly meets next year in Birmingham, AL.

     Meanwhile, the MRTI committee will approach the companies:

     Caterpillar, based in Peoria, IL. As of June 30, these shares in the company were held by PC(USA) entities: Pension Trust for retired church workers (Board of Pensions) — 68,100; Presbyterian Foundation/New Covenant Growth Funds — 37,500.

     Caterpillar is a manufacturer of heavy equipment used by the Israeli military and privately owned companies under contract with the Israeli government. The equipment has been used in the demolition of Palestinian homes; the uprooting of olive trees; construction of roads and infrastructure in the occupied territories for use only by Israeli settlers; and support of military incursions through widening roads for Israeli tanks and armored vehicles. The MRTI committee has had periodic contact with Caterpillar over the past 20 years on a variety of issues.

     Citigroup, based in New York City. Shares held by PC(USA) entities as of June 30: Pension Trust for retired church workers (Board of Pensions) — 481,322; Presbyterian Foundation/New Covenant Growth Funds — 304,575

     Citigroup is a large international bank that, according to a Wall Street Journal story of April 20, 2005, had “moved substantial sums for the same suspected terrorists who used Arab Bank.” This involved transfers of funds to Arab Bank from charities in the United States, Saudi Arabia, Kuwait and elsewhere, charities later seen to be fronts that helped funnel money to terrorist organizations.  Some of the money reportedly was paid to the families of Palestinian suicide bombers. The bank’s defense is that it “has ‘industry-leading’ controls against money laundering.” The committee has had regular contact with Citigroup over the past 20 years on a variety of issues.

     ITT Industries, based in White Plains, NY. Shares held by PC(USA) entities as of June 30: Pension Trust for retired church workers (Board of Pensions) — 20,080.

     ITT is a diversified manufacturer that supplies the Israeli military with communications, electronic and night-vision equipment used in the occupied territories. The committee has had little contact with ITT Industries in the past 20 years.

     Motorola, based in Schaumburg, IL. Shares held by PC(USA) entities as of June 30: Pension Trust for retired church workers (Board of Pensions) — 428,500; Presbyterian Foundation/New Covenant Growth Funds — 215,900.

     Motorola is a large electronics and telecommunications company with a wholly-owned subsidiary in Israel that has extensive ties to the Israeli military. For example, it recently won a contract to develop encrypted wireless communications for military use in the occupied territories. The company also is a majority investor in one of Israel’s four cell-phone companies.  That investment is controversial because the companies, according to the Oslo Agreement of 1995, must be licensed by the Palestinian Authority to operate in the West Bank and Gaza. However, the companies violate that agreement by placing their equipment in Israeli settlements with enough capacity to cover every Palestinian community. Without regulation, the companies have undercut prices and threatened the survival of the only Palestinian cell-phone company.

     The companies also take advantage of an Israeli government policy of delaying or prohibiting the importation of modern equipment into Palestine. In addition, such practices evade taxes (estimated at more than $40 million) that could help the Palestinian Authority develop its economy, and deprive Palestinian operators of revenue (estimated at more than $500 million). The lost taxes and revenue go into the Israeli economy, and probably into the settlements, through fees for placing equipment and discounts for cell-phone service. The MRTI committee has had periodic contact with Motorola over the past 20 years.

     United Technologies, based in Hartford, CT. Shares held by PC(USA) entities as of June 30: Presbyterian Foundation/New Covenant Growth Funds — 56,000.

     United Technologies is a large military contractor with a subsidiary that has provided helicopters to the Israeli military.  The aircraft have been used in attacks on suspected terrorists in the occupied territories. The company also provides other military hardware. United Technologies was once on the General Assembly’s military-related divestment list, but was removed a few years ago after revising some of its policies. The committee has not had contact with the company.

     Immediately after the vote and during the lunch break, Somplatsky-Jarman and Hylkema, an elder at Westminster Presbyterian Church in Detroit, made calls to executives of the presbyteries where the five companies are located — Great Rivers, Chicago, Hudson River, New York City and Southern New England.

     At the start of the MRTI committee meeting, 15 companies were under discussion, including some in which the church owns no stock. Although the group ultimately agreed to focus on corporations in which the church is invested, it decided to continue researching the other companies as well.

     Only one of the named companies was available for comment late Friday afternoon. Paul Jackson, a spokesman for United Technologies, said from Hartford, CT: "UTC has been widely recognized as an ethical and responsible corporation. Work on military programs is stringently regulated by the U.S. government, and UTC complies wholly with all policies and related regulations."