House of Lords July ‘08

On the 7^th and 8^th of July I went down to Parliament to watch CAAT and the Corner House return to court, this time for the Serious Fraud Office’s appeal hearing in the House of Lords. If you make it past security, agree to wear a little picture of yourself around your neck and meander round the stony labyrinth we call Parliament, you can sit in a little room with regal, furry wallpaper and watch the proceedings.

The results of this hearing – sadly not expected until October due to the Summer recess – will be crucial not only for CAAT and the Corner House, but also for the government. The case has brought under the microscope one of the main facets of Britain’s unwritten, tacitly approved constitution: that our legal system is, or should be, independent of the government. Whilst this is something that has been unanimously accepted as right for aeons, there are odd occasions when the principle is called into question, . A decision on this matter is important as, having a legal system based upon precedent means that if a person can prove a particular principle in a British court, then it will open a gateway for all similar cases in future.

When the al-Yamamah deal was struck between the government and Saudi Arabia, a confidentiality clause was included, preventing the explicit terms of the deal from becoming public. This in itself is nothing remarkable; business arrangements of private corporations are often subject to some level of privacy agreement. What is remarkable is that allegations began to surface that this weapons deal worth billions was not as black and white as it should have been. Before long the Serious Fraud Office had no choice but to open an investigation.

The SFO investigations are in theory as plain an example of the separation of powers in a liberal democracy as one is likely to find. The UK government is not sovereign over all, and if it is suspected of wrongdoing, then by jove someone will go in and investigate.

That’s why CAAT and The Corner House are determined that the government and the Serious Fraud Office will not get away with scrapping the investigation following lobbying by BAE and a threat from the Saudi regime. That’s why the future of justice as we have long understood it hangs in the balance – the judges’ decision will determine not only the outcome of this case but set a precedent for how the government, corporations and foreign powers can act in the future too.

We eagerly wait for the judges to announce their decision on the hearing in October. But in the meantime, keep a close eye on the government’s Constitutional Renewal Bill. The government would like to legislate so that the Attorney-General can halt any fraud investigation or criminal prosecution just by citing ‘national security’. There would be no recourse to judges, courts and public appeal if this went through… A reaction to the recent SFO events perhaps? You decide.

Sign the petition here:

http://www.caat.org.uk/campaigns/controlBAE/petition/index.php

The UK Arms Industry

When campaigning against the arms trade, I’ve always found it interesting how few people disagree with the moral case we’re making. Discounting those few rare souls who see the production of weaponry, in itself, as a morally worthy activity, the general opinion tends to be one of resigned acceptance. That there is a demand for such weaponry is seen to be a sad fact of life and that supplying this demand benefits our economy an unfortunate boon. After all, if we didn’t do it, surely someone else would?

Yet the initial perception of inevitability demands examination. Certainly, leaving aside more utopian aspirations, we can accept armed conflict as a sad fact of global politics. Yet the vast industrial and commercial machinery which exists to service this demand is no such given. The arms industry is not just supported by government (as, perhaps, one might expect to happen with regards to any major industry) but is in fact subsidised to a rather considerable degree. The full extent of the subsidy is estimated to stand at up to £890 million per year. Given around 65000 people working in the arms trade within the UK, this roughly amounts of each job costing the tax payer over £13000 a year in subsidy. Until this year when, hopefully as a sign of things to come, Gordon Brown announced the decision to close it, the defence export service organisation (DESO) existed within Government solely to market and sell UK arms. Employing nearly 500 civil servants within the Ministry of Defence, the head of DESO was a post always filled by an arms industry executive with a portion of his salary ‘topped up’ by the arms industry. Could you imagine the outcry if the department of health had a similar organisation working within it at the taxpayers expense to promote pharmaceutical sale? Yet DESO was sadly indicative of the connections between government and arms industry and they extend far beyond it.

The Export Credits Guarantee Department (ECGD) uses £180 million of taxpayer’s money each year to underwrite arms deals abroad. If a foreign buyer fails to pay the British company supplying them, the ECGD (or, we could say, the British taxpayer) will cover the cost. Then the cost to the ECGD will be added onto the buyer nation’s national debt. 95% of the debt owed directly to the UK by developing countries comes from the ECGD. The tax payer is charged millions and developing countries impoverished, all in the name of granting the arms industry a commercial privilege denied to other industries and surely contrary to the conceptions of free trade which dominate international economics. There are numerous other means by which the tax payer ends up footing the bill of arms trade subsidies (research and development, distortion of MoD procurement, defence attaches) yet these are beyond the scope of the present article. What’s important is to note the extent to which the arms industry is not an unfortunate fact of life but is rather actively promoted and supported by the British government at the taxpayer’s expenses. Nor is it the cornerstone of the British economy it’s presented as being. Only 0.2% of total employment is within the arms industry and at the equivalent of over £13000 a year in subsidy per job that 0.2% represents a disproportionate drain on the public purse. Likewise, arms exports only account for 1.8% of total exports yet through £180 million incurred by the ECGD each year these too amount to a disproportionate drain on the government’s resources.

Many arms trade campaigners are arguing for nothing more radical than the end of these subsidies: the arms industry isn’t so central to the nation’s economic vitality that it deserves this cosseted pride of place. The arms industry should compete in the same way as other industries. The promotion of arms exports is not necessary. Nor, crucially, is it right. More than simply being bad public policy, these subsidies serve to fuel and industry that largely exists to produce products that kill people. Until the final closure of DESO, the British tax-payer’s money will be paying for the promotion of arms fairs to drum up demand amongst nations, many of whose populations go hungry while their leaders shop for arms. Certainly, you can say, if we didn’t do it someone else would. Yet take that moral logic and apply it to any other area and it rapidly seems obviously absurd. Promoting the arms trade doesn’t become the right thing to do simply because not doing it doesn’t make it go away.

 

Students campaigning against arms investments plan to meet in July

Back in March a few anti-arms trade campaigners from UCL, Warwick and Nottingham met in London to discuss the  “Unis against the arms trade National Action Day” held in February.

It was really great and inspiring to hear what other students at other unis are up to.  One of the things we all wanted was to try and arrange as many opportunities as possible to meet and swap experiences and ideas.

So - if you are a student campaigning against your uni investing in the arms trade here’s the next opportunity to meet up and discuss the issue:

People & Planet will be holding their annual Summer Gathering between Sunday 29th June to Thursday 3rd July – four days of discussing campaigns, learning new skills, sharing experiences, and generally having fun.

On the agenda is a session on Ethical Investment. This a great chance for ethical investment campaigners up and down the country to discuss the ethical investment student network – a chance for various campaigners to meet face to face and share their ideas and hopefully successes.

We all know that the tide is turning against higher education investment in the arms trade but now is the time to capitalise on the all the recent hard ground work done by ourselves.

Obviously it would be great to have as many people & planet activists join us in the Oxfordshire countryside for the whole event, but if you can only come down for this one session, then there shouldn’t be any problems with that.

Click here for more info or e-mail us at: info@disarmucl.com

The next chance to meet after that will be the CAAT National Gathering on 8 November !

“Merchants of Death” guided tour.

London CAAT decided on a “Merchants of Death” walk as one part of our “Stop the Arms Trade Week”. Rather than a series of protests, this was a more sedate tour of Central London, with descriptions of certain companies thrown in. So thirteen of us met outside Victoria station and even had the sun shining on us. In terms of the types of companies we went to, there was a clear distinction.

Obviously, we took in major military producers and arms dealers such as BAe Systems, Boeing UK, Rolls Royce, Lockheed Martin (including INSYS), QinetiQ, MATRA BAe, Northrop Grumman, General Dynamics and Land Rover Leyland International Holdings. Among such “Merchants of Death” there is a long history of corruption, sometimes involving countries with serious records of human rights abuse, which underlines how indiscriminate the trade is.

In addition, the knowledgeable guides informed those present of the details of some of the numerous corporate mercenaries who have their offices in Central London. These include Spear Communications,

Aegis Defence Services, Erinys International and ArmorGroup. These Private Military and Security Companies are making a killing out of wars in Iraq and Afghanistan in a trade worth more than $100 billion. PMSCs outnumber British soldiers in Iraq by a ratio of more than 6:1.

We were also able to discuss certain themes as we progressed. Rolls Royce, the single biggest employer of engineering graduates (BAe is second), benefits from the hundreds of millions that military exports are subsidised by and those subsidies clearly skewer the market. QinetiQ, owned now by the Carlyle Group (which includes John Major), and MATRA BAe, who supplied the last head of DESO, afforded us the opportunity to talk about the revolving door between government and business.

BAE Systems AGM, 7 May 2008

My BAE AGM virginity was about to come to an end as I entered the Queen Elizabeth Conference centre, where no expense had been spared on lavish security measures to welcome proxy shareholders like myself. The BAE chairman Dick Olver’s introductory statement included a shareholder-pleasing boast about a 13.3% proposed increase in the 2007 dividend. However, much of his presentation was devoted to this year’s hot topic, business ethics. He acknowledged the reputational damage that the whole SFO affair had done but kept stressing that “our” company had never been found guilty of any wrongdoings in four years of SFO scrutiny, conveniently omitting the fact that the investigation was halted just as it was making good progress unearthing useful details from Swiss bank accounts.

He made much of the publication of a single global code of ethical conduct due in January 2009 which is to implement the 23 (!) recommendations of the hot-of-the-press Woolf Committee report, designed to fulfil BAE’s aspiration “to be the industry leader in business ethics” and “to set the pace for ethical business behaviour”. This ambition, in light of the way BAE had lobbied for the cessation of the SFO enquiry, was later described as “Orwellian” by one of the questioners.

CEO Mike Turner’s 2007 performance review highlighted the significance of Saudi Arabia as a growth market, as a result of which yet more UK staff had been transferred there. But even in his overview of BAE’s top ten objectives, the presentation returned to this year’s flavour, ethics, albeit in tenth place, and bundled together with diversity and safety (the latter giving rise to heckles of “how safe are your weapons?”).

Soon we reached the part of the meeting we had all been waiting for: the question and answer session. The opening salvo was delivered by an apparently old stalwart of BAE AGMs who expressed concerns about BAE wasting too much of investors’ money on the unnecessary implementation of ethics measures, and furthermore urged BAE to impress on the Prime Minister the UK’s reliance on Saudi Arabian cooperation. However, once the second BAE supporter had been dealt with, the floor belonged almost exclusively to a range of protesters, with corruption-related questions dominating the proceedings.

Reference was made to Dick Olver’s appearance on the morning’s “Today” programme where he had drawn a careful distinction between commission payments (legal!) and bribery (illegal). Was BAE now happy to support completion of the SFO enquiry? As earlier on, Dick Olver referred once more to four years of cooperation with the SFO which had not yielded any incriminating results but he welcomed a case review by the SFO. Why then, he was asked, had BAE invested so much effort into trying to halt the enquiry in the first instance? The question remained unanswered.

A BAE aide had to come to Dick Olver’s rescue on the matter of cluster bombs, eventually confirming that BAE had stopped supplying these in 2004 but that, despite its new-found enthusiasm for ethics and social responsibility, substantiated by brandishing the polished Corporate Responsibility (CR) report, it did not compensate those still affected by its cluster bombs, nor contribute to the clear-up of blighted areas. Further questioning as to what constituted ethical weaponry was referred to the CR report. When asked what criteria the Board uses to base its decision on, it was unsurprising to learn that this was based on a commercial risk assessment.

The apparent irreconcilability of two different types of ethics, selling lethal wares to a country with an appalling human rights record but in an ethical, i.e. corruption-free manner, was lost on the BAE board. Olver went on to portray BAE’s involvement in Saudi Arabia almost as a type of development aid, stating that engagement was preferable to ostracism and that BAE was helping the country with its industrialisation.

A local authority employee outlined his involvement in campaigning for ethical investment of his local authority pension fund and pointed out that BAE had long missed the corporate social responsibility bandwagon that many other companies had boarded some while ago. He went on to say that, as an ex-member of the Territorial Army, he felt that BAE’s dealings with Saudi Arabia actually undermined UK security rather than enhance it.

This year, BAE had made some changes to the way questions were being handled which, as one CAAT supporter noted, had led to the AGM becoming more and more a slick showcase for the company and less of the shareholder meeting it should actually be. Any interaction with the Board, previously possible, was now curtailed since, so far, all questions had been handled by Dick Olver only. Minutes later, the truth of this was borne out again when another activist directed his ethics-related question specifically at a member of the CR Committee. Olver’s brusque reaction was that it was he who decided who was to respond, and that was to be him only.

Olver had been fielding the questions very slickly but nevertheless his increasing irateness came across as he started to patronise questioners with increasing frequency, no more clearly than when a Warwick University engineering student, usually the kind welcomed with open arms by BAE at university milk rounds, described his and many other students unease at applying his skills in a lethal industry. The invitation to attend a public debate at Warwick was declined by Olver.

The two lone “genuine” shareholders who did manage to get a word in amongst all the inconvenient questioning both expressed concern about BAE’s move away from diversification, having now put all its eggs in one defence basket (although, curiously, one of them did also complain bitterly that the BAE AGM clashed with that of Rolls Royce – some people just cannot get enough!).

The Q & A session was fittingly closed by South African former ANC MP Andrew Feinstein who had resigned from parliament in 2001 in protest over the South African government’s refusal to allow a full investigation into corruption allegations relating to a £5m arms deal. He had given evidence to the Woolf Committee, and urged BAE, if it was serious about turning over a new ethical leaf, to come clean about its past, stop all commission payment still being made, and provide full disclosure of its procurement process.

Edda Dirks, CAAT London Campaigner