New Zealand superannuation fund divests from six Israeli banks

March 7, 2021 by David Cumin
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The New Zealand Government superannuation savings vehicle, the NZ Super Fund, is ostensibly joining the Boycott, Divestment, and Sanctions (BDS) campaign against Israel – a movement deemed racist by many of New Zealand’s traditional allies.

Dr David Cumin

It is divesting from six Israeli banks under the auspices of biased UN and NGO reports.

The decision to exclude Jewish companies is antithetical to the very purpose and spirit of the Super Fund’s constituting Act which is supposed to interpret and follow, not dictate, NZ foreign policy.

Section 61(d) of the New Zealand Superannuation and Retirement Income Act 2001 that governs the NZ Super Fund mandates that “…investment policies, standards, and procedures must cover ethical investment, including policies, standards, or procedures for avoiding prejudice to New Zealand’s reputation as a responsible member of the world community.” Implicit in this mandatory statement is that any policies which exclude stock must be done so without racial bias.

It is curious that only Israeli banks listed in the NZSF have been divested from, and not those in China, Turkey, Russia, or Saudi Arabia.

In the document that underpinned the decision, the evidence for Israeli banks being in breach of the standards for investment were United Nations rulings and NGO reports about construction of Jewish homes in the disputed territories. The banks issue mortgages for the homes and so the Guardians Board, chaired by Catherine Savage, decided that they should divest.

Putting to one side the nature of Peace Now and Who Profits – the NGOs cited in the report – there is debate about the precise legal position of the disputed territory and it is clear that Israel is treated differently to other countriesthat are labeled by some as ‘occupiers’.

Turkey, for example, occupies Northern Cyprus and the presence of Turkish settlers is “an undisputed fact”. Russia has occupied and annexed parts of both Georgia and Ukraine; and a significant number of settlers have moved to Crimea, attracted in part by Russian economic incentives. China is not only considered to occupy Tibet, it has recently taken democracy away from Hong Kong and is accused of committing a genocide against Uyghur Muslims.

Furthermore, countries like Saudi Arabia, Cuba, Pakistan, Venezuela, and Zimbabwe, which have appalling human rights records yet are hardly, if ever, condemned by the United Nations. Over the past 5 years, the United Nations has passed 112 resolutions that single out Israel and only 42 that mention any other country, including 7 against the United States of America. And the language used in the 112 resolutions allows no praise for Israel, unlike the others. Israel is also the only country to have a standing item at the Human Rights Council that singles it out.

The reason for this is that the majority of countries at the United Nations are non-democratic and anti-Israel. The resolutions that target the Jewish state are put forward by despots, led by a 57-nation block known as the Organisation of Islamic Cooperation which includes 9 of the 31 member countries that don’t recognise Israel.

It would seem illegitimate for the New Zealand Super Fund to consider those despotic, non-democratic nations as part of the “world community” with which to uphold New Zealand’s reputation as demanded by the words of the Super Fund’s constituting Act. Yet that is precisely what Ms Savage has allowed to happen by relying on biased United Nations and NGO reports. Particularly when Security Council Resolution 2334, that was featured in the advice to her board, has been recognised as deeply flawed: the New Zealand National government admitted they “got it wrong” by supporting the resolution.

Furthermore, the document NZCF bases their decision on misrepresents international law. For example, it claims “[UNSC 2334] is considered binding on Israel”. However, the resolution was not explicitly adopted in exercise of the Security Council’s ‘Chapter VII’ powers, therefore all of its operative provisions are legally non-binding.

Moreover, as at 30 June 2020, the NZ Super Fund was invested in $631,539,093 worth of Chinese companies (including $441,585,508 in banks), $38,789,277 in Saudi Arabian corporates (including $18,282,649 in banks), $6,871,821 in Turkish companies (including $2,209,347 in banks), and $17,029,339 (of which banks comprised $8,883,810) in Russian companies.

When it is only the Jewish nation that features on the exclusion list for “poor environmental, social and governance”, one must ask not only what motivation Ms Savage has but what signal NZ is trying to make in respect of foreign policy. Especially when traditional allies like Canada, Australia, United States, and European nations have not divested from Israel. And those are the countries, surely, that Section 61 of the constituting Super Fund Act relates to.

In singling out Israel for divestment, Ms Savage has empowered the despots at the United Nations rather than supported our traditional allies. She is charged with protecting our Kiwi “reputation as a responsible member of the world community” but is in fact damaging it.

Being an outlier in investment strategies and also in the leadership of protecting human rights can most definitely be a best practice but this move by the NZSF is neither of those. A courageous human rights divestment would be a fair one, balanced across a true representation of the world’s bad actors, starting with the worst human rights abusers. This is clearly not that.

Rather than using the United Nations as a de facto standard, New Zealand should recognise the inherent bias in that system and acknowledge a fair standard should be applied instead.

If Ms Savage continues to find it reasonable to adopt the biased resolutions of dictatorships who form an automatic majority at the general assembly and hold revolving chairmanships of the UN Human Rights Council, or NGO reports that are time and again shown to be distorted and politicized; rather than exercising sound judgement and considering expert legal opinion, then New Zealand’s reputation will continue to be damaged.

Comments

2 Responses to “New Zealand superannuation fund divests from six Israeli banks”
  1. Daniel Hochberg says:

    A disgraceful decision. This should be tested in the courts, and at the very least, the NZ Super Fund should be made to apply the same principal to other countries condemned internationally. Singling out Israel falls within the IHRA working definition of antisemitism (Adopted by the UN), and I quote: “Applying double standards by requiring of it a behavior not expected or demanded of any other democratic nation”. This is a case in point, and should be tested!

  2. Dorothy Finlay says:

    It is a disgrace that the New Zealand government has succumbed to the pressure of the BDS movement which has a biased anti Israel goal. The reasons given are very clearly racist and discriminatory by the standards of many of New Zealand Allies. In a world where there is hatred of the Jew and Israel is condemned in the UN for no other reason than the ancient evil of anti-Semitism, New Zealand is joining the club while talking friendship with Israel. True hypocrisy! New Zealand must stand with Israel, the only Jewish nation in the world and this move is a disgrace and will be judged in higher courts than the ICC and UN!

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