Dodgy deals Raytheon & cluster munitions,

Dodgy Deals

BankTrack works with communities and organisations worldwide to monitor 'dodgy' projects and deals. We consider being involved in these projects as incompatible with being a sustainable bank.

BankTrack is currently revising the system of disclosure of financial information. As this is a work in process, we include the information of banks successively.

Cluster Munitions producers - - international -

Although 98% of cluster munitions victims are civilians, cluster munitions producers don’t have any problems attracting capital from financial markets. A research by Netwerk Vlaanderen reveals that sixty-nine financial institutions play a role in the financing of at least six of these companies. Together they secured credit facilities for these producers worth a total amount of US$ 12.6 billion (€ 10 billion) during 2004-2007. Investment banking services have also arranged bond issues for two companies worth a total amount of US$ 1.3 billion (€ 1 billion) during the same period. Several financial institutions have also been found to hold significant shareholdings in four cluster munitions producers. company / companies involved GenCorp (USA): Aerojet, a fully-owned subsidiary of Gencorp, produces the cluster munitions for the ATACMS-missile of Lockheed Martin. Aerojet also produces the solid propellant rocket motor for this rocket. At least until 2004, Aerojet assembled BLU-97 submunitions and integrated them into the AGM-154 A Joint Standoff Weapon (JSOW-A). Lockheed Martin (USA) produces various missiles which can be categorised as cluster munitions, including the MLRS M26 surface-to-surface missile containing 644 M77 submunitions, and the MLRS XM30 rocket containing 404 DPICM submunitions. The M26 rockets have been used by the US Army in Iraq (2003) and by the Israeli Army in Lebanon (2006). Raytheon (USA) produces the AGM154 Joint Standoff weapon (JSOW), an air-delivered bomb with some cluster munition variants. For example the AGM154A, the standard version, contains 145 BLU-97/B sub munitions. Also the Tomahawk cruise missile has amongst its variants a submunition warhead. Textron (USA), produces the CBU-105 Sensor Fused Weapon, an air-to-surface cluster bomb. This weapon was used by the US Army during the latest Iraq War. Thales (France): TDA, a wholly-owned subsidiary of Thales, is a European producer of missiles, amongst others some cluster munitions. TDA admitted to the Norwegian Central Bank that it produces a PR Cargo bomb containing 16 dual effect submunitions. In 2006 Forges De Zeebrugge, a fully-owned subsidiary of TDA, admitted that it is working on a 70mm FZ101 rocket containing eight submunitions for the Tiger Helicopter program of the German army. These companies are mentioned in the Netwerk Vlaanderen Report ‘Explosive Investments’ (feb 2007). Other companies involved in the production of cluster munitions are: Rheinmetall, Aerostar, Aselsan and Singapore Technologies, Israeli Military Industries, Diehl Munition Systeme, Giat industries, FAMAE, Dezamet, Honeywell, ATK, L-3 Communications, General Dynamics, Poongsan, Northrop Grumman, etc. financial institution(s) involved / actively interested banks ABN AMRO General corporate finance Thales - January 2005, Rheinmetall - April 2005 ANZ General corporate finance Lockheed Martin - June 2007, Thales - January 2005, Raytheon - March 2005 Bank of America General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006, Rheinmetall - April 2005 Issuing of bonds provided in March 2005 for Textron Barclays General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006, Thales - January 2005 BBVA General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Thales - January 2005 BNP Paribas General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006, Thales - January 2005 Issuing of bonds provided in December 2007 for Thales Calyon General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Thales - January 2005, Rheinmetall - April 2005 Issuing of bonds provided in December 2006 for Thales Citigroup General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006, Thales - January 2005 Crédit Agricole General corporate finance Through Calyon: Lockheed Martin - June 2007, Raytheon - March 2005, Thales - January 2005, Rheinmetall - April 2005 Issuing of bonds provided in December 2006 for Thales (through Calyon) Credit Suisse Group General corporate finance Raytheon - March 2005, Textron - April 2006 Deutsche Bank General corporate finance Textron - April 2006, Thales - January 2005, Rheinmetall - April 2005 Issuing of bonds provided in March 2005 for Textron Fortis General corporate finance Thales - January 2005 HSBC Group General corporate finance Textron - April 2006, Thales - January 2005, Rheinmetall - April 2005 Issuing of bonds for Textron - March 2005, for Thales - December 2006 ING Group General corporate finance Thales - January 2005 Intesa Sanpaolo General corporate finance Lockheed Martin - June 2007 JPMorgan Chase General corporate finance Raytheon - March 2005, Textron - April 2006, Thales - January 2005 Issuing of bonds provided in March 2005 for Textron Merrill Lynch General corporate finance Textron - April 2006 General corporate finance Textron - April 2006 Mitsubishi UFJ Trust and Banking Corporation General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006, Thales - January 2005 Issuing of bonds provided in March 2005 for Textron Mizuho General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005 Morgan Stanley General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006 Royal Bank of Scotland General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Thales - January 2005 Scotia Bank General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006 Société Générale General corporate finance Raytheon - March 2005, Textron - April 2006, Thales - January 2005 Issuing of bonds for Textron - March 2005, for Thales - December 2006 Sumitomo Mitsui Banking Corporation General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Thales - January 2005 UBS General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005, Textron - April 2006, Thales - January 2005 UniCredit General corporate finance Thales - January 2005, Rheinmetall - April 2005 WestLB AG General corporate finance Lockheed Martin - June 2007, Raytheon - March 2005 For more detailed information on how banks are or have been involved in financing cluster munition producing companies, see the reports of Netwerk Vlaanderen and the upcoming report "mind the gap". dodgy aspects Using cluster munitions is a serious breach of International Humanitarian Law as it is impossible to distinguish between civilian and military targets, and causes disproportionate long-term civilian harm. Therefore cluster munitions stand out as the weapon category most in need of stronger national and international regulation. Cluster munitions pose a serious threat to civilian populations during and after a conflict. Cluster munitions are designed to cover a large area where one or more targets are located. Spreading the munitions over this area results in a large chance of civilian casualties during the attack. But these weapons also cause civilian casualties after the end of the armed conflict. The sub-munitions contained in cluster bombs or rockets have a certain rate of failure (dud rate). Following a cluster attack there will be many unexploded submunitions left behind over a large area. A mine field is created, with a great risk for civilians, for years after the conflict. At this moment cluster munitions have been used in 23 countries or areas. Recent use has been documented in amongst others former Yugoslavia, Afghanistan, Iraq and Lebanon. In the first world-wide research on cluster munitions victims, Handicap International revealed that nearly all recorded cluster munitions casualties are civilians, putting the figure at 98 percent. Twenty seven percent of these are children. Investing as complicity Investing in a company is clearly an active and supportive effort to raise the capital that is needed to fulfil the plans this company has made. Any financial service delivered to a company by a FI is in fact an approval and a belief in the plans this company is making. Moreover it is a crucial, important and necessary support to the company and its projects and plans. Investing in a cluster munitions producer therefore is a choice to support the production of these civilian-killers, and is clearly choosing sides. On the other hand refusing to invest in cluster munition producers is also a clear choice. FIs that develop a policy to no longer invest in these companies are not willing to take responsibility for these kind of weapons and their use. They do not want to bear any complicity in the killing of innocent civilians. Investors in cluster munition production can be considered as being complicit in the unnecessary killing and maiming of innocent civilians by cluster munitions during and after a conflict. current status as of 12-Dec-2007 Credit to cluster munitions producers has been common over the years, and looks set to continue unabated if due attention is not given. Commercial banking for cluster munition producers includes all types of corporate loans and credits, i.e. investment loans, working capital facilities, trade credits, et cetera. Investment banking services include helping clients to sell shares and bonds to investors (asset managers, insurance companies, et cetera), as well as financial advisory services. Asset management means investing in shares and bonds of companies and governments, on behalf of investment funds (which in turn are owned by many private investors), wealthy private clients and financial institutions such as pension funds and insurance companies. Legal initiatives against investments in the production of cluster munitions Some financial institutions have, under the pressure of campaigns and new legislation, severed their investment policies concerning weapons producers. This is a very positive evolution, but research into the concrete investments reveals that self regulation by the financial sector only leads to rather patchy results. Stemming the capital flow towards the arms industry will therefore need stronger international regulation and national legislation. A government simply cannot allow investments by its resident financial institutions that are in opposition to its principles or policies. During the last years there have been signs that some politicians have taken up this challenge. In February 2007 and after years of campaigning by Netwerk Vlaanderen, the Belgian Parliament voted a law forbidding any investment in cluster munition producers by Belgian financial institutions. (“Financing a Belgian or foreign company active in production, usage, repair, offer, sale, delivery, import, export or stocking of submunition in the sense of this law, is also forbidden.”) The law also instructs the Belgian government to produce a list of cluster munition producers. Belgium is the first country banning investments in cluster munitions. In July 2005 a European Parliament Resolution “Calls on the EU and its Member States to prohibit through appropriate legislation financial institutions under their jurisdiction or control from investing directly or indirectly in companies involved in production, stockpiling or transfers of anti-personnel mines and other related controversial weapon systems such as cluster sub-munitions.” This resolution forms the perfect starting point for national legislation against investments in weapons producers and traders. what must happen... In short, financial institutions must divest from producers of cluster munitions. Development of transparent policies by investors which exclude cluster munitions producers is a priority, and law makers around the globe should also follow Belgium’s lead by outlawing this type of investment. contact us Christophe Scheire and Inez Louwagie Netwerk Vlaanderen Vooruitgangstraat 333/9 1030 Brussels - Belgium tel +32 - 2 201 07 70 fax +32 - 2 201 06 02 see documents Explosive Investments Netwerk Vlaanderen briefing paper on Financial Institutions and Cluster Munitions. The report identifies 68 financial institutions from around the world involved in funding the production of cluster munitions. Feb 28 2007 pub Netwerk Vlaanderen: Explosive portfolios Report released on Sept 14 on investment in cluster munitions by 5 banks. Sep 14 2006 pub Netwerk Vlaanderen: Banks Disarm(ed) Netwerk Vlaanderen report on results of campaign 'My money, clear conscience' on Belgium bank involvement in weapons production and trade May 01 2005 pub Netwerk Vlaanderen: Cluster bombs, Landmines Nuclear Weapons and Depleted Uranium Weapons A Report on the Financial Links between Banks and the Producers of Controversial Weapon Systems. Apr 01 2004 pub follow links Handicap International Handicap International is an international solidarity organisation specialised in the field of disability and supporting the struggle against landmines and cluster munitions. - international - KBC Belgium-based bank-insurance group. In 2004 they developed a policy on investments in the weapon industry. They decided to stop investments in anti-personnel mines, chemical weapons, uranium weapons and cluster munitions. Belgium Netwerk Vlaanderen Netwerk Vlaanderen promotes an alternative approach to money. Netwerk gives advice on sustainable saving and investment products and runs the campaign "My Money. Clear Conscience?". Belgium Amnesty International and Handicap International France AI and HI France cancelled their contracts with the Financial group AXA because of their investments in producers of landmines and cluster munitions. France Norwegian Pension Fund In Norway the Government Pension Fund – Global is set up to manage all the state’s oil revenues. In the summer of 2005 the Fund excluded eight companies from its portfolio because they were considered to manufacture key components for cluster bombs. Norway Storebrand Norwegian financial holding with three main activities: banking, asset management and insurance. Storebrand Investments excludes producers of cluster munitions from all of their investment portfolios. Norway watch video Banking Secrets documentary on investments of Dutch banks in arms industry and other dodgy projects. The Cluster bomb feeling documentary on investment of Dutch pension fund in arms industry statements of banks Statement of ING: ING does not invest your savings in cluster munitions. ING applies strict criteria for companies directly involved in anti-personnel landmines, cluster bombs, depleted uranium ammunition and biological, chemical or nuclear weapons. Companies which are directly involved in manufacturing, maintaining or trading these types of weapons will be excluded from new financing. An exception is made for companies with limited involvement in controversial weapons which are mainly involved in non-controversial activities such as civil aircraft. If so, we may provide financing for their non-controversial activities only. With regard to investments, the policy differentiates between ING proprietary investments and investments made on behalf of our customers. The Policy applies to ING proprietary assets only. These are amongst others customer savings and pension premiums invested by ING to provide for future guaranteed pension schemes. Third party assets, invested on behalf of our customers, are not restricted under our voluntary defence policy. Within the boundaries of the law, our customers are free to invest their money according to their personal preferences. ING offers sustainable investment funds and portfolio screening for customers who wish to exclude defence industry securities from their investment portfolio. Find the ING Defence Policy here. This section is kept up to date by Inez Louwagie. It was last updated on 12-Dec-2007. For any comments please contact here.