Tag Archives: BAE Systems

The Dispatch Update: Princeton University, BAE Systems, Zimbabwe

Two short items from a Friday meeting with Andrew Golden, president of Princeton University Investment Co. (PRINCO), and Cass Cliatt, Princeton’s spokeswoman, about University investments in Zimbabwe and British arms supplier BAE Systems revealed by WPRB last week.

The broad takeaway: while Princeton claims it no longer owns BAE bonds and that it has two cents worth of an 18-year-old holding in Zimbabwe, nothing prevents the University from making future investments in either. Further, Princeton can only offer speculation to account for the listing of Zimbabwe on a federally-filed, public tax form that requires disclosure of investments of $10,000 or greater in foreign countries. What has changed, however, is that investment records are no longer made public due to concerns over “economic cost”. The precise economic cost of having made investments public before 2002, when the current non-disclosure policy was implemented, remains unclear.

BAE Systems
While the money manager responsible for the acquisition of BAE bonds is no longer affiliated with Princeton, “the fact these changes occurred had nothing to do with BAE,” Golden told WPRB.

“There is nothing that prevents us from investing in defense contractors,” Golden said, adding that the manager who acquired the BAE bonds “thought it was a good economic investment.”

While PRINCO is charged with overseeing Princeton’s multi-billion dollar endowment and managing funds of several organizations associated with the University, including WPRB, individual investment decisions are made by external money managers. Any non-economic factor applied to investment decisions– what Golden termed a “social overlay”– must be imposed by the Trustees of Princeton University and not by PRINCO or individual money managers.

Zimbabwe
After a lengthy search, PRINCO could only locate a single, 18-year-old bond valued at around $.02, Golden told WPRB, adding he was “99 percent sure” it was the only investment.

Should PRINCO’s review prove accurate, why Zimbabwe was listed last year among countries where the University has investments in excess of $10,000 remains a mystery. During the Friday interview with WPRB, Golden suggested it was an “out and out mistake” while Cliatt speculated that Zimbabwe might have been listed because in situations where “there’s any confusion” the University adopts a “conservative approach” to its filings.

The Dispatch Update: More Context on Princeton's Investment Policies

I’m currently traveling, but I’ll be posting a short story very soon based on WPRB‘s meeting last Friday with Andrew Golden, president of Princeton University Investment Co. (PRINCO), and Cass Cliatt, Princeton’s spokeswoman.

In the meantime, I wanted to point readers to an article that ran last Friday in Princeton’s campus newspaper, The Daily Princetonian, that provides a great deal of context on the comparative policies for ethical review of investments at Princeton, Harvard and Yale– something that becomes more interesting in light of our Friday interview with Golden, who told WPRB he felt Princeton’s system is “more democratic”.

From the Princetonian:

At Yale, an eight-person Advisory Committee on Investor Responsibility (ACIR) meets regularly to discuss ethical investment policies for the school’s endowment, said ACIR chair Jonathan Macey, a law professor and deputy dean of Yale Law School. The committee, composed of two students, alumni, faculty and staff members, makes recommendations to the Yale Corporation Committee on Investor Responsibility relating to matters ranging from “company investment in South Africa, to defense contracting, political lobbying and environmental safety,” according to the ACIR website.

Though some of the committee’s meetings are open to the Yale community and the ACIR values outside input, Yale evaluates the ethics of its holdings regardless of community interest, Macey said.

“It’s none of my business what goes on at Princeton, but either an investment policy is ethical or it isn’t,” Macey said. “The idea that it’s only a problem if it upsets a lot of people seems odd to me.”

“It doesn’t seem plausible,” he added. “It sounds like it’s a practical concern at Princeton, not an ethical one.”

Harvard, like Yale, has an Advisory Committee on Shareholder Responsibility composed of faculty, students and alumni that recommends ethical investing policies to the Harvard Corporation Committee on Shareholder Responsibility.

Princeton does not currently have a body specifically devoted to reviewing the ethics of its investment practices.

Breaking: Princeton says it no longer holds BAE bonds

By Sebastian Jones
WPRB News

Princeton University says it “no longer owns” bonds of BAE Systems, a controversial British arms supplier, that WPRB reported yesterday were purchased in 2001. This disclosure appears to represent a departure from the University’s stated policy of not discussing investment holdings.

In an e-mail sent to WPRB Wednesday evening, University spokeswoman Cass Cliatt wrote:

A case in point is your inquiry related to BAE. While we do not disclose specifics of our investment portfolio, I can confirm that your inquiry relates to a fixed-income account that was widely diversified, but since mid-2003, the University no longer owns those securities.

BAE Systems has been criticized for dealings with, among others, Suharto’s Indonesia and Robert Mugabe’s Zimbabwe and has been investigated on charges of alleged corruption on multiple occasions.

Additionally, details surrounding the foreign financial account or accounts held by the University in Zimbabwe, first revealed by WPRB on Tuesday, have yet to be disclosed.

In her Wednesday evening e-mail, Cliatt instead suggested that:

members of the campus community with interest in these issues typically would not need to know whether the University is invested in Zimbabwe today to know whether they feel the University should be invested in Zimbabwe. And looking at a list of investment holdings on a given day can’t tell you what we’re invested in today. It tells you only what we were invested in at the time the list was published.

Tomorrow afternoon, at the invitation of the University, WPRB is slated to sit down with Andrew Golden, the president of the Princeton University Investment Co. (PRINCO), to discuss how the University makes and monitors investments, why Princeton has stopped disclosing printouts of investments–as was a standard practice during the late 1990′s up until 2002–and why consideration of non-economic factors in investment appear only to be considered after concerns are raised by the campus community.

[Editor's Note: If you have questions you feel WPRB should ask Mr. Golden, send them along to tips@wprb.com before 1:30 PM tomorrow]

Our full program on Zimbabwe, and on Offshore Financial Centers (OFCs)– where companies, individuals and foundations can invest funds at very low tax rates, usually at the expense of their home nations’ tax revenues– aired this afternoon and will be posted online tomorrow evening. Roughly one third of Princeton’s declared foreign financial accounts, as of June 2007, are situated in OFCs.

Princeton invested in arms supplier with Zimbabwe ties

By Sebastian Jones
WPRB News

In 2001 Princeton University purchased bonds in British arms supplier BAE Systems, essentially giving a $1.5 million dollar loan to a company whose dealings with regimes like Robert Mugabe’s Zimbabwe have come under repeated scrutiny from investigators, journalists and activists, WPRB has learned.

An excerpt of a 2002 printout of Princeton University's investments that reveals holdings in British arms supplier BAE Systems.

In Zimbabwe, BAE has been tied to alleged efforts by arms dealer James Bredenkamp to supply the government with military equipment, potentially in violation of sanctions. Just days ago Bredenkamp, who The Guardian claims “acted as BAE’s agent in southern Africa”, had his assets frozen by the United States Treasury Department for his close relationship with Robert Mugabe’s regime.

For years BAE supplied military equipment to Zimbabwe, a relationship that began in the 1980’s when the Zimbabwean Air Force acquired 12 fighter planes from British Aerospace, BAE’s predecessor.

In 2000, the British government imposed an arms embargo against Zimbabwe, yet replacement parts for BAE-manufactured planes arrived as late as 2001, in apparent violation of sanctions, according to a UN report. Those components were allegedly supplied by Bredenkamp, who received £20,000,000 between 2003 and 2005 from BAE, The Financial Times reported this July. The payment served as “the first detailed evidence of a financial relationship” between Bredenkamp and the company. Both have both repeatedly denied violating sanctions. Continue reading →