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FIGHTING GLOBAL POVERTY

FIGHTING GLOBAL POVERTY

Banking on Bloodshed
UK high street banks’ complicity in the arms trade

Banking on Bloodshed: UK high street banks’ complicity in the arms trade
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1. The arms trade – “theft from those who hunger” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.1 Making a killing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.2 Fuelling poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.3 Profiting from war and human rights abuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. Financing the arms trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 2.2 2.3 2.4 Providing banking services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Directly investing in arms companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Investing in cluster munitions and depleted uranium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Loaning money to arms companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3. Corporate social responsibility: rhetoric v reality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 4. Conclusion and recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Preface

War is one of the chief causes of poverty.War can completely undermine a country’s development prospects, destroying schools and hospitals and putting agricultural land out of use for years to come. Fully 80% of the world’s 20 poorest countries have suffered a major war in the past 15 years, and the human legacy continues long after. Nine of the 10 countries with the world’s highest child mortality rates have suffered from conflict in recent years. Yet not everyone is made poorer by war. Many companies thrive off conflict, whether through supplying military hardware to armed forces or running mercenary armies on behalf of combatant states. Others fuel conflict through their operations in war zones, such as oil companies in volatile countries like Colombia and Iraq, or through their continued trade in goods such as blood diamonds. Others again profit from financing the war effort. This report forms part of War on Want’s campaign to confront those companies which exacerbate or profit from war. The aim of the campaign is to expose the many different ways in which the corporate sector is involved in conflict, and to suggest public action to call such companies to account. The campaign complements War on Want’s longstanding support for our partners in conflict zones: some of the world’s bravest men and women, on the front line in the struggle for human rights.

In this report War on Want exposes the extent of the UK banking industry’s complicity in the arms trade. Databases uncovered by War on Want reveal for the first time the billions of pounds of customers’ money that high street banks use to finance the production of weapons. The arms industry sells products designed to maim or kill human beings or destroy a country’s assets and infrastructure. This industry fuels war and poverty and undermines development worldwide, contributing to the suffering of millions. Banks that claim to support sustainable development and human rights are financing the sale of arms, including cluster munitions and depleted uranium, which kill and maim innocent civilians. All top five UK high street banks invest in, provide banking services for and make loans to arms companies. The truth is that if you bank with Barclays, Halifax Bank of Scotland, HSBC, Lloyds TSB or Royal Bank of Scotland your money is directly supporting weapons production.War on Want calls on these banks to stop funding the arms industry and to end their complicity in the fuelling of war and poverty around the world.

John Hilary Executive Director,War on Want

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

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Executive summary

Conflict kills people, most of them civilians, and is also a major cause of poverty, which in turn leads to many more deaths.Yet not everyone is made poorer by war. The arms industry is responsible for producing the machines that kill, maim or destroy, and therefore profits from the destruction. The UK has exported $53 billion in arms in the past five years. In 2007 it had the dubious honour of topping the list of global exporters with a record $19 billion in orders, the largest of which was a $8.4 billion order from Saudi Arabia for 72 Eurofighter/ Typhoon aircraft. The arms trade undermines development around the world, contributing to the poverty and suffering of millions.Whilst the world gave $104 billion in development aid in 2006, world military expenditure in the same year was $1,158 billion. The UK is the third largest exporter of arms to developing countries. The United Nations Development Programme (UNDP) has named military expenditure by developing countries as a major barrier to achieving the Millennium Development Goals.

This report reveals, for the first time, that all of the UK’s high street banks fund the arms industry through direct investment in shares, participation in loan syndicates and the provision of banking services.War on Want has drawn on databases that until now have only been seen by the financial sector and a select number of academics. Databases AMADEUS and ORBIS, which are published by Bureau van Dijk Electronic Publishing and Reuters DelScan, respectively, are subscriber-only databases and have never been used to establish the link between the banking sector and the arms trade. Evidence from AMADEUS reveals how much money UK high street banks hold in shares in UK arms companies. ORBIS exposes the same holdings in international arms companies, while Reuters DelScan charts the loans issued by high street banks to arms dealers. The new evidence War on Want has uncovered shows that if you bank with Barclays, Halifax Bank of Scotland, HSBC, Lloyds TSB or Royal Bank of Scotland your money is supporting the arms trade. In fact, the only UK high street bank that does not finance the industry is the Co-operative Bank.

Lockheed Martin F-16 Fighting Falcon jet fighter Picture: Fredrik Naumann/Panos Pictures

Barclays: • Holds, by far, the largest amount of shares in the global arms sector, with £7.3 billion invested in total. • Ranks amongst the top 10 largest investors in US arms companies. • Serves as principal banker for three arms companies:VT Group, Cobham and Meggitt. • Has been part of 50 syndicated loans to the arms sector over the last 10 years and has invested in and gives loans to companies that produce cluster munitions and depleted uranium munitions. HSBC: • Holds shares in the global arms industry totalling £450.6 million. • Serves as principal banker to two arms companies: BAE Systems and Meggitt. • Has been part of 43 syndicated loans to the arms sector over the last 10 years worth £27.1 billion and has invested in and gives loans to companies that produce cluster munitions and depleted uranium munitions. Royal Bank of Scotland: • Holds shares in the UK arms sector totalling £36.4 million. • Serves as principal banker to four arms companies: BAE Systems, Rolls Royce, Babcock and Ultra Electronic. • Ranks as the world’s leading creditor to the arms sector, having participated in 52 deals over the last 10 years worth £44.6 billion, including loans to producers of cluster munitions and depleted uranium munitions. Lloyds TSB: • Holds shares in the UK arms sector totalling £717.5 million. • Serves as principal banker to BAE Systems and QinetiQ. • Has been part of 40 syndicated loans to the arms sector over the last 10 years worth £33.3 billion, including loans to producers of cluster munitions and depleted uranium munitions.

Halifax Bank of Scotland:1 • Holds shares in the UK arms sector totalling £483.4 million. • Serves as principal banker to two arms companies: Babcock and Chemring. • Has been part of six syndicated loans to the arms sector over the last 10 years worth £1.2 billion. Most high street banks are violating their own corporate social responsibility (CSR) statements. As the evidence in this report demonstrates, CSR as a voluntary approach to good practice cannot make companies accountable for their actions. For instance, there is an irreconcilable contradiction between Royal Bank of Scotland’s stated commitment to human rights and sustainable development and its support for the arms industry. In addition, the sheer scale of Barclays’s investments in arms companies’ shares contradicts its stated concerns for sustainable development and human rights. One bank has gone much further than just producing a CSR report. HSBC has since 2000 publicly stated its commitment to “avoid certain types of business, such as financing weapons manufacture and sales” and to have had that policy “fully in place” since 2006. However, since 2000 there has been no significant downward trend in HSBC lending to the arms sector. In fact, there was a major rise in HSBC’s lending in 2005. This report will begin with an overview of the global arms trade and the cost of war to the poorest people in the world. It will then expose for the first time the different ways that UK high street banks use our money to finance the arms industry.We will then contrast the hypocrisy of the ethical claims made by the banks and the unseen reality of their investments. Finally, War on Want will show how we can take action to stop account holders’ money from being used to fuel conflict, poverty and human rights abuses across the world.

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

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1. The arms trade – “theft from those who hunger”

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.” Dwight D. Eisenhower, 19532

Worldwide, military spending is rising.While military expenditure decreased after the Cold War ended, falling to $831 billion in 1995, spending has since rebounded, peaking at $1,158 billion in 2006.3 The US spends by far the most money on arms annually – $528.7 billion in 2006, or 46% of global military spending. The military expenditure of the top five countries (the US, UK, China, France and Japan) accounts for 63% of the global total, and the top 10 account for 77%.4

1.1 Making a killing

Only five countries account for around 90% of arms exports. These five are the permanent members of the UN Security Council: the US, China, UK, France and Russia.5 In 2007 the UK had the dubious honour of topping the list of global exporters with a record $19 billion in orders, the largest of which was a $8.4 billion order from Saudi Arabia for 72 Eurofighter/ Typhoon aircraft. Over the last five years the US has exported $63 billion in arms, more than any other country, followed by the UK, which has exported $53 billion, Russia ($33 billion), France ($17 billion), Germany ($9 billion) and Israel ($9 billion). Over the same period the main importers were Saudi Arabia, which purchased arms worth $31 billion, with India ($18 billion), the US ($17 billion), Australia ($11 billion), Canada ($10 billion) and Pakistan ($6 billion) rounding out the list of the world’s top arms importers.6 The 10 largest arms companies in the world are shown in the table below, along with the 10 largest British arms companies. A company may derive only a small percentage of its total sales from military products yet still rank as a major arms company.

Table 1: Major UK and international arms companies7
Company Lockheed Martin Boeing BAE Systems Northrop Grumman Raytheon General Dynamics EADS L-3 Communications Finmeccanica United Technologies Rolls Royce QinetiQ GKN VT Group Cobham Babcock Ultra Electronic Meggitt Chemring
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Country US US UK US US US Netherlands US Italy US UK UK UK UK UK UK UK UK UK

World Ranking 1 2 3 4 5 6 7 8 9 10 16 36 40 45 46 55 65 82 100

UK Ranking

Total Sales Military sales ($ million) as % of total 39,620 61,530 1 29,968 30,148 20,291 24,063 52,019 12,477 16,466 47,829 2 3 4 5 6 7 8 9 10 14,077 1,983 6,797 1,740 1,979 1,456 739 1313 357 91.0 50.0 93.0 78.4 96.1 78.0 25.4 80.1 55.0 16.0 29.0 76.3 20.2 70.0 61.4 59.0 76.0 39.0 89.0

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

The table shows each company’s total sales, and the percentage of those sales that are arms-related. For example, United Technologies is the 10th largest arms company in the world, despite deriving only 16% of its sales from military equipment. The rankings are based on the value of each company’s military sales.

normal economic activity difficult. Uncertainty and fear also make it hard to carry out the work necessary to survive. As one person in Burkina Faso pointed out during a recent survey, “How can people do business when they fear attack every time they transport their goods?”10 Trade is badly affected by conflict, and foreign investment is withdrawn or scaled back. Food production is one of the industries worst hit by conflict, undermining food security for the whole population. Humanitarian and aid workers are often withdrawn during conflict, reducing vital services to the civilian population and increasing the number of deaths attributable to the conflict. Even after a conflict has ended, the misery it causes continues. Internal displacement, a common consequence of war, makes resumption of normal activity difficult. The infrastructure that was destroyed must be rebuilt, which diverts money away from social spending. The psychological effect on the population at large may reverberate for years.

The arms industry is not an industry like any other. It profits from products explicitly designed to maim or kill human beings or destroy assets and infrastructure, and contributes directly to instability and poverty worldwide. At the start of the 20th century 5% of all war casualties were civilians; today 90% of people killed and wounded by armed conflict are civilians.8 War is also a major cause of poverty worldwide – of the 30 least developed countries worldwide, half have suffered a recent conflict.9 Beyond the loss of human life, the destruction of crucial infrastructure such as roads, factories and utilities makes

1.2 Fuelling poverty

Eritrea ranks 157th in the Human Development Index yet devotes 24.1% of its GDP to military expenditure Picture: Stefan Boness/Panos Pictures

The United Nations Development Programme (UNDP) has recognised the threat the arms trade poses, naming military expenditure as a major barrier to achieving the Millennium Development Goals.11 Large debts assumed by developing countries to purchase military equipment exacerbate the problem. One recent survey showed that among the 17 main arms-exporting countries, only four had ever disallowed a deal because of development concerns, and only 10 would consider such action – despite the fact that all 17 are signatories to agreements that arms deals should be assessed for their impact on development prior to approval.12 Whilst the world gave $104 billion in development aid in 2006, world military expenditure in the same year was $1,158 billion. The US spent £11.3 billion on aid, compared with £273 billion on military purposes, a figure larger by a factor of 24.13 The UK is the third largest exporter of arms to developing countries.14 In fact, from 1998 to 2001 the USA, UK and France earned more income from arms sales to developing countries than they gave in aid.15 BAE Systems is the UK’s largest arms company, with annual sales exceeding £15 billion.16 It manufactures a vast range of products from ammunition and missiles to helicopters, fighter jets, aircraft carriers and nuclear submarines. BAE has supplied arms to developing countries. Examples include Tanzania, which was taking part in the World Bank’s Highly Indebted Poor Country (HIPC) programme for debt relief in 2001 when it purchased a £28 million military radar system from BAE. BAE also signed a £1.5 billion deal to supply Hawk aircrafts to South Africa.17 Of the 10 countries with the highest military expenditure as a percentage of GDP, six rank in the bottom half of the world’s Human Development Index, and four (Eritrea,Yemen, Burundi and Angola) fall in the bottom 25 of the world’s human development rankings.18 As a point of comparison, the average military expenditure as a percentage of GDP for the world’s top five military spenders (the US, UK, China, France and Japan) was 2.42 %.19

Table 2: Military expenditure and Human Development Index rankings20
Military expenditure Human (% of GDP) Development Index rank (177 countries total) Eritrea Oman Israel Saudi Arabia Yemen Burundi Iran Angola Jordan Syria 24.1 11.9 9.7 8.2 7.0 6.2 5.8 5.7 5.3 5.1 157 58 23 61 153 167 94 162 86 108

In 2006 the UK government approved sales by UK arms companies to 19 of the 20 countries identified by the Foreign and Commonwealth Office as ‘countries of concern’ for human rights abuses. These countries included Saudi Arabia, Israel, Colombia, China and Russia.21 Colombia, Russia and Israel are also countries in conflict. Deals have been approved in other conflict countries including Algeria, Turkey, Pakistan, Afghanistan, Indonesia and Georgia. In 2007 the UK government, in defiance of an arms embargo, allowed UK companies to sell Zimbabwe £1 million in cryptography equipment and software. Israel is a regular customer of the UK arms industry, despite its flagrant violations of international law, including the military occupation of the Occupied Palestinian Territories. In 2006 the government approved for sale to Israel a laundry list of military hardware: helicopters, military aircraft cockpit displays, unmanned vehicles, anti-armour missiles and other electronic warfare equipment.22 BAE Systems makes subsystems, or components, for the F-16 fighter jet, of which Israel has 236. F16s have been deployed by Israel against civilian populations in both Lebanon and Gaza.23

1.3 Profiting from war and human rights abuses

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BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

Palestinian human rights are violated on a daily basis under Israeli occupation Picture: Matt Robson/EAPPI

Many US companies also sell to Israel, including Boeing (Apache helicopters) and United Technologies (Black Hawk helicopters).24 Lockheed Martin, the world’s largest arms company, sells F-16 aircraft, F351 joint strike fighters and C-130J tactical transports to Israel in spite of its illegal occupation of Palestine. As one defence market analyst put it, “The Israeli Air Force now flies only US-origin fighters, a mix of F-15s and F16s, and the rest of the service’s fleet is almost completely of US origin.”25 US contractors such as Boeing, Raytheon, Alliant Techsystems, Northrop Grumman and Lockheed Martin all benefit directly from US military aid to Israel. A $1.2 billion package was approved by the US Senate in the wake of the 2006 war in Lebanon, despite acknowledgement from the State Department that Israel had used American-made cluster bombs in the conflict.26 The Iraq and Afghanistan conflicts have been a boon to arms companies in the US and the UK. One UK company that has benefited particularly from the surge in demand from the Iraq war has been Chemring, which manufactures niche products such as missile countermeasures and flares. Profits have risen each year since the start of the occupation in 2003. In 2006

returns were almost 500% higher than in 2002, and share prices have followed.27 BAE supplies many weapons to the US and UK that have been used in the Iraq and Afghanistan conflicts, including V-22 guns and armoured fighting vehicles.28 BAE also recently won a contract from the UK Ministry of Defence to service its Tornado jets in Iraq for £10 million apiece.29 Lockheed Martin also supplies extensively to the US and UK governments to fulfil demand from the ongoing conflicts in Iraq and Afghanistan. These supplies include military ground vehicles and sniper targeting pods for fighter aircraft, amongst other products. There are some weapons that have come under particular criticism for their toll on civilian life even long after a war has ended. Cluster munitions are one such weapon. They are designed to scatter dozens to hundreds of smaller bomblets over a large area and can cause high levels of civilian casualties both during attacks because of their indiscriminate, wide-area effects, and long afterwards, since unexploded ordnance turns fields, roads and even schools into minefields. One in four cluster munitions victims are children.

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The world reached a consensus on cluster bombs in May 2008, with more than 100 countries, including the majority of stockpilers, agreeing a treaty to ban the use, production, stockpiling and transfer of all cluster bombs. The treaty will be signed in Oslo on 3 December 2008 and millions of these weapons will now be destroyed.30 Major producers of cluster munitions, such as the US, Russia and China, still oppose the ban. GenCorp, Lockheed Martin, Textron, Raytheon and Thales have all produced cluster munitions.31

Another deeply controversial weapon that has faced worldwide opposition is depleted uranium. Depleted uranium is a toxic and radioactive weapon that is used to pierce armour. It has been used in Iraq, Bosnia, Serbia and Kosovo, mainly by US and UK troops. The weapon has been linked to significant increases in cancer and birth defects, amongst other health problems which are long term and often life threatening. General Dynamics, GenCorp and Alliant Techsystems all produce depleted uranium munitions, as did BAE before 2003.32

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BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

2. Financing the arms trade

New evidence published in this report for the first time from financial databases AMADEUS and ORBIS reveals the extent to which British high street banks finance the UK’s and the world’s largest arms companies. UK banks also finance smaller manufacturers of particularly abhorrent weapons like cluster bombs and depleted uranium. The major UK banks fund the arms industry through a variety of ways: • Direct investment in shares • Participation in loan syndicates • The provision of banking services

The British Bankers Association was unwilling to provide an estimate of the value of acting as principal banker to arms companies, citing trade secrecy. However, considering that BAE’s annual sales exceed £15 billion33 and Chemring (the smallest of the UK companies considered) earned revenue amounting to £254 million,34 there are obviously lucrative amounts to be made from managing these companies’ accounts.

Each of the high street banks acts as a principal banker to at least two of the largest British arms companies, whilst Royal Bank of Scotland and Barclays are principal bankers for four of the top 10. The table overleaf shows which arms companies each bank is associated with, according to information provided in each company’s most recent annual report.

2.1 Providing banking services

Shareholding is a form of direct ownership in a company that entitles the shareholder to a proportion of the firm’s earnings and assets. For example, if you own 5% of a company’s total shares, you have claim to 5% of its assets. Shareholders profit from dividend payments or by selling their shares at a higher price than that at which they bought them. Banks that hold shares in arms companies not only benefit from the arms trade, but are explicitly endorsing the industry and are therefore complicit in those companies’ actions. Banks can use

2.2 Directly investing in arms companies

An American tank in Najaf during the US siege of the city, August 2004 Picture: Kael Alford/Panos Pictures
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Table 3: UK arms companies’ principal bankers in 2007
HSBC BAE Systems Rolls Royce QinetiQ GKN VT Group Cobham Babcock Ultra Electronic Meggitt Chemring Total 2 4 3 their own money to buy shares, or can invest other people’s money through funds they own and manage. The statistics that follow include both. In the UK, companies are required by law to report all shareholders with holdings above 3%. Barclays and Lloyds TSB are the only high street banks with stakes in UK arms companies which exceed the reporting threshold. However, by examining specialised company information from the database AMADEUS, we have uncovered a much fuller picture.35 This report exposes for the first time the fact that all five high street banks have shareholdings in Britain’s largest arms companies (a detailed breakdown of the holdings can be found in the Appendix). In fact, four of the five major UK banks hold shares in every single one of the UK’s top arms companies. Royal Bank of Scotland is the exception; it invests directly in six of the 10. Abbey’s parent company, Santander, holds shares in three UK arms companies. Royal Bank of Scotland, which possesses holdings of a fraction of 1% in only six companies, has the smallest combined stake, worth £36.4 million.36 HSBC and Halifax Bank of Scotland, the other two banks without any stakes above the reporting threshold, nevertheless have holdings worth significant sums – £409.5 million and £483.4 million, respectively.With £717.5 million in shares, Lloyds TSB ranks as the UK banking industry’s second largest shareholder. Barclays’s investments in the UK arms sector total £1.39 billion, the highest total amongst UK banks. X X X X X 2 2 Figure 1: Total value of shareholdings in UK arms companies as of June 200837
1,600 1,400 1,200 1,000 800 600 400 200 0 HSBC RBS Barclays HBOS Lloyds TSB Banco Santander Abbey

RBS X (NatWest) X (NatWest)

Barclays

HBOS

Lloyds TSB X X

X

X X X

Companies in the US are only required to report investors with holdings that exceed a 5% threshold. Barclays is the only UK high street bank with investments in US and European companies above the reporting thresholds. Its £5.9 billion in international arms investments dwarfs its UK holdings, and Barclays is amongst the top 10 largest investors in the US companies listed in Table 4. Barclays’s global arms investments total £7.3 billion. Through the ORBIS database, we were also able to examine the portfolios of those banks whose shares in arms manufacturers fell below the reporting threshold. Our research uncovered that HSBC holds shares in two US arms companies, General Dynamics and GenCorp, and the French arms company Thales totalling £41 million. The extra holdings bring the total value of HSBC’s investment in arms companies to £450.6 million.

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BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

£, millions

Both Barclays and HSBC invest in companies that produce cluster munitions and depleted uranium. Barclays has investments in five manufactures of cluster munitions: GenCorp, Lockheed Martin, Textron, Raytheon and Thales. HSBC holds shares in three of these companies.With the exception of Halifax Bank of Scotland, every UK high street bank has given loans to at least one cluster munitions producer in the last decade. As Belgian NGO Netwerk V points out, “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.”38 General Dynamics, GenCorp and Alliant Techsystems all produce depleted uranium munitions, and so did BAE prior to 2003. Banks investing in or lending to any of these companies are therefore complicit in the serious long-term health problems associated with depleted uranium. Barclays holds shares in all of these companies; HSBC has investments in two; and, with the exception of Halifax Bank of Scotland, all of the UK banks have issued them loans.

2.3 Investing in cluster munitions and depleted uranium

Besides the banks, many institutional funds such as pension funds and insurers hold large stakes in arms companies. This report identifies eight investors – Aviva, AXA, F&C, Invesco, Legal and General, Prudential, Schroders and Standard Life – with particularly large holdings. These companies, however, are by no means the only institutional investors active in the arms industry. (See the Appendix for full details of investor holdings in the arms companies.) Many institutional funds are signatories to the UN’s Principles on Responsible Investment (UNPRI), which emphasise incorporating environmental, social and corporate governance issues into investment analysis and ownership policy and practice. Of the investors identified, AXA, F&C, Schroders and Standard Life are UNPRI signatories. However, most institutional investors exclude arms producers from their ethical funds only. These are highly specialised funds that make up only a tiny percentage of the assets they manage.

Institutional investors

Table 4: Barclays and HSBC shareholdings in international arms companies39
HSBC % of total shares Lockheed Martin Boeing Northrop Grumman Raytheon General Dynamics EADS L-3 Communications Finmeccanica United Technologies Thales ATK GenCorp Textron Total 41,075,108 0.37% 849,227 0.21% 12,845,939 0.15% 27,379,942 Value of holding (£) Barclays % of total shares 2.83% 4.58% 6.32% 3.28% 3.69% 0.44% 3.54% 0.65% 3.55% 0.55% 3.80% 5.42% 4.41% Value of holding (£) 626,125,064 1,359,639,291 823,870,737 438,651,204 673,546,569 39,238,390 222,953,375 40,637,948 1,235,278,472 33,644,127 68,248,988 12,440,025 325,763,845 5,900,038,035
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BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

The investors and insurers identified here include some of the largest UK companies in the sector. Aviva, for example, is the UK’s largest insurer (it owns Norwich Union). Aviva and Legal and General have 22.75 million customers between them – 37.5% of the UK’s entire population.40 This means that the money that people in Britain put towards their savings or use for insurance protection very likely supports weapons production. Careful examination of the shareholders of major British arms manufacturers reveals several unexpected names (the holdings can be seen in detail in the Appendix). Large British companies such as British Airways, BT and the National Grid have arms investments. The Universities Superannuation Scheme also has significant holdings in arms companies, and has stated explicitly that it will not exclude them from its investment portfolio. Even governments which are committed to ethical investment hold significant shares in arms companies. In 2003 the Norwegian Government Commission on Ethical Guidelines for the Government Pension Fund recognised that “owning shares or bonds in a company that can be expected to commit gross unethical actions may be regarded as complicity in these actions”. Norway’s pension fund has accordingly dropped from its investment portfolio manufacturers of cluster munitions. Despite its principled stance on ethical shareholding, Norway is a major investor in UK arms companies, possessing shares in six UK arms companies worth a total of £70.6 million.

Another form of financial support for the arms trade is through lending. This section looks at general lending to the arms industry by examining all deals from the last 10 years. These deals are listed in the Loan Pricing Corporation database run by Reuters DealScan, a subscriber database used by the financial industry. The database reveals that in the last decade the top five UK banks have issued nearly 200 loans to the arms companies under investigation in this report.41 Some loans that finance specific defence exports have already been in the spotlight because they have involved sales to developing countries. For example, Barclays financed controversial BAE sales to Tanzania and South Africa.42 HSBC and Lloyds TSB made claims to the UK government’s Export Credit Guarantee Department for arms exports to Indonesia.

2.4 Loaning money to arms companies

Lebanese children alert locals to the presence of unexploded ordnance after Israel air strikes August 2006 Picture: Sean Sutton/MAG/Pano Pictures

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BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

Number of deals

This deal sparked a great amount of controversy because Indonesia had been suspected of using the weapons against its own population.43 These loans for individual projects are subject to the UN’s Equator Principles, a framework used to evaluate the social and environmental impact of project financing. However, the loans exposed in this report are listed in company books under ‘corporate purposes’, ‘working capital’, ‘debt repayment’ and other non-specific terms. Because the sums of money involved are so huge, loans are most often issued in syndication with other banks.44 The loan money finances any of the company’s activities, and the banks have no control over where the money goes or ability to assess its impact. As Figures 2 and 3 show, Royal Bank of Scotland is the most active in lending to the arms sector, having participated in 52 deals over the last 10 years. If we measure net worth, Royal Bank of Scotland’s trade deals also rank first in the industry: the total value of the syndicated loans Royal Bank of Scotland participated in amount to £44.6 billion.45 Barclays is not far behind Royal Bank of Scotland in terms of both the number and value of deals with the arms sector. HSBC participated in more syndicated deals than Lloyds TSB (43 versus 40), but their net value was lower (£27.1 billion versus £33.3 billion). Halifax Bank of Scotland ranks last, with participation in only six deals that amount to £1.2 billion – a mere 2.6% of the total value of Royal Bank of Scotland’s syndicated deals.

Figure 2: Number of syndicated loans each bank participated in, 1998-200846
60 50 40 30 20 10 0 Barclays HBOS HSBC Lloyds TSB RBS

Figure 3: Value of syndicated loans each bank participated in, 1998-200847
50 45 40 35 £, billions 30 25 20 15 10 5 0 Barclays HBOS HSBC Lloyds TSB RBS

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

13

3. Corporate social responsibility: rhetoric v reality

The rise of corporate social responsibility means that many companies now advertise their apparent commitment to environmental protection, sustainable development and human rights. As we have seen, the arms industry represents a direct and pernicious threat to these goals.Yet most banks do not even address the sector specifically in their CSR policies, and the deep involvement of banks in the arms sector that this report exposes is indisputably at odds with their purported commitment to sustainable development and human rights. What Halifax Bank of Scotland says… Halifax Bank of Scotland provides no information on its website about its policy on the arms industry. The bank’s corporate responsibility team, however, responded to our questions about its policy, stating: “We will never knowingly deal with organisations or individuals who are engaged in illegal or unethical activities.”48 When asked to clarify what Halifax Bank of Scotland understands ‘ethical’ to mean, no definition was forthcoming. Instead, we were referred to the responsible investment policy of Halifax Bank of Scotland’s asset management business, Insight Investment, and specifically to the ethical fund that Insight Investment runs. This ethical fund,

which holds a mere £33.2 million of the £109 billion Insight Investment manages, specifically excludes the arms industry.49 …and what it does Apparently, Halifax Bank of Scotland applies ethical standards to only one fund which it manages, while the vast majority of its holdings are not subjected to any ethical oversight. The exclusion of the arms industry from its ethical fund suggests that a division of the bank considers arms companies unethical. The rest of the bank’s dealings with arms companies, therefore, violate its stance to “never knowingly deal with organisations or individuals who are engaged in illegal or unethical activities”. What Lloyds TSB says… Lloyds TSB also does not have a policy relating to the arms industry (and is the only bank that does not have a CSR link on its homepage). Its CSR policy does not address human rights or sustainable development. Lloyds TSB also ignored our request for more information regarding its stance on the arms industry. The guiding principle of its investment management arm, Scottish Widows Investment Partnership, is to “maximise returns for clients without making any moral or ethical judgements on their behalf. This means that we get involved in social, ethical and environmental issues only where these may affect a company’s long term financial performance.”50 Like Halifax Bank of Scotland, Scottish Widows Investment Partnership offers a specialist ethical investment fund for customers who are concerned with such issues. This fund does not invest “in companies which produce alcohol or tobacco, generate turnover from gambling, publish or distribute pornography, provide animal testing services, test cosmetics on animals, own or operate nuclear power stations or sell fur products”.51 Arms companies are not mentioned. …and what it does As Lloyds TSB does not mention the arms industry in its CSR policy, its actions do not breach any stated principles. It is interesting to note, however, that its ethical fund considers cosmetic testing on animals as grounds for exclusion, but makes no mention whatsoever of dealing in weapons. What HSBC says… Of the three banks with publicly available CSR policies, HSBC’s guidelines contain the most restrictive language on the topic of involvement with the arms industry. Generally, HSBC recognises that “being one of the world’s biggest banks means the decisions we make can have a big impact.We aim to lend and

Israeli army Apache helicopter over Nablus, West Bank, April 2002

14

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

invest responsibly, avoiding projects where the potential for social and environmental damage outweighs the economic benefits.”52 Included as part of its explanation of responsible lending and investment is a commitment to “avoid certain types of business, such as financing weapons manufacture and sales, dealing with countries subject to international sanctions, and transactions that might be used to evade tax or to launder earnings from crime”.53 …and what it does In spite of its commitment to “avoid certain types of business, such as financing weapons manufacture and sales”, this report shows that HSBC has arms company shareholdings worth £450 million, participates in loans to arms companies and acts as principal banker to two major UK arms companies. So how does HSBC reconcile its continued involvement in the sector with the robust language of its CSR policy? In a letter to Campaign Against Arms Trade on 17 February 2006, HSBC acknowledged its decision to “withdraw progressively from financing the manufacture and sales of weaponry”, but added the caveat that it “would honour contractual commitments that had already been made”.54 However, this policy was originally unveiled in 2000. HSBC attributes the delay to a naturally occurring lag in implementation. In the same letter the bank explains; “it has taken us a little time to disengage from the weapons business and to reach the position we have today where our policy is now fully in place”.55 However, since 2000, there has been no significant downward trend in HSBC’s lending to the arms sector, and there was a major rise in lending in 2005. Figure 4: Value of HSBC loans to arms companies, 1998-200756
9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

disservice by not participating in the loans is hard to credit. Since its pledge to abstain from financing weapons manufacturers, HSBC has in fact participated in loans that were oversubscribed, which means that there were other banks ready and willing to step in and take its place. HSBC has not followed through on its promised full withdrawal from the weapons trade, and it therefore operates in direct violation of its publicly stated policy.

Of the top UK banks, HSBC now has the most restrictive policy towards the arms industry. Its current stated policy marks a major change from its activities as Midland Bank in the 1980s and 1990s. Midland Bank, which was taken over by HSBC in 1992 and rebranded as HSBC in 1999, had close ties to MI6 and was described as the “most enthusiastic of all banks in pursuit of defence export financing”. Midland set up hundreds of millions of pounds worth of trade credits for Iraq, and was closely involved in a £1 billion arms contract with Malaysia.57 What Barclays says… Barclays also has a policy that specifically addresses the arms industry, which states that it “provides financial services to the defence sector within a specific policy framework.We assess each proposal on a case-by-case basis and legal compliance does not automatically guarantee our support.”58 The statement explains that “the aim is to ensure that defence exports financed by Barclays are not used by foreign authorities either to oppress their own populations or to support unjustified external aggression.”59 Barclays also states that it will not finance the manufacture of certain weapons, including “nuclear, chemical, biological or other weapons of mass destruction”. Moreover, its policy also “explicitly prohibits financing trade in landmines or any equipment designed to be used as an instrument of torture”.60 Barclays acknowledges the potential harm to its reputation from holding any ties to the arms trade. An internal document states that the bank’s guidelines should apply to “any customer relationship whether borrowing or not”.61 Furthermore, the Barclays Code of Conduct contains a human rights clause which emphasises the “need to ensure that we are not involved in
15

HSBC: Change in arms policy

Value of loans, £ million

Because these loans are done in syndication with other banks, the idea that HSBC would be doing longstanding customers a

Year

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

human rights violations, either directly or indirectly and that we operate in accordance with the Universal Declaration of Human Rights”. The clause continues, specifying that the bank “will not be complicit, either directly or indirectly in the condoning of human rights violations… We will take steps to understand the potential human rights impacts of the organisations, projects and activities we support.”62 …and what it does The arms industry’s effect on human rights is well documented, yet seemingly does not preclude Barclays’s involvement with or support for it. As this report shows, the nature of Barclays’s involvement with the arms trade violates its policies. Depleted uranium is radioactive, yet we uncovered evidence of Barclays’s involvement with three depleted uranium producers. Our research also reveals that Barclays has issued loans to companies that produce cluster munitions. In addition, by participating in loans for unspecified corporate purposes, Barclays violates its stated commitment to assess case-by-case each funding proposal from an arms company. Finally, the sheer scale of Barclays’s investments in arms companies – £7.3 billion shares that we uncovered – is irreconcilable with its stated concerns for sustainable development and human rights. What Royal Bank of Scotland says… Royal Bank of Scotland takes a similar position to Barclays – that it will finance legal activities in strict accordance with best standards. Royal Bank of Scotland says that it does not accept funding applications from companies whose activities contravene British legal standards, even if they are based outside the UK. The bank’s policy on this issue reads, “Within the UK, the manufacture and export of defence equipment is subject to strict regulation and licensing arrangements laid down by the Government and approved by Parliament, and in accordance with internationally accepted codes and standards. We only fund businesses that comply with these regulations. In relation to landmines, UK Government policy reflects the highest international standards in response to the Ottawa Convention and bans the production and export of all types of anti-personnel landmines, including non-detectable ones, to all countries. Royal Bank of Scotland does not support any application for funding world-wide that would contravene these standards.”63

…and what it does This report did not reveal any instances where Royal Bank of Scotland acted in direct violation of its arms policy. The bank, however, keeps ties to the arms industry through investment, lending and the provision of banking services to arms companies. This longstanding support for the industry is fundamentally at odds with Royal Bank of Scotland’s stated commitment to human rights and sustainable development.

The Co-operative Bank has a far more comprehensive policy regarding the arms industry than any of the major high street banks. Its explanatory leaflet about the arms industry addresses all of the reasons behind the Cooperative Bank’s policy, most notably the proven links between conflict and poverty and the mutually selfdefeating aims of development aid and arms exports. The document then sets out a restrictive policy on investment in the arms industry. The policy states that: “the bank will not invest in: • companies which manufacture for systems (or products) that kill, maim or destroy • companies who issue licences for the production of armaments for oppressive regimes • individuals or organisations involved in the brokerage of armaments to oppressive regimes • companies which export products to oppressive regimes that, while not designed to kill, maim or destroy, are parts for equipment which have a battlefield application or are essential to the operation of a weapon, such as radar and electronic warfare, military communications and armour.”64

The Co-operative Bank’s ethical policy

This report found no evidence of any involvement by the Co-operative Bank with the companies investigated. By contrast, HSBC, which also pledges not to finance weapons manufacturers, was revealed to have extensive ties with the worst offenders from the arms trade.

16

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

4. Conclusion and recommendations

The arms trade provides the destructive hardware used in conflicts across the world. This report has exposed, for the first time, the extent to which the five main British high street banks are funding this violent trade. High street banks are using our money to fund companies that sell arms used against civilians in wars across the world, including conflicts in Iraq and Afghanistan. They are financing an industry that sells arms to countries committing human rights abuses such as Israel, Colombia and Saudi Arabia. Money from our savings and current accounts is being used to fund companies that produce pernicious weapons like depleted uranium and cluster bombs. Faith in the banking sector is already at an all-time low. The revelation that high street banks are investing in weaponry will add to this public mistrust. Barclays, Halifax Bank of Scotland, HSBC, Lloyds TSB and Royal Bank of Scotland are all complicit. Barclays stands out for the sheer scale of its investments. Royal Bank of Scotland is the most active in lending to the arms sector. HSBC shows its glaring hypocrisy by having claimed to

divest from the arms trade while actually continuing its holdings. Whilst the complicity of high street banks is the focus of this report War on Want believes that the arms trade should ultimately be abolished. However, with governments such as the US and UK determined to pursue military adventures around the world, the arms trade remains big business.War on Want believes that now is the time to act to put an end to high street banks’ support for arms companies. As a result of the financial crisis there are now unprecedented calls for regulation of the banking sector. It is understood that the light touch of deregulation has been a major cause of the current financial crisis. Calls have focused on the social functionality of banks as providers of finance to small business and mortgages. By the same token War on Want believes that there should be regulation of bank lending and investment in respect of other social criteria.

Former Minister for Defence Procurement Lord Willy Bach and the then chairman of BAE Systems Sir Richard Evans sharing a hawk jet cockpit, Bangalore, India, February 2003

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

17

Take action

The government Write to the government and demand that: all banks are made to publish the full details of their loans, holdings and other banking services to the arms trade. Call on the government to introduce regulation which prevents high street banks from supporting the arms trade whether through loans, investments or other banking services. Write to: Rt. Hon. Lord Mandelson Secretary of State for Business, Enterprise & Regulatory Reform Department for Business, Enterprise & Regulatory Reform 1 Victoria Street London SW1H 0ET The banks Write to your bank and demand that they stop financing the arms trade and call for transparency on all their investments. You can threaten to move to a different bank if they don't guarantee that your money will stop being used to fuel conflict, poverty and human rights abuses. Write to: John Varley Chief Executive Barclays Group 1 Churchill Place London E14 5HP john.varley@barclays.com Dyfrig John Chief Executive HSBC 8 Canada Square London E14 5HQ dyfrigjohn@hsbc.com

Eric Daniels Chief Executive Lloyds TSB 25 Gresham Street London EC2V 7HN eric.daniels@lloydstsb.co.uk Chief Executive HBOS plc The Mound Edinburgh EH1 1YZ investorrelations@HBOSplc.com Stephen Hester Chief Executive Royal Bank of Scotland 135 Bishopsgate London EC2M 3UR investor.relations@rbsir.com

For further information:
Co-operative Bank www.co-operativebank.co.uk

Campaign Against Arms Trade www.caat.org.uk Cluster Munition Coalition www.stopclustermunitions.org

War on Want relies on your contributions to continue campaigning on corporations and conflict. Become a member today – you can join online at www.waronwant.org or use the form at the back of this report.

Join us!

18

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

Table 5: UK banks’ holdings in UK arms companies as of March 200865
Barclays Bank % of total shares 3.40% 4.12% 2,699,844 3.38% 6,243,255 5.99% 4,434,597 941,081 2.63% 838,256 1,386,715,728 9.86% 82,652,042 0.92% 45,262,721 0.59% 10.35% 88,547,148 0.55% 4,705,404 10,153,994 7,711,955 483,388,581 2.28% 33,702,937 0.75% 11,086,493 142,435,072 5.24% 124,600,964 4.21% 50,546,355 1.04% 12,486,510 3.49% 6.97% 4.03% 3.95% 4.96% 0.18% 64,359,932 0.40% 7,616,560 0.15% 1.33% 17,953,963 2.30% 31,048,206 5.22% 306,044,230 1.49% 110,681,044 1.45% 107,709,741 70,465,928 2,856,210 41,901,847 165,738,306 59,571,420 33,793,356 85,362,394 1,508,861 717,508,742 0.81% 0.57% 555,211,330 1.00% 163,297,450 0.91% 148,600,680 Value of holding (£) % of total shares Value of holding (£) % of total shares Value of holding (£) % of total shares 0.39% HBOS Lloyds TSB Banco Santander (Abbey) Value of holding (£) 63,686,006 0 0 0 6,843,568 0 0 0 13,940,230 0 84,469,803

HSBC Bank

Royal Bank of Scotland

% of total shares

Value of holding (£)

% of total shares

Value of holding (£)

BAE Systems

1.93%

315,164,079

0.13%

21,228,669

Rolls Royce

0.22%

16,342,168

QinetiQ

1.03%

13,904,197

0.20%

GKN

0.96%

18,279,744

VT Group

0.90%

10,805,634

0.52%

Cobham

0.80%

19,023,048

Babcock

0.29%

4,286,777

0.30%

Ultra Electronic

0.25%

2,138,820

0.11%

Meggitt

0.28%

4,818,845

Chemring

0.57%

4,778,059

0.10%

Appendix – Details of shareholdings

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

Total

409,541,370

36,385,702

19

20

Table 6: Institutional investors’ holdings in UK arms companies as of March 200866
F&C % of total shares 1.07% 1.24% 0.11% 1.03% 1.32% 0.20% 0.10% 5.87% 0.98% 3.26% 356.01 770.60 27.33 4.11% 16.87 0.87% 14.97 4.00% 50.22 2.85% 24.38 4.04% 34.56 68.84 34.45 1,597.18 1.48 2.61% 38.59 4.04% 59.72 4.76 0.47% 11.18 7.96% 189.28 0.69% 1.62% 3.85% 7.27% 4.83% 15.85 4.07% 48.87 1.33% 19.61 4.07% 77.50 1.47% 27.99 15.97 16.41 23.95 32.94 125.12 40.49 795.34 766.51 1.48 3.00% 40.50 3.82% 51.57 92.11 6.17% 458.32 5.10% 378.84 2.16% 160.45 1.41% 1.06% 4.93% 1.06% 1.55% 16.95% 5.69% 6.30% 174.73 1.07% 174.73 4.07% 664.62 1.84% 300.47 0.59% 96.35 104.74 14.31 93.87 12.73 36.86 250.55 48.68 108.42 Value of % of holding (£, total millions) shares Value of % of holding (£, total millions) shares Value of holding (£, millions) % of total shares Value of % of holding (£, total millions) shares Value of holding (£, millions) % of total shares 2.53% 2.67% 0.18% 6.03% 2.99% 0.64% 6.22% 3.36% 3.56% 5.13% Invesco Prudential Legal and General Schroders Standard Life Value of holding (£, millions) 413.14 198.33 2.43 114.82 35.90 15.22 91.94 28.75 61.27 43.00 1,004.80

Aviva

AXA

% of total shares

Value of % of total Value of holding (£, shares holding (£, millions) millions)

BAE Systems

1.85%

302.10

10.32%

1,685.23

Rolls Royce

2.96%

219.88

0.93%

69.08

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

QinetiQ

0.56%

7.56

0.96%

12.96

GKN

1.30%

24.75

5.46%

103.97

VT Group

3.47%

41.66

4.24%

50.91

Cobham

5.45%

129.59

5.79%

137.68

Babcock

1.54%

22.76

1.62%

23.95

Ultra Electronics

2.27%

19.42

1.61%

13.77

Meggitt

1.45%

24.95

6.53%

112.38

Chemring

1.14%

9.56

5.87%

49.21

Total

802.24

2,259.13

Table 7: Institutional investors’ holdings in international arms companies as of June 200867
F&C % of total shares 0.94% 0.49% 0.68% 0.16% 0.77% 0.97% 0.41% 50.53 0.31% 38.21 0.33% 109.03 40.67 275.05 0.29% 103.59 0.21% 75.01 41.87 0.57% 149.18 0.30% 78.51 0.37% 96.83 173.47 0.29% 73.98 0.73% 186.23 284.66 0.31% 180.09 0.91% 528.66 406.99 0.30% 129.89 0.49% 212.15 0.10% 58.09 Value of % of holding (£, total millions) shares Value of % of holding (£, total millions) shares Value of holding (£, millions) % of total shares Value of % of holding (£, total millions) shares Value of holding (£, millions) % of total shares Value of holding (£, millions) Invesco Prudential Legal and General Schroders Standard Life

Aviva

AXA

% of total shares

Value of % of holding (£, total millions) shares

Value of holding (£, millions)

Lockheed Martin

2.83%

1,225.29

Boeing

1.01%

586.76

Northrop Grumman

0.11%

28.06

8.61%

2,196.46

Raytheon

0.99%

259.10

General Dynamics

0.36%

128.59

EADS

1.52%

170.85

L-3 Communications 0.63% 0.86% 0.25% 0.18% 41.87 1,844.78 0.81 825.56 8.79 0.29% 66.31 10.19 0.22% 0.68% 429.00 0.31% 211.09 1.38%

0.73%

89.97

Finmeccanica

0.75%

59.10 939.71 0.10% 68.10

United Technologies

0.12%

81.71

2.12%

1,443.62

Thales

0.28%

21.59

ATK

0.74%

26.01

7.73 3.05 2,199.09 68.10

2.69%

94.55 152.64

GenCorp

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

Total

109.78

6,207.34

21

22

Table 8: Other shareholders in UK arms companies as of June 200868

British Airways Value of holding (£) 27,760,567 1,484,914 8,378,216 1,800,939 4,993,550 2,512,938 5,047,615 5,679,353 1,425,035 2,964,456 59,083,127 2,972,351 190,374,814 0.61% 5,113,362 0.17% 0.23% 0.13% 2,972,351 0.84% 19,974,200 2,512,938 1,967,714 0.87% 0.12% 0.10% 0.47% 0.22% 0.11% 1,484,914 4,189,108 0.51% 0.95% 155,132,578 0.53% % of total shares Value of holding (£) % of total shares Value of holding (£) % of total shares

BT Group

National Grid

Universities Superannuation Scheme Limited

Government of Norway Value of holding (£) 39,369,767 9,711,114 11,176,041

% of total shares

Value of holding (£)

% of total shares

BAE Systems

0.16%

26,127,592

0.17%

Rolls Royce

QinetiQ

0.11%

GKN

0.44%

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

VT Group

0.11%

1,320,689

0.15%

Cobham

0.24%

5,706,914

0.21%

Babcock

0.17%

Ultra Electronics

0.59%

7,443,094 2,065,219 838,256 70,603,491

Meggitt

0.33%

Chemring

0.17%

GenCorp

0.66%

Total

33,155,195

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extent of individual banks’ contributions within the loan syndicate. This section values of the loans are expressed in inflation-adjusted 2007 prices DealScan Database, Reuters Loan Pricing Corporation, 2008 DealScan Database, Reuters Loan Pricing Corporation, 2008

Loan Pricing Corporation database provides incomplete information on the

International, a leading provider of defence market intelligence services in the United States, as quoted in T Deen, ‘Israel Violates US Law With Attack on Lebanon’, Antiwar.com,18 July 2006

to Tom Baranauskas, a senior Middle East analyst at Forecast

45. The

therefore uses as a measure of comparison the total value of the syndicated deals

46. Reuters 47. Reuters 48. Email

Officer, HBOS, 15, 17 January 2008

exchange between War on Want and I Roe, Senior Corporate Responsibility

BANKING ON BLOODSHED: UK HIGH STREET BANKS’ COMPLICITY IN THE ARMS TRADE

23

Officer, HBOS, 15, 17 January 2008
50. Corporate 51. Prospectus 52. ‘What 53. ‘Our 54. I 55. I

49. Email

exchange between War on Want and I Roe, Senior Corporate Responsibility responsibility review 2006: Building long-term relationships, Lloyds TSB

www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=articleFWsocial&value=12769 &target=_self&site=pfs
60. ‘Corporate

59. ‘Corporate

Lending: Defence Sector’,

Investment Partnership, 25 July 2008

of Scottish Widows UK and Income Investment Funds ICVC, Scottish Widows

responsibility/csr-at-hsbc

we mean by corporate sustainability’, www.hsbc.com/1/2/corporate-

www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=articleFWsocial&value=12769 &target=_self&site=pfs
61. ‘Group 62. ‘Barclays

Lending: Defence Sector’,

our-sustainable-approach-to-banking

sustainable approach to banking’, www.hsbc.com/1/2/sustainability/

policy on the defence sector’, Barclays plc, July 2004

Relations, to Josh Gilbert, Campaign Against Arms Trade’,17 February 2006 Relations, to Josh Gilbert, Campaign Against Arms Trade’,17 February 2006 DealScan Database, Reuters Loan Pricing Corporation, 2008

Godfrey-Davis, ‘Letter from I Godfrey-Davis, HSBC Head of Group Corporate Godfrey-Davis, ‘Letter from I Godfrey-Davis, HSBC Head of Group Corporate

63. ‘Frequently

Group: statement on human rights’, Barclays plc, June 2006

www.rbs.com/global_options.asp?id=GLOBAL/FREQUENTLY_ASKED_QUESTIONS #corres8 Co-operative Bank – Good with money:The arms trade, The Co-operative Bank, database, Bureau van Dijk Electronic Publishing, 2008 database, Bureau van Dijk Electronic Publishing, 2008 database, Bureau van Dijk Electronic Publishing, 2008; ORBIS database,

asked questions – does the group lend to the defence industry?’

64. The

56. Reuters 57. S

&target=_self&site=pfs

www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=articleFWsocial&value=12769

58. ‘Corporate

1994, pp 338-341

Dorril, The Silent Conspiracy: Inside the Intelligence Services in the 1990s, London, Lending: Defence Sector’,

65. AMADEUS 66. AMADEUS 67. ORBIS 68. AMADEUS

2008

database, Bureau van Dijk Electronic Publishing, 2008

Bureau van Dijk Electronic Publishing, 2008

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