New Internationalist

The bang in the buck

Issue 392

Banks fund arms traders. Dheepthi Namasivayam goes in search of ones that won’t.

Kael Alford / PANOS
Empty chairs in front of walls scarred by bullets. This home – like too many others in Fallujah, Iraq – has been caught in the crossfire as US troops have retaliated against insurgents. Kael Alford / PANOS

Burned. Burned bodies. I mean, it burned children, and it burned women. White phosphorus kills indiscriminately… And when it makes contact with skin, then it’s absolutely irreversible damage, burning of flesh to the bone.’ This is how US soldier Jeff Englehart, who served in Fallujah, west of Baghdad, described the effects of white phosphorus weapons used by his military.

His words reach into me, conjuring up the same reaction that I had at school to napalm-burnt humans during the Vietnam War. Reading about it in history lessons is one thing, but the realization that it happens in your lifetime is another thing entirely.

White phosphorus is frighteningly versatile: it has been used to disperse explosive munitions for ground attacks and to detonate aerial explosions with a timed fuse. It limits enemy vision, destroys enemy equipment and is luminous in the dark. On plants, white phosphorus burns leaves and causes the defoliation of trees and shrubs.

On humans, the effects are unimaginably horrible. Flesh is burned away to the bones, ensuring a slow, painful death for its victims. Blisters appear as the skin burns, sending out a distinctive garlic odour. In November 2004, this fate befell thousands of Iraqis after the US military attacked Fallujah by carpet-bombing the city with white phosphorus-filled ammunition in a revenge attack for the highly publicized murders and mutilations of four US military contractors.

The world didn’t find out until exactly a year later, when Italian broadcaster RAI produced a documentary. Only after this report did the international community fully comprehend the realities of white phosphorus used on human populations and the dangers of using the chemical again.

Excuse me for asking

Further production of white phosphorus spells imminent disaster, both for the Iraqi populations and the US forces trapped in the quagmire that is the Iraq War. But it’s going to happen anyway. Pine Bluff Arsenal in Arkansas, owned and operated by the US military, is the only white phosphorus-producing factory in North America. Two major corporations – Shaw Environmental Inc and Teledyne Brown Engineering – have been given contracts for modernizing the factory.

Guess who is funding them? I wanted to be sure it wasn’t me. So, armed with a pen, paper and a head full of uncertainty, I set off with a question – just where is my money being invested?

I told the bank inquiries officer about the atrocities caused by white phosphorus in Fallujah. ‘Welcome to corporate Australia!’ he said

You’re the first person who has ever asked me that,’ said the young teller at National Australia Bank (NAB) – the second-largest in Australia. ‘Are you doing research?’ he added suspiciously.

No, of course not, I just want to make sure my money is not spent on human rights abuses,’ I said.

My curiosity was piqued. Was his response standard? At the counters of the four main Australian banks that I visited – NAB, Westpac, Commonwealth Bank and ANZ – none of the staff could offer guarantees that their customers’ deposits were being reinvested ethically. None knew of secure screening processes in place to monitor where consumers’ money is being spent. Disturbingly, they seemed perturbed about my inquiries, evidently unprecedented in their time behind the counter.

As you’re reading this, you may say: ‘Of course! Why should they know? The bank is a bureaucratic labyrinth. The counter staff is just there to process the money. It’s the people higher up who direct where it goes.’ Perhaps. But surely counter staff attitudes provide a litmus test of banking culture – a window into how bankers think. The thing that I found fascinating was the absence of any interest or knowledge about both ethical investment or where a customer’s money goes.

I told the ANZ bank inquiries officer about the atrocities caused by white phosphorus in Fallujah. He seemed to find my questions amusing. ‘Welcome to corporate Australia!’ he said, adding: ‘The rich get richer and the poor get poorer.’ He suggested that I write a letter to the Chief Executive Officer of the ANZ, John McFarland, voicing my concerns. ‘I’m sure if he has the time, he’ll be able to answer your questions.’ Yeah. Right. Thanks for the help.

No wonder customers aren’t asking questions. Banks make money and customers gain interest. It’s a win-win situation. Perhaps I shouldn’t be asking questions either. After all, these mega-corporations work in ten zero figures and I’m a journalism student working in two digit figures. Competition for my deposits is hardly going to change their behaviour. Resistance is futile. That’s just how it works.

But the Fallujah story haunts me. So I do what most consumers can’t – I stop being a customer and start being a journalist: I scratch beneath the surface.

Network of complicity

Research into the two corporations currently modernizing the US white phosphorus-producing factory soon turns up financiers. Global financial groups AXA and ING have a combined investment of almost $37 million in the two. French-based AXA and Dutch-based ING group both provide a range of financial and wealth management services around the world. In Australia alone, AXA and ING boast funds exceeding $52 billion under their combined management.

None of the four major Australian banks appear to have a direct connection to the white phosphorus producers. But at least two have a working relationship with AXA or ING: the National Australia Bank (NAB) appointed AXA two years ago to handle commercial insurance for its British customers, and the ANZ owns 49 per cent of ING Australia.

My question is whether these relationships with AXA and ING indirectly taint them, making them somehow unethical. Surely such complicity is too remote?

Not according to campaigner Christophe Scheire from the Belgian NGO Netwerk Vlaanderen. His organization has done extensive research on AXA and ING, so I ring him up with some questions from Australia. By working hand-in-hand with companies that fund arms traders, Scheire sees complicity, even approval: ‘You’re saying to the company: “No problem – go ahead and invest in white phosphorus munitions.”’

Aren’t the connections too removed?’ I ask. If banks that liaise with AXA and ING should be held accountable for the injuries caused by white phosphorus production, what about the other parties who are pivotal to its production such as the builders, architects, engineers and workers who are constructing the new white phosphorus factory? Then there are the caterers who feed them. And the people who sell them clothes. Just where do we draw the line?

You can’t, says David Heller, campaigner for the Belgian NGO For Mother Earth, which works closely with Netwerk Vlaanderen. Complicity comes from all components of arms production. But according to Heller, even if there were a line, the banks would be behind it: ‘The whole business of arms production is financial – it depends on business and loans.’

Netwerk Vlaanderen is one of the few NGOs in the world that’s working to make banks accountable for investing in companies that abuse human rights. Together with two Dutch peace organizations and For Mother Earth, Netwerk Vlaanderen compiled a report in 2003 called My Money. Clear Conscience?, which investigated five major banks operating in Belgium – including AXA and ING – and their investments in companies producing illegal weapons globally.

Consumers get results

The report encouraged some impressive results. In 2004 Belgium banned investments in anti-personnel mines – the first country to do so. In 2005 the European Parliament followed Belgium’s lead when it called for a ban on investments in landmines and other arms production. In addition, four of the five banks targeted in the report have reviewed their weapons investment policies. AXA was not one of them. The most responsive of the banks so far has been KBC, which has created a blacklisted ‘no-go zone’: a published list of weapons companies that have been removed from its investment funds because of their involvement in producing illegal weapons such as anti-personnel mines and cluster munitions. Netwerk Vlaanderen has applauded KBC’s policies: ‘This openness gives investors clear information about what’s being done with their money,’ Heller says.

It also gives investors a clear incentive to ask questions about what their banks are funding. The campaigners say that consumer reaction has been pivotal. Indeed, ethical investors may not realize the power that they have. Scheire says that the banking industry is more sensitive than most about its image: ‘One thing banks hate is an image breakdown. They rely on an image of “You can trust me”.’

So maybe my questions aren’t futile after all. Iraq’s a long way away. But the banks that help fund the deaths there are not. Netwerk Vlaanderen’s persistent campaigning inspires hope. By asking questions and demanding that our money is not filtered through the ugly prism of arms production, banks are being forced to adopt more rigorous investment policies. It can be done. It’s just a matter of which banks will do it.

Now, where’s that phone book?

Dheepthi Namasivayam is a freelance journalist studying at the University of Technology in Sydney.

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