Earlier this year, the Guardians of the New Zealand Super Fund made a decision to divest from Israeli banks.

The ostensible reason for this was the Israeli banks lending money to Israelis who wished to build homes in disputed territory. However, the Guardians have not divested from their $441,585,508 worth of Chinese banks; $2,209,347 worth of stocks in Turkish banks; or $8,883,810 worth of Russian banks, despite these banks lending to people who build homes in other disputed territories.
Similarly, the Guardians have not chosen to divest from 39 other companies deeply involved in ‘occupations’ around the world, or a further 48 countries that have been identified as using forced labour.

The Guardians’ Ethical and Socially Responsible Committee justified the decision to single out Israeli banks in a document published on 14 January 2021 which is deeply flawed, in both content and process.

Documents released under the Official Information Act shows that the only external advice for the document came from anti-Israel activists in New Zealand who push the Boycott, Divestment, and Sanctions (BDS) campaign against Israel. There were no independent experts engaged in the process.

It is disappointing that the Guardians have not acknowledged the new information that The Israel Institute of New Zealand has presented to them and revisited their decision.

The Chair of the Ethical and Socially Responsible Committee is Anne-Maree O’Connor, who has no relevant formal qualifications; and we are unaware of anyone on staff at the Super Fund who has an appropriate background or qualifications. The simple errors made in the document also attest to this. However, the Guardians have refused to identify the authors of the report.

Last week Ms O’Connor; Matt Whineray, Super Fund CEO; and Catherine Drayton, Chair of the Guardians Board appeared before the Foreign Affairs Defence and Trade Select Committee to speak to their ‘Responsible Investment approach‘ with a specific focus on Myanmar, given the investment the Guardians have made in companies linked to the Myanmar military.

Simon O’Connor, MP, took the opportunity to ask the trio about their apparent double standards when it comes to Israel:

“…you’ve divested from five banks [in Israel]. At this point, I still can’t reconcile how you can hold both positions – you’ve just discussed Myanmar and all the subtleties and you’re still not sure. Yet with Israel, a country we have cordial relationships with, good diplomatic relationships with, you went out and divested from five commercial banks. They’re not state actors, they’re commercial companies, individual citizens. Because of the lobbying of one group in NZ from what I can see, you divested. I can’t quite understand how you manage, consistently, both approaches. I might add, just to finish, that I look at China, where many companies are controlled by security services: what are you doing there?”

Mr Whineray explained to the committee that their decisions are based on corporate behaviour, not state-level policies, and they rely heavily on the UN Global Compact for guidance. Mr Whineray was clear that “NZ should deal with states; the UN should deal with states” and the Guardians were only interested in corporate behaviour.

However, Israeli banks are prohibited by Israeli law from discriminating against customers on the basis of where they are from – that is, they cannot legally refuse a loan for any citizen wishing to build a home because they happen to live in a disputed area [that the Palestinians agreed Israel would fully control under the Oslo accords]. Thus, the Guardians are effectively divesting on the basis of state policy, contrary to what Mr Whineray tried to say.

Ms O’Connor told the Select Committee the Guardians’ Responsible Investment approach usually starts with engagement to understand whether a breach has occurred. However, this was not followed in the case of the Israeli banks, because the Guardians did not think they would change their practice. If the Guardians had engaged, they may have found this out and not tried to convince the Select Committee members that they are only interested in the corporate behaviour divorced from state policies.

It was also interesting to note that Mr Whineray explained that there had been changes since the Guardians’ 2012 decision not to divest from the Israeli banks – he cited the “increased intensification” of settlements, more United Nations Resolutions, and “further information” about linkages between the banks and construction.

It was always going to be the case that more United Nations resolutions would be passed – the institution is systematically biased against Israel. The majority of the UN member states are not democratic and it is disappointing that the Guardians would defer to these countries rather than our traditional allies who vote against the disproportionate anti-Israel resolutions.

Furthermore, the Israeli banks were lending money for construction in 2012, so there is nothing new there. And Mr Wineray’s reference to “increasing intensification” belies the fact that the majority of new families living in communities located East of the 1949 armistice line are living in blocs of land that are widely agreed will be swapped in a negotiated two-state solution that will provide for secure borders.

Mr Whineray made a comment in an attempt to justify the move that they had been monitoring the situation in Israel for more than a decade and yet were “early in the process” regarding Myanmar. Given the volatile history of Burma and the political reforms that started in 2011, it is curious how an entity claiming to be concerned about human rights would not have taken an interest until recently – especially when that interest seems to be prompted by a political party expose.

Another striking example of the double standards the Guardians have applied to Israel relates to an example that Mr Whineray raised – that of the Guardians’ investment in a company that sold turbines to Western Sahara mines. The Guardians have decided that supplying power to the mine is not ‘close enough’ to divest from the companies. Mr Whineray explained that “If you are a supplier of generic services, that doesn’t bring you close enough to the breach”. However, the supply of generic mortgage services by Israeli banks does seem to meet their threshold for divestment.

The decision of the Guardians was apparently driven by anti-Israel BDS campaign activists and has caused damage to New Zealand’s reputation. The recent answers given to the Select Committee only highlight the double-standards at play and the flawed logic of the decision-making. If there was a real commitment to fairness and responsibility, the Guardians would revisit their decision with the new information presented to them by the Israel Institute of New Zealand.