The New Zealand Super Fund Justification Document for Divesting from Israeli Banks

04 May 2021

Executive Summary

The Guardians of the New Zealand Super Fund (NZSF), a crown entity legally required to avoid “prejudice to New Zealand’s reputation as a responsible member of the world community” recently chose to single out the banks of Israel, a democratic country, to divest from.

The US research institute, Foundation for Defense of Democracies, has pointed out that the divestment decision “could cause reputational and financial problems for New Zealand and for companies managing its sovereign wealth fund.”

Furthermore, UK Lawyers for Israel, whose patrons include the former President of the UK Court of Appeal and a former Judge of the UK Court of Appeal, have suggested that the decision breaches legal requirements.

The Guardians’ Chair of the Ethical and Socially Responsible Committee is Anne-Maree O’Connor. Ms O’Connor has no relevant formal qualifications, and her committee’s decision was justified with a document published on 14 January 2021 which is deeply flawed, in both content and process, for eight primary reasons:

1. The decision is a gross double standard
2. The Guardians apparently think they supersede the UN Global Compact
3. The Guardians apparently require Israeli companies to break Israeli law
4. The Guardians did not give the banks a chance to put their case forward
5. The Guardians sought no expert advice or differing opinions
6. The Guardians did not consult with the NZ government
7. The Guardians have made NZ the only democratic country to shun Israeli banks
8. The Guardians misrepresent international law

The Guardians’ document should have been written by a competent expert. However, its contents prove that it has not been. It is therefore disappointing that the Guardians did not seem to follow best practice process in their decision-making and actioning of the divestment. There are other issues that raise serious questions, for example:

  • the Guardians notified anti-Israel activist and BDS proponent, John Minto, about the decision before informing the Minister of Finance; and
  • the document referenced overseas funds, but those funds do not to divest from Israeli banks, in contrast to the implications made in the document.

The decision seems to be politically motivated, rather than aligned with the objectives of the NZSF or the minimum standards prescribed by law for the fund’s administration.

We hope the Guardians will review the expertise of those chairing their committees and the decision to divest Israeli banks. This should lead to a reversal of the divestment, as a Dutch fund did in 2019, and stronger NZSF policies about who they rely on for decisions.


Open or download the full report here