Australia’s sovereign wealth fund, the Future Fund, modestly standing at $272.3 billion, has crawled into some trouble of late. Investors keeping an eye on where the money of the publicly-owned Australian Future Fund goes have found a good slice of it is invested in the military-industrial complex, a sector that stands to boom in times of war.
As much as $600 million in public funds has found their way into defence company assets, it has been revealed in a Freedom of Information (FOI) request by Greens Senator David Shoebridge filed last October.
Those 30 defence and aerospace companies it was revealed included Thales ($3.5 million), Lockheed Martin ($71 million), BAE Systems ($26 million), Boeing ($10.7 million), Rocket Lab USA ($192 million) and Elbit Systems ($488,768).
The findings gave Shoebridge a chance to spray the board administering the fund: “The Future Fund is meant to benefit future generations. That rings hollow when they are investing in companies making equipment that ends future generations.”
Some cleansing of the stables was on offer, and the choice of what was cleaned proved popular – at least for the Canberra security establishment.
In May, the Future Fund board upped stakes and divested from funds associated with the People’s Liberation Army of China.
Eleven companies were noted, among them Xinjiang Guanghui Energy, a natural gas and coal producer. Its chairman, Sun Guangxin, had teased US officials in 2021 by purchasing ranches for reasons of building a wind farm in proximity to a US Air Force base in Texas.
Some of the excluded Chinese companies included Jiangsu GoodWe and LONGi, both with expertise in the line of solar energy generation.
“Taxpayer funds and Australians’ retirement savings should never be invested in companies linked to serious human rights abuses, sanctions evasion or military suppliers to an authoritarian state,” gloated the satisfied Opposition Home Affairs spokesman, Senator James Paterson.
The same, it would seem, would not apply to human rights abuses committed by purported democratic states. To that end, things are somewhat murkier when it comes to the companies of other, friendlier powers.
Israel an exception
Israel’s largest defence company, Elbit Systems, continues to make its presence felt in the field of Australian defence and finance. Despite a resume of lethal drone production and some of its technology infamously tested on Palestinians, and despite the ongoing murderous conflict in Gaza (where Elbit is providing essential weapons to the Israeli military), the Israeli defence company managed to convince the Australian government to throw $917 million its way in a contract signed in February.
The contract, to be performed over a period of five years, will supply “advanced protection, fighting capabilities and sensors” for Australia’s new Korean-designed Infantry Fighting Vehicles. The vehicles are being constructed in the electorate of the Australian Defence Minister, Richard Marles.
The issue drew some public interest, with a petition attracting 38,331 signatures, requesting parliament to ban Elbit Systems from Australian government contracts:
“Many allies around the world, including Japan, have banned Elbit Systems as a supplier, and we ask that the Australian Government does the same.”
Despite still attracting Australian funds, Elbit Systems has had some rocky times of late in Australia.
In May last year, Elbit was dropped by Australia as its provider of the ADF’s BMS battle management system, after a ‘backdoor’ was discovered designed into the computer software allowing remote access. The Australian Signals Directorate discovery led to the Army abandoning its $1.6 billion battle management system.
Elbit was contracted to build this ADF battlefield management system by then-Defence Industry Minister Chris Pyne. Of interest, Elbit lated hired Pyne & Partners government lobbyists after Pyne left parliament.
It was an Elbit-manufactured Hermes drone that was used by the IDF to kill the seven World Central Kitchen aid workers in Gaza, including Australian Zomi Frankcom, in April.
An Israeli investigation led by a former Israeli weapons executive, and an Australian investigation headed by a former Australian defence chief, both found the killings were “not deliberate”, despite, as Declassified Australia first reported, not being provided with the audio evidence from the Elbit drone.
Investments with Elbit? No problem.
What of the near half-million dollars invested by the Future Fund in Elbit Systems? In October 2023, a list of the Fund’s direct holdings in various companies was published. It included Elbit Systems.
This was odd, given that the company, since 2021, is precluded from investing in the fund given, as Shoebridge reveals, the ratification by Australia of various “military weapons-related conventions or treaties”. The Fund’s board, accordingly, had to furnish reasons explaining “how it continues to invest in Elbit Systems despite the publicly announced direction it gave to withdraw those funds because of Australia’s international legal obligations.”
The internal correspondence of December 7, 2023, prompted by Shoebridge’s FOI request, and some prodding by independent outlet Michael West Media (MWM), proved more revealing.
In an internal email, a Canberra bureaucrat in the Department of Finance asked an official associated with the Future Fund (both names are redacted) to clarify the status of Elbit Systems in terms of the exclusion list. The reply notes the role of “expert third party service providers” who keep an eye on company activities and provide research upon which a decision is made by the board every six months.
Elbit had been previously excluded as an investment option for the Fund “in relation to its involvement in cluster munitions following its acquisition of IMI [Systems]”.
IMI, which is another Israeli weapons manufacturer, rather than Elbit, was the spoiling consideration, given its role in producing technology that violates the Convention on Cluster Munitions. As of April 2023, Elbit was “no longer excluded by the portfolio. This reflects the updated research of our expert research providers.”
The response is not obliging on the exact details of the research. Banal talking points and information stifling platitudes are suggested. The board, for instance, had “a long-standing policy on portfolio exclusions and a robust process to implement” them.
The policy was reviewed twice a year, buttressed by expert third party research. Recent media reporting had apparently a skewed slant, having relied on an outdated exclusions list. The board did not invest in those entities on the exclusions list. For the media establishment, this would have more than sufficed. The board had said, and revealed, nothing.
Efforts to penetrate this veil of inscrutability had so far come to naught. The Future Fund and its Board of Guardians persisted in their refusal to respond to MWM media inquiries.
In August, MWM again approached the Future Fund on its stake in Elbit, and whether former senior Liberal MP Peter Costello’s successor as chairman, former senior Labor MP Greg Combet, had shown a change of heart. “Greg Combet ignored it,” MWM informed the reader.
The lack of response is disappointing, given the new chairman’s following claim: “There’s a good opportunity, with this change in the board of guardians and me coming in, for us to make it a bit better known exactly where the money is invested and how, for example, it is assisting in the energy transition.” Evidently, revealing the contours of the military-industrial complex was not on his mind in this change of the guard.
The renewed questioning of the Fund’s direction also came on the back of an MWM report examining four years of financial statements from Elbit Systems of Australia Pty Ltd.
Elbit Australia had forked out just under $17 million in dividends to its Israel-based parent company in 2023 ($6.9 million) and 2022 ($10 million). The same entity also advanced a loan of $3.5 million to the parent company at an interest rate of 4.77%, a curious state of affairs given the much higher rate normally expected on business loans.
Australia’s investments are effectively financing the slaughter of Palestinians, Lebanese and aid workers with public money.
Given the various interim orders by the International Court of Justice warning Israel of a real risk of committing genocide, even as it ponders South Africa’s application to make that finding official, and given a broader international divestment of Elbit from sovereign wealth funds, why Australia’s Future Fund continues investing in Elbit remains unclear.
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