IRELAND - The Irish National Pension Reserve Fund has come under pressure to conduct a full ethical review of its investment strategy, after it was discovered the fund invests more than €575m in companies operating in Zimbabwe.

Analysis by Progressio Ireland, an independent organisation for sustainable development, claimed the most recent figures for the fund - from the end of 2006 - showed the NPRF had invested just over €578m in 14 companies operating in Zimbabwe.

As a result, these investments, which included financial institutions, military companies, and mining, petroleum and tobacco companies with proven links to the Mugabe regime, represented 3.07% of the funds total assets of €18.9bn in 2006.

Progressio claimed the NPRF's investments in three financial institutions - Barclays Bank, Standard Chartered and Old Mutual - in particular that operate in Zimbabwe had helped provide "vital finance" to allow President Mugabe "to defy world condemnation" and to "bankroll the Zimbabwe leader's vilified land reforms". 

In particular, the organisation's research claimed Barclays Bank, in which the NPRF had invested €26.9m (at 2006), has lent "substantial loans" to Mugabe supporters who were given land seized under the land reform programme, including more than €1bn in 2007.

Progressio also argued Old Mutual's investment in Zimbabwe - it currently holds shares on the Zimbabwe stock exchange valued at 16% of the market - is so high "it has become a critical prop for the regime's financial survival".

The company, in which the NPRF has a €1.7m investment, also holds a stake in Zimbabwe Newspapers, which publishes two newspapers - the Herald and the Chronicle - that are "hopelessly biased" towards Mugabe, suggests Propressio.

According to this research, the NPRF also had shares in the arms production companies BAE Systems and Finmeccania, that both operate in Zimbabwe, with BAE recently criticised for supplying aircraft parts for Zimbabwe fighter jets despite the EU arms embargo on the country.

The NPRF has signed up to the adoption of the UN Principles for Responsible Investment (UN PRI), however Progressio claimed "it is unclear what, if any effect, their adoption is having on NPRF's engagement with companies and decision-making on which companies to invest in".

The organisation noted although the fund invests in more than 2,500 companies worldwide, in July 2007 it appointed Hermes Equity Ownership Services as part of its responsible investment policy to provide a shareholder voting and engagement service.

However, Progressio argued: "There is no evidence that NPRF has raised concerns directly with the management of the companies they invest in about their operations in Zimbabwe or, through its engagement with Hermes Equity Ownership Services, has this organisation raised social, environmental and governance issues on its behalf."

Following publication of the research Billy Timmins, spokesperson on foreign affairs for Fine Gael, a political opposition party, expressed "outrage" that the NPRF is "propping up the Mugabe regime".

He claimed Fine Gael had previously called on the government to cut economic and political ties with Zimbabwe and claimed "it is unfathomable to learn now that the state pension fund is being invested in companies operating there".

Timmins claimed the government had voted against a proposal put forward by the Fine Gael party a few months ago, to prohibit the NPRF from being invested in companies involved in the manufacture of cluster munitions.

He argued: "Had Fine Gael's proposal been accepted, this hypocrisy could have been brought to light earlier. I want the government to cease this investment immediately and to carry out a full ethical review of how the fund is being used."

No-one from the NPRF was available for comment at the time of publication.

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