Conflicts of Interest
Donald Trump’s inauguration fueled by tobacco, oil and drug company money
Other big-spending sponsors include insurers, auto makers, tech giants
https://www.publicintegrity.org/2017/01/31/20651/donald-trumps-inauguration-fueled-tobacco-oil-and-drug-company-money
Big corporations with money riding on President Donald Trump’s policies helped pick up the tab for Trump’s inaugural festivities earlier this month, new disclosures show.
The companies’ five-to-seven-figure contributions earned company representatives prime perks, including access to events featuring the newly inaugurated president, Vice President Mike Pence, the Trump and Pence families and prospective Cabinet members and administration officials.
Pfizer Inc. and Dow Chemical Co. both disclosed making $1 million contributions to Trump’s inaugural committee in December 2016.
Microsoft Corp., Exxon Mobil Corp., Amgen Inc. and Altria Client Services LLC reported giving $500,000 each, a contribution that would have earned tickets to a similar list of events.
According to Microsoft’s report, half its contribution was in cash and half in “in-kind contribution, products and services.”
Exxon Mobil Corp. reported making its contribution on Dec. 19, the week after Trump announced he would nominate Rex Tillerson, the company’s chairman and CEO, as secretary of state. Tillerson’s nomination is still pending.
General Motors Co. reported giving $200,000. Six companies reported $100,000 contributions: Verizon Communications Inc., Valero Energy Corp., MetLife Group Inc., Clean Energy Fuels Corp., Anthem, Inc., and Aetna Inc.
Aflac, Inc. reported giving $50,000 and Monsanto Co., Florida East Coast Industries, CVS Health and Brown Rudnick LLP reported giving $25,000.
According to inauguration donor packages previously obtained by the Center for Public Integrity, donors in the “$1,000,000+” tier were to receive four tickets to a “leadership luncheon” billed as “an exclusive event with select Cabinet appointees and House and Senate leadership to honor our most generous inaugural supporters.”
Donors in the $500,000 tiers also got access to a dinner with Pence and his wife, a candlelight dinner with Trump and Pence, and other festivities. Donors in lower tiers received more limited ticket packages to inaugural events.
The inauguration committee doesn’t have to file detailed reports listing contributors until 90 days after Trump’s Jan. 20 inauguration.
But companies that lobby the federal government are legally required to file so-called “lobbying contribution” reports twice a year, and contributions to inaugural committees must be disclosed. The reports only cover the second half of 2016, so any 2017 contributions companies made to the inaugural committee aren’t included.
Trump’s inaugural committee raised more than $100 million, according to a report in the New York Times earlier this month, far more than previous inaugural committees. Tens of millions of dollars in inaugural contributions have yet to be disclosed.
The White House press office did not immediately respond to a request for comment Tuesday night.
This article was co-published by the Buffalo News.
The Irish State has just sold its shares in big tobacco companies
It had been claimed that the investments made a ‘mockery’ of the State’s aim of a tobacco-free Ireland.
http://www.thejournal.ie/tobacco-investments-irish-government-2-3154386-Dec2016/
THE IRISH STATE’S sovereign wealth fund has just sold all of its shares in tobacco companies in a move to offload some of its ‘legacy investments’.
Finance Minister Michael Noonan announced today that the Ireland Strategic Investment Fund (Isif) “has completed the sale of its remaining investments in tobacco manufacturing”.
Isif said its decision to sell off its legacy investments in tobacco manufacturing companies “is part of a wider review of the exclusion of categories of investment from the fund as a whole, which is due to be completed in early 2017″.
Isif recently told TheJournal.ie that, as of 30 September 2016, it had equity holdings in three tobacco companies with a value of €1.5 million. A spokesman for the NTMA said that the company also held €16.7 million in tobacco-related corporate bonds.
This is relatively small relative to Isif’s total investments. The organisation, which was established with remaining funds from the National Pension Reserve Fund (NPRF), has a total fund of €7.9 billion and expects to have about €3 billion of that by the end of 2016.
The NTMA’s investments in the companies are made through fund managers, rather than the organisation actively selecting the firms or industries.
Ethical investment
Isif’s ethical investment policy for armaments is mainly influenced by its commitment to the UN Principles for Responsible Investment, but this policy does not stop its funds going into the sector altogether.
Under the UN guidelines, Isif is required to carry out investments on an ‘active-ownership basis’, which means it does not have to rule out any companies as long as it works to improve their environmental, social and governance policies.
A law that would have banned Isif from investing in tobacco companies was recently floated in the Seanad by Fianna Fáil Seanad health spokesperson Dr Keith Swanick, who said that the state’s investments in tobacco companies “makes a complete mockery of the stated objectives of a tobacco free Ireland by 2025″.
The Department of Finance said that all of Isif’s investments since its establishment in December 2014, “comply with the fund’s sustainability and responsible investment policy, which sets out key principles for responsible investment”.
Tobacco control
Minister Noonan welcomed Isif’s decision, saying: “Ireland has earned a significant reputation as a leader in tobacco control and, as we know, tobacco use is a leading cause of preventable death in Ireland and throughout the world.
The legislation that established the Ireland Strategic Investment Fund, provides that the fund’s investment strategy will be carried out in accordance with government policy. Today’s decision reinforces the government’s policy on tobacco.
He added: “Public policy is not fixed and can evolve, and the ongoing reviews by the Isif are opportunities to fine tune its investment approach in the light of relevant developments both nationally and internationally.”
This story was updated to include more information on the value of ISIF’s tobacco holding
Written by Paul O’Donoghue and posted on Fora.ie
CalPERS extends ban on tobacco to external asset managers
http://moderninvestor.com/news/calpers-extends-ban-on-tobacco-to-external-asset-managers/a980197
The Investment Committee for the California Public Employees’ Retirement System (CalPERS) has voted to broaden the tobacco investment restrictions to externally managed portfolios of public assets.
The €270 billion pension scheme also decided to remain divested from tobacco-related securities in internally managed public equity and debt portfolios.
Commenting on the decision, chair of the Investment Committee, Henry Jones, said: ‘There is no doubt that divestment as an investment strategy presents challenges.
However, after careful consideration of all the benefits and risks, the Committee has decided not only to maintain our current policy regarding tobacco divestment, but to extend the restrictions.’
The CalPERS tobacco restrictions date back to 2000, when concerns over ongoing litigation and regulatory risks facing the tobacco industry prompted it to take action.
Analysis performed in 2015 by Wilshire Associates, CalPERS board’s investment consultant, indicated that the pension fund’s restrictions on tobacco reduced portfolio returns by approximately $3 billion between 2001 and 2014. The committee decided in April 2016 to request a review of the current tobacco restrictions.
CalPERS chief investment officer, Ted Eliopoulos, said that he appreciated the committee’s willingness to review the sensitive topic of investment in tobacco. ‘We understand their concerns and will maintain the current tobacco exclusions while working to extend the tobacco divestment to our external portfolios.’
As part of the action, CalPERS staff will now study the appropriate timing and implementation.
Tobacco is — still — a bad investment for pension fund
The California Public Employees’ Retirement System’s board of administration took a stand in 2000 when it voted to divest from tobacco companies, which profit from a product so toxic that it kills or disables millions of the people who use it. It was the right decision at the time, and remains so 16 years later.
http://www.latimes.com/opinion/editorials/la-ed-calpers-tobacco-20161216-story.html
It was also a fairly easy decision back then for the nation’s largest public pension fund. Not only was tobacco killing people, it was costing the state dearly in healthcare expenses and lost productivity. The final nail in the coffin, so to speak, was that tobacco didn’t appear to be a great investment in 2000. The value of tobacco investments had plunged in the previous two years, smoking rates were continuing on a long downward trend and potentially pricey litigation against the industry was pending.
In other words, divestment looked like a classic win-win. CalPERS could take a moral position and not jeopardize its primary duty to make money for the 1.8 million people who rely on it for their retirement. And though there’s no evidence CalPERS divestment affected smoking rates (which were already dropping) or blocked tobacco companies’ access to capital, it was part of successful effort, along with strict regulation, high taxes and ubiquitous anti-smoking campaigns, to “denormalize” tobacco use.
Divestment is a difficult call for governmental pension funds. They have a clear fiduciary duty to maximize the returns on their members’ investments.
Turns out, though, that tobacco investments didn’t tank as expected, in part of because of expanded marketing in Third World countries. Investors who retained their tobacco holdings realized significant revenue. Analysts estimate that CalPERS lost out on as much $3.68 billion in earnings over the years — about a quarter of what CalPERS’ investments have earned annually over the last decade.
That’s not great news for a severely underfunded pension fund whose poorer-than-expected performance may lead the board this week to lower its expected earnings from investments — again. If the board votes to do so, it would force the state and local governments and school boards in CalPERS to increase their annual pension contributions by millions of dollars, leading them to cut services or raise taxes.
On Monday, the CalPERS Investment Committee is also considering a proposal by staff to allow the $300 billion fund to reinvest in tobacco companies. It must be tempting to chase the revenue that may have been lost from not investing in Camels or Kools, but if there is a return to be made on tobacco (and that’s not even a sure bet), it wouldn’t be worth the moral cost. The board should reject this proposal.
Divestment is a difficult call for governmental pension funds. They have a clear fiduciary duty to maximize the returns on their members’ investments. But in our view, these public agencies also have a responsibility not to support evil, corrupt or destructive forces whose ill effects far outweigh any good they may do. That can take the form of products, like tobacco and firearms, or regimes. The decision by pension funds and U.S. companies to divest from South Africa in the late 1970s and 1980s, for example, is credited by many with helping to raise awareness about apartheid, which led to its ultimate demise.
Yet such moves also increase pressure to divest from more businesses, products and countries for purposes that aren’t necessarily as morally imperative but are politically popular. For example, a bill introduced this month in the state Legislature would restrict CalPERS’ investments in the construction of the Dakota Access Pipeline. It’s not a stretch to imagine a push to divest from soda companies or industries that use genetically altered organisms for food or farming.
That’s a slope CalPERS can’t afford to slide too far down. (The board’s own policies state that it will not divest unless required by valid state or federal law, which seems disingenuous in light of its history on tobacco.) The more constrained the fund becomes, the harder it will be to generate the big returns it’s relying on. And every dollar it falls short will have to be made up by the state and participating local governments, leaving them less money for public safety, anti-poverty programs, educating children and other priorities.
Admittedly, there’s a solid, if heartless, case to be made for reinvesting in tobacco. It’s a legal product, and users can’t credibly claim they didn’t know about the dangers listed right on the pack. And while ever-dwindling smoking rates may eliminate that habit within the next two decades, tobacco companies have found a new source of profits in the growing market for electronic cigarettes.
But doing the right thing often costs more than the doing what’s easy. That’s true for individuals, for groups and for organizations. It’s true too when it comes to socially responsible investments. Yes, there may be big money to be made investing in this poison product. If individual investors can live with that, fine. But public institutions such as CalPERS shouldn’t.
French pension reserve fund turns its back on tobacco, coal
Fonds de reserve pour les retraites (FRR), France’s €37.2bn pension reserve fund, will no longer invest in the tobacco industry or certain coal companies.
https://www.ipe.com/news/esg/french-pension-reserve-fund-turns-its-back-on-tobacco-coal/10016717.fullarticle
Further, next year, it will launch €5bn of ESG-based passive equity mandates as part of the implementation of the new strategies.
The exclusion strategy will be applied to the fund’s existing bond mandates, so that, by the end of 2017, it will have been applied to almost 95% of the “overall scope” of FRR’s assets, according to the fund.
It yesterday announced that it decided to exclude, from its equity and bond portfolio, investments in tobacco-producing companies and companies for which more than 20% of turnover is derived from thermal coal extraction or coal-fired power generation.
The strategy was proposed by the executive board and approved by the supervisory board on 1 December.
In a statement, FRR said efforts by the World Health Organisation, governments and civil society to deal with the “scourge” of tobacco consumption could eventually weigh on the performance of tobacco companies.
It also believes engaging with companies will not lead to progress “because the whole purpose of engagement would be to demand that they should stop their activities altogether”.
“For this reason, FRR has decided to exclude the tobacco industry from its portfolio,” it said.
On its decision on coal companies, the reserve fund said it had already reduced its exposure to high-carbon sectors, especially those exposed to coal, which is accountable for more greenhouse gas emissions than any other fossil energy source.
FRR said that, after the international agreement on climate change reached at the UN Conference of Parties (COP21) in Paris last December, “governments, and also investors, are increasingly calling coal into question as being incompatible with the objective of limiting global warming to 2°”.
FRR will still invest in companies that generate more than 20% of their turnover – or their electricity, steam or heat production – from coal if they employ carbon capture and storage processes or “have formally announced their commitment and have begun to take action in this direction”.
The fund said the two exclusion strategies would be rolled out in 2017.
The coal exclusion decision contributes to portfolio decarbonisation efforts that have been underway at FRR over at least the past two years.
Individual and institutional investors representing more than $5trn (€4.7trn) of assets under management have committed to divesting from fossil fuels, according to a recent report.
FRR’s announcement comes a day after the local authority pension fund for the borough of Southwark in London pledged to sell its investments in fossil fuels.
Think tanks with ties to tobacco arguing against plain packaging
http://www.theglobeandmail.com/life/health-and-fitness/health/think-tanks-with-ties-to-tobacco-arguing-against-plain-packaging/article32884552/
A tobacco company speaking out against a public-health measure doesn’t have the same credibility as a respected think tank or advocacy group. So those companies often work with or donate funds to organizations that publicly criticize tobacco taxes and other new regulatory measures.
Those financial relationships create the possibility for bias. Yet most of the organizations on the receiving end of tobacco donations do not clearly disclose that information when speaking about related issues.
The latest example is the current debate over plain packaging.
The federal government wants to pass new regulations that would strip brand colours and logos from tobacco products and instead require them to carry a standard plain colour and font in addition to the graphic health warnings that are currently used. The government hopes the move can stop some of the nearly 90,000 Canadians who pick up the deadly habit each year. Across the country, nearly 40,000 people die annually from tobacco-related illnesses
Not surprisingly, the three biggest tobacco companies in Canada, Imperial Tobacco Canada; Rothmans, Benson & Hedges; and JTI-Macdonald, are all opposed to the measure.
But they aren’t the only ones against the proposal. Some think tanks and advocacy groups with tobacco funding are also speaking out against plain packaging. And yet, these groups typically don’t mention their financial ties when speaking about policy.
For example, the Montreal Economic Institute published a report in September saying plain packaging “attacks the value of brands.” It included a disclaimer saying the report was “in no way” financed by tobacco. In September 2015, institute president Michel Kelly-Gagnon authored a Huffington Post article saying plain packaging drove consumption higher in Australia, where it was adopted in 2012. The article didn’t mention an industry connection.
But in an e-mail, Kelly-Gagnon said the institute has “proudly received” tobacco funding since 1998 in amounts between 2 and 4 per cent of its budget. He said in an interview that the organization recently decided to stop accepting donations from the industry because health groups use that information to criticize its work.
Then there’s the National Coalition Against Contraband Tobacco, which issued a press release in September warning about the prevalence of illegal cigarettes and how the problem will worsen with plain packaging. A letter to the editor from the coalition and published in The Globe and Mail in September also stated that plain packaging will increase the contraband market. In its official comments to the federal government on plain packaging, the coalition said there is “no doubt” the new measure “will increase the availability of the illegal product.” The document doesn’t mention financial ties to tobacco.
Online, the coalition lists its members, which include the Ontario Chamber of Commerce, Toronto Crime Stoppers and the Canadian Tobacco Manufacturers Council.
But according to documents obtained by The Globe and Mail, the coalition works closely with the country’s three major tobacco companies to shape its public statements and reports. The coalition declined an interview request and did not respond directly to questions about its ties to tobacco.
Another example dates back to May, when the Atlantic Institute for Market Studies (AIMS), a Halifax think tank, hosted a talk by Sinclair Davidson, an Australian professor and vocal plain-packaging critic. According to articles in the Sydney Morning Herald, the Institute of Public Affairs, where Davidson is a fellow, has received tobacco funding and some experts have criticized Davidson’s work as flawed.
In an e-mail, Davidson defended his work and said he was invited to speak in Canada by the Canadian Convenience Stores Association (CCSA). But according to the AIMS Facebook page, Davidson’s Halifax visit was organized by the institute in partnership with Crestview Strategy, a public-affairs firm. According to the Office of the Commissioner of Lobbying of Canada, Crestview currently lobbies on behalf of Rothmans, Benson & Hedges. (Crestview and Rothmans did not respond to questions about the visit.)
The CCSA said it does receive funding from the tobacco industry but declined to state an amount or respond to questions about Davidson’s visit.
Imperial Tobacco Canada; Rothmans, Benson & Hedges; and JTI-Macdonald declined requests to name the groups they fund, but said they work with groups that share their views.
Julia Smith, a postdoctoral research fellow at Simon Fraser University who studies tobacco control, said she is concerned organizations with financial ties to tobacco will help derail plain packaging and other health measures, in part because many believe their views are independent and unbiased. “We’ve seen the tobacco industry use these tactics in the past,” she said, noting that “in some cases, they have been successful.”
Beyond engaging vocal sources, the tobacco industry has also commissioned several reports that say plain packaging is ineffective. But independent research tells a different story.
An Australian government survey found the number of daily smokers fell from 2.7 million in 2010 to 2.5 million in 2013. The average age young people reported smoking their first full cigarette rose from 15.4 years in 2010 to 15.9 years in 2013. And a 2013 study published in the journal Tobacco Control found only a small number of retail stores sold illicit cigarettes. Before plain packaging, researchers found about 2 per cent of cigarette packages to be illicit, compared to 0.6 per cent in the months after implementation.
Think tanks and advocacy groups regularly seek to influence public policy. But policy-makers and the public deserve to know when those organizations may be representing the interests of others.
Kiwi managed funds flock to discuss going tobacco free, campaigner says
http://www.sharechat.co.nz/article/c9bb7fb4/kiwi-managed-funds-flock-to-discuss-going-tobacco-free-campaigner-says.html
Bronwyn King, the Australian doctor leading a global push to encourage fund managers to exclude tobacco stocks, said she’s had approaches from six major funds in New Zealand interested in making the shift.
The move follows investor uproar earlier this year after media investigations found New Zealanders had unknowingly invested $152 million in arms manufacturers and big tobacco companies through their KiwiSaver funds, she said.
King is chief executive of Tobacco Free Portfolios and a practising radiation oncologist in Melbourne. She has already persuaded 35 Australian superannuation funds controlling nearly half of the total funds under management in that country to shun tobacco, and doesn’t know the numbers of funds that exclude tobacco in New Zealand though ANZ is a recent convert and the New Zealand Superannuation Fund was the first sovereign wealth fund in the world to do so.
King’s own epiphany came in 2010 when she and her Kiwi husband wanted to buy a house and she went to discuss her savings in the superannuation fund Health Super with a consultant. As she left, she asked whether she was meant to specify how she wanted her money invested in Health Super. The consultant replied she didn’t need to worry because she was in the default option where the decisions were made for her.
King then asked what the options were and was told there was a “greenie option” involving no investment in mining, alcohol, or tobacco.
“It was a big shock knowing I was investing in tobacco companies that were making products that killed my patients,” she told a Responsible Investment Conference in Auckland yesterday.
It turned out Health Super’s default option included investing in four of the big tobacco companies, and King shared that news with other staff members at Peter Mac, a dedicated cancer hospital. She also raised it with the chief executive and then with the super fund which had merged with Sydney-based First State Super. After a lot of discussion, it became the first Australian superannuation fund to renounce tobacco investments in 2012.
One of the biggest successes in King’s campaign came this year when AXA, the world’s second-biggest insurer, said it would sell 200 million euro of tobacco stocks and run down 1.6 billion euro of tobacco corporate bonds. King says she’s currently working with more than 100 financial institutions with four more likely to announce a similar move soon.
The tide has turned in public sentiment on the issue and fund managers who manage investors’ money are slowly waking up to that fact, she said.
The pitch that has worked best has been highlighting the tobacco industry’s exploitation of young people with an estimated 100,000 children starting smoking each day.
Not many people are aware that according to the International Labour Organisation up to 60 percent of the workforce in tobacco farming are aged under 16, she said. The average age at which Australian smokers take up the habit is 15 years and nine months – the oldest in the world. The average in the UK is just 11 years.
The percentage of boys that smoke between 13 and 16 years old is 3.7 percent in New Zealand but is much higher in emerging countries such as Indonesia where the figure is 41 percent and 52.1 percent in Papua New Guinea.
“This is not about adults making an informed choice but about children who start smoking when they’re too young to be aware of the risks,” she said.
One conference attendee said one of the problems with divestment was that tobacco stocks had done so well for investors over the years. King said that was the most difficult thing though there were signs those profits could change in the next 10 years.
“The industry has done well in the past 10 years because it has gone into the developing world before these regulations were crafted. It’s made the most of these very poor populations with large user bases and very poor levels of awareness and very poor regulatory frameworks, an industry that continues to get away with 60 percent of its workforce being child labour, externalising costs and internalising profits and not being held to account for all of these deaths is extraordinary.”
King said there’s three strong reasons behind going tobacco free: tobacco is a unique product in that it can’t be used safely with two out of three smokers dying from its use; the UN Tobacco Treaty signed by 180 countries including New Zealand requires governments and related bodies not to invest in the industry and take other measures such as plain packaging; and engagement with the industry to change its behaviour is futile.
There’s a regulatory risk for fund managers with three countries having introduced plain packaging legislation and another 20 will have by next year, King said. New Zealand has signed off on it but not yet set a date for implementation.
There’s also a litigation risk with the Quebec state government succeeding last year in a landmark class action suit against three big tobacco companies where the judge awarded C$15.6 billion in compensation to one million smokers for the health effects of the products. It is being appealed by the tobacco companies.
King said the case was one the rest of the world should watch with interest.
“If that precedent is set I can’t believe the people of New Zealand would be happy to continue to pick up the costs of the tobacco industry, it doesn’t make any sense. The truth is if we all sued at the same time the tobacco industry couldn’t even pay its own costs for one year.”
Tobacco stocks up in smoke as govt mulls FDI ban
http://economictimes.indiatimes.com/markets/stocks/news/tobacco-stocks-up-in-smoke-as-govt-mulls-fdi-ban/articleshow/55455794.cms
Shares of cigarette companies plummeted up to 20 per cent on Wednesday amid reports that the Union Cabinet is likely to consider a proposal to completely ban foreign direct investment (FDI) in the tobacco sector.
Reacting on the news, shares of Godfrey PhillipsBSE 6.81 % hit the lower circuit and closed 20 per cent down at Rs 918.80 on Wednesday. Shares of other tobacco companies such as ITCBSE 0.72 % and NTC IndustriesBSE -5.14 % slipped 4 per cent and 0.65 per cent, respectively. The benchmark BSE Sensex closed almost flat at 26,298.
The Commerce and Industry Ministry has forwarded the final note on this issue to the Union Cabinet for consideration, sources told PTI.
At present, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contracts in the tobacco sector. However, it is prohibited in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes.
The proposal, if approved, may be a setback for domestic cigarette manufacturers, according to the report.
The ban would also eliminate the possibility of indirect flow of overseas funds to the sector. FDI into the country grew by 29 per cent to $40 billion in 2015-16.
On a year-to-date basis, most of cigarette-related companies have been outperforming the benchmark equity indices. Stocks such as Golden TobaccoBSE 1.58 % and VST IndustriesBSE 4.29 % have risen 33.36 per cent and 33.32 per cent to Rs 65.55 and Rs 2268.25 till November 15 from Rs 49.15 and Rs 1701.30, respectively, on January 1.