Wirral Council invests £38 million in company mired in allegations of bribery of foreign politicians and civil servants
Towards the end of the BBC ten o’clock news yesterday evening after the stories about Syria, climate change and the doctors’ strike being called off there was a piece about British American Tobacco.
For those who don’t know Wirral Council (who manage the Merseyside Pension Fund) had (valued at March 2015) £38 million invested in shares in British American Tobacco. In fact it is their largest shareholding (see page 15 here). I will declare an interest as a close relative of mine is paid a pension by the Merseyside Pension Fund.
As the BBC only keep clips of the news available on BBC Iplayer for 24 hours, I felt it would be useful to have a transcript of the piece so that it reached a wider audience.
Huw Edwards: A BBC investigation has uncovered evidence of corruption and bribery at the UK’s fifth biggest company. BBC Panorama found British American Tobacco paid bribes to politicians and civil servants in countries across East Africa.
The illegal payments even undermined a United Nations initiative designed to save lives! The company could face prosecution around the world for failing to prevent bribery. BAT says it does not tolerate corruption.
Our special correspondent Richard Bilton reports.
Richard Bilton: This is northern Uganda, it’s tobacco country. Thousands of farmers work these hills, but there is another way to make money from this crop. We’re on our way to meet a very important man. This is a guy who helps to decide who gets to buy and sell tobacco and what we know about the man we’re on our way to meet is he’s corrupt.
This is Doctor Kasirivu Atwooki and we’ve seen documents that show he was paid $20,000 by BAT to change a parliamentary report. He doesn’t know, I know he’s corrupt.
If an MP, a sitting MP took a bribe, how would you feel about that?
Dr Kasirivu Atwooki: Well, that’s not acceptable.
Richard Bilton: You took a bribe though, didn’t you?
Dr Kasirivu Atwooki: Why should I?
Richard Bilton: You took $20,000 from BAT!
Dr Kasirivu Atwooki: From when?
Richard Bilton: In 2012.
Dr Kasirivu Atwooki: No, no, no, that’s not true!
Richard Bilton: Are you corrupt?
Dr Kasirivu Atwooki: I’m not!
Richard Bilton: The evidence suggests he is and we know because of this man. Paul Hopkins was in the Irish Special Forces before he joined BAT. He says he was told bribery was the cost of doing business in Africa.
Paul Hopkins: I was a commercial hit man. My job was to ensure that the competition never got a breathing space.
Richard Bilton: So BAT, they knew what they wanted you to do and they expected you to get on with it?
Paul Hopkins: Yes.
Richard Bilton: And that included bribing?
Paul Hopkins: Yes.
Richard Bilton: Breaking the law?
Paul Hopkins: Yes.
Richard Bilton: Applying pressure?
Paul Hopkins: Yes.
Richard Bilton: Undermining commercial rivals?
Paul Hopkins: Yes.
Richard Bilton: And you were happy to do that?
Paul Hopkins: Yes.
Richard Bilton: BAT sold 667 billion cigarettes last year and made £4.5 billion profit, but the documents Paul has supplied show employees paid bribes to change anti-tobacco legislation, damage rivals, even undermine the UN effort to save lives.
Bribes were paid to three officials connected to a World Health Organisation supported campaign which aimed to reduce tobacco related deaths. I showed our evidence to the woman who runs the campaign.
Richard Bilton: That’s BAT paying a representative $3,000. What do you feel about that?
Dr Vera Luiza Da Costa E Silva (WHO): It’s a company that is err irresponsible to say the least. It’s using bribery to profit at the cost of people’s lives, simple as that.
Richard Bilton: BAT failed to answer any of our questions directly. Mr Durante? So I caught up with Chief Executive Nicandro Durante as he arrived at work. Sir, can I ask you a quick question? I’m from Panorama, why did you not respond to our emails about bribery? Is that the nature of BAT Sir, that you just put up with bribery?
Richard Bilton: BAT has since told us, the truth is that we do not and will not tolerate corruption no matter where it takes place. Our accusers in this programme left us in acrimonious circumstances and have a vendetta against us. The whistleblower is due to meet investigators from the UK’s Serious Fraud Office this week to discuss the bribery secrets of one of the UK’s biggest companies. Richard Bilton, BBC News.
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EXCLUSIVE: Leaked minutes of Merseyside Pension Fund’s Investment Monitoring Working Party
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The public meeting of Wirral Council’s Pensions Committee held on the 16th November 2015
I will start this piece by declaring that I have a close family relative paid a pension by the Merseyside Pension Fund.
Monday night’s public meeting of Wirral Council’s Pensions Committee (you can view the video above) chucked out the public for two agenda items (issues about the tender exercise for CB Richard Ellis Capital Advisers Ltd (CBRE) and the minutes of the Investment Monitoring Working Party meeting of the 17th September 2015 and the 8th October 2015.
Originally one of the governance policies agreed by councillors that run the Merseyside Pension Fund stated that minutes of the Investment Monitoring Working Party and Governance Working Party should be published. I did query a while back why they weren’t, which led to the situation now where the minutes are split on the agenda and the public gets to see which councillors turned up, who sent their apologies and what the declarations of interest are.
However the rest of the minutes of those meetings (despite it being councillors that sit on these committees), councillors decide to keep the rest of the minutes a secret (on the advice of Wirral Council officers).
As it states on Wirral Council’s website the law states “Information is exempt to the extent that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information” and the reason given on Monday evening was “Information relating to the financial or business affairs of any particular person (including the authority holding that information)”.
Strictly speaking politicians are supposed to carry out their own public interest test based on the above and I suppose I should kick up more of a fuss at this point of the meeting if they’re about to chuck us out for no reason.
The Merseyside Pension Fund is a large pension fund with billions of pounds invested. Of course as a member of the press I’m going to take a view that it’s wrong for the public sector to be engaging in these inappropriate levels of secrecy when the total number of people in the fund comes to over 100,000.
Actually persuading politicians to actually go against an officer recommendation on this though is probably beyond my powers of persuasion. So here is a leak instead of the Investment Monitoring Working Party minutes of 8th October 2015. Think of all the money I’ve saved Wirral Council by not making a FOI request for this (although no doubt they will now carry out another leak investigation!)
I’ve corrected Cllr Ann McLachlan’s name in section 1 which was misspelt as McLachalan.
NOT FOR PUBLICATION
By virtue of paragraph(s) 3 of Part 1 of Schedule 12A
of the Local Government Act 1972.
EXEMPT APPENDIX 2
Minutes of the Investment Monitoring Working Party,
8 October 2015
In attendance:
Councillor Ann McLachlan (WBC) (Vice Chair)
Peter Wallach (Head of MPF)
Councillor Geoffrey Watt (WBC)
Joe Blott (Strategic Director Transformation and Resources
Councillor Treena Johnson (WBC)
Noel Mills (Independent Adviser)
Rohan Worrall (Independent Adviser)
Councillor Paulette Lapin (SC)
Louise-Paul Hill (Aon Hewitt)
Emma Jones (PA to Head of Pension Fund)
Apologies were received from:
Councillor Paul Doughty (WBC)
Councillor Brian Kenny (WBC)
Councillor Cherry Povall (WBC)
Councillor George Davies (WBC)
Councillor John Fulham (SHC)
Councillor Adrian Jones (WBC)
Declarations of Interest
Councillor Geoffrey Watt declared an interest due to a relation being a beneficiary of the Merseyside Pension Fund.
1. Introduction
Cllr Ann McLachlan (AM) chaired the meeting on behalf of Cllr Paul Doughty.
Action Points
None
2. External Manager Presentation
2.1 M&G Investments
Matthew Vaight (MV), Fund Manager and Orla Haughey (OH), Client Director, presented their global Emerging Markets Mandate to IMWP. Their agenda covered their mandate, market overview, a re-cap on their process, performance and finally their funding positioning.
Merseyside Pension Fund current holdings are valued at £112.8m. They briefed members on their bottom-up stock picking style and currently hold 50-70 stocks on behalf of the Fund.
A discussion ensued with regard to the risk in developed markets compared to emerging markets but MV argued that although a portfolio could remain cautious there are improving fundamentals in countries such as Taiwan for example which still offer opportunities as markets on cheaper valuations.
Specific risks of stocks and value was examined and how specific risks can be stock specific rather than country specific. However the sharp currency devaluations in some markets such as Brazil and Russia over the past 12 months had hit the fund’s performance where stock fundamentals had been overridden by the market’s performance. Oil prices were discussed and how this affected the markets. To further mitigate risks M&G said they have also developed a framework to look at currency which will further aid stock selection.
Questions were raised with regard to governance and M&G clarified how they work with particular companies and examine management within the organisation closely.
Ethical investments were discussed and M&G clarified they have no exposure in tobacco products or defence. M&G explained their view is that good corporate governance is an indication of quality management and is a good indicator of how a company is run. It combined to make an attractive investment and is integral to their analysis of a company.
Action points
None.
3. External Manager Presentation part 2
3.1 Maple-Brown Abbott
Geoff Bazzan (GB), Head of Asia Pacific Equities, and Susan Douse (SD), European Marketing and Client Services, presented at IMWP an overview of their organisation. They spoke about their value style and investment process and philosophy. They looked at their total performance up to 31 August 2015 and the major contributors and detractors during that period.
A discussion ensued with regard to their cyclical turn down and the classic value trap over the long term. The Chinese economy was discussed and the fact that GB believes there is still opportunities in China but be wary of companies exposed to too much US debt.
Maple-Brown Abbott’s asset allocation and in particular their specific stock selection was debated and how this has impacted on performance. GB asserted that there has been a slight improvement in performance and hopes to see this improving in the future. GB expressed the view that exposure of Chinese stocks will improve.
Maple-Brown Abbott were asked about their ethical investments and it was asserted that restrictions are imposed on companies but in the broader portfolio they do not screen out but look at the sustainability over the long term and subsequently ethical questions come into play.
Action points
None.
External Manager Presentation part 3
4.1 Amundi
Mickaël Tricot (MT), Head of Emerging Markets Equities and Peter Brackets (PB) presented the Amundi Actions Emergent Team, Process and Portfolio Review to the IMWP. MT gave Merseyside’s portfolio’s investment summary and talked about the team structure and its resources. MT explained that they combined a top-down and bottom-up featured approach which supported a high quality stock selection process which was well suited for emerging markets with higher volatility.
Ethical investments were discussed and MT asserted this was very subjective but they coupled this with knowing the companies and looking carefully at aspects of the organisation thoroughly. MT explained that although aspects of ethical investments were not mandatory, companies were coming under pressure from the stock exchange to comply with guidelines. This was becoming very important and companies are finding it beneficial to conform.
The question of how the stock exchange can apply pressure was discussed and it was stressed that there was a common current exchange of disclosure and reporting which raises issues when concerns are expressed. It was also argued that collaboration and initiatives within global firms have a consistent framework which can put pressure on managers to comply. There are also the UN PRI principles which encourage disclosure.
Amundi’s exposure in Brazil and currencies was discussed and value versus growth was debated further. Amundi noted they were always looking at changing their approach to look at more complex valuations by using supplementary tools and databases to help with analysis.
Action points
None.
5.
5.1 Noting items
None
5.2 Action Points
None
5.3 Summary of Recommendations
None
5.4 Discussion Points (including any other business)
None
Date of Next Meeting
Thursday 10 December 2015 at 10.00 am, 6th floor, Cunard Building.
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What’s happened on the 6th floor of Wirral Council’s Chamber of Secrets for it to sue for over £300,000?
What’s happened on the 6th floor of Wirral Council’s Chamber of Secrets for it to sue for over £300,000?
Last year I requested various legal invoices during the 2013/14 audit of Wirral Council. One of these is below:
The invoice above is from Trowers & Hamlins and is for work connected to a court case to do with the 6th floor of Castle Chambers (a building owned and rented out by the Merseyside Pension Fund which is part of Wirral Council).
The court fee of £1,670 means this invoice is to do with to a civil court case in the High Court (in which Wirral Council is the claimant) to recover a sum of money where the amount exceeds £300,000 or an amount that is not limited.
What is blacked out under the heading Professional services provided appears to end in “6th floor Castle Chambers – Merseyside Pension Fund for the period to 31 01 2014”
So why all the secrecy surrounding the 6th floor at Castle Chambers? What was the outcome of the case and did the expenditure of £10,151.04 with Trowers & Hamlins lead to Wirral Council recovering any money?
Below is an earlier invoice about the same matter for £5,749.44.
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