SWEDEN/ISRAEL - Four of the buffer funds in the Swedish pay-as-you-go pension system have cut their ties with an Israeli defense company on ethical grounds.
AP funds 1, 2, 3 and 4 have dumped arms firm Elbit Systems from their portfolio because of its involvement with the highly controversial West Bank barrier.
The company built and operates a surveillance system for certain parts of the barrier, which is a network of fences, barbed wire, ditches and up to eight-metre-high concrete slabs.
The Israeli government says the structure is essential to protect its citizens from Palestinian attacks. But it remains a bitter bone of contention as critics argue it is an excuse to grab land key to a future Palestinian state.
The decision to ban the firm from AP portfolios comes after a recommendation by the Ethical Council, which is made up of officials from each fund to make sure invested firms behave responsibly and are adhering to international conventions.
"The Council has noted that both the European Union and the Swedish government consider the part of the separation barrier being built on West Bank to be illegal under international law," it said in its 2009 annual report.
It also noted that this position was supported by the advisory ruling by the International Court of Justice in The Hague in 2004.
Last year, Norway's oil fund, the Government Pension Fund - Global, also dropped Elbit Systems on similar concerns. (Global Pensions; September 4, 2009)
Elbit Systems was not available for comment.
Ethical Council chair Annika Andersson said: "The work of the Ethical Council is based on a rigorous process where dialogues with companies are our main tool.
"As a last resort, the Ethical Council may recommend each fund to exclude the company if the dialogue fails to produce the desired result. This is now the case with Elbit Systems Ltd."
The Swedish pension scheme said it will remain invested in Grupo Ferrovial, PetroChina, Thales and Yahoo after they successfully addressed its concerns about ethical abuses.
This week's edition of Professional Pensions is out now.
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