Presbyterian Church names companies for ‘progressive engagement’ over role in Middle East violence

SEATTLE — Today, the Mission Responsibility through Investment (MRTI) Committee of the Presbyterian Church (U.S.A.) announced that it will begin its process of ‘progressive engagement’ with five companies it says contribute to the ongoing violence that plagues Israel and Palestine. The Committee’s action is in response to a resolution passed last year by the Church’s General Assembly and is consistent with the Church’s long-standing practice of ensuring its investments are used to further the Church’s mission.

The companies selected for initial focus are:

Caterpillar – Caterpillar manufactures heavy equipment used for demolition of Palestinian homes, the uprooting of olive trees, construction of roads and infrastructure in the occupied territories for use only by Israeli settlers, and facilitating by the Israeli military.

Citigroup – Citigroup is a large international bank cited by the Wall Street Journal on April 20, 2005, for having moved substantial funds from charities later seen to be fronts funneling money to terrorist organizations. Some of these funds ended up as payments to the families of Palestinian suicide bombers.

ITT Industries – ITT Industries is a diversified manufacturer that supplies the Israeli military with communications, electronic and night vision equipment used by its forces in the occupied territories.

Motorola – Motorola recently won a contract to develop wireless encrypted communications for the Israeli military in the occupied territories. Additionally, it is a majority investor in one of Israel’s four cell phone companies. This investment is controversial because cell phone companies, according to the Oslo Agreement of 1995, must be licensed by the Palestinian Authority in order to operate in the West Bank and Gaza. With powerful facilities in the settlements, with a range covering all of the occupied territories, this licensing has not occurred.

United Technologies – United Technologies is a large military contractor whose subsidiary has provided helicopters to the Israeli military. They have been used in attacks in the occupied territories against suspected Palestinian terrorists. The company also provides other military hardware.

Carol Hylkema, chairperson of the MRTI committee said, “We have chosen these companies because we believe that they can make changes that will increase the possibilities for a just peace in the region. As shareholders of these companies, the Presbyterian Church (U.S.A.) calls on them to act responsibly.”

Church policy calls for corporate engagement to be a phased and selective endeavor, using dialogue, shareholder action, and as a last resort, divestment, as distinct phases in the process of working with companies to bring about change which reflects the mission of the Church.

Bill Somplatsky-Jarman, staff to the MRTI Committee, said that the next step will be to engage senior management of each company in a conversation aimed at persuading them to change practices that enable or support violence in Israel and Palestine: “We are initiating a slow, deliberate process, designed to produce opportunities for engaging companies around the social witness policies of the denomination through dialogue, shareholder resolutions and public pressure, so that these corporations might change their business practices which inflict harm on the innocent, and delay movement toward a just peace.”

“If these dialogues fail,” said Somplatsky-Jarman “we may conclude that our investments are not being used for activities that support the broad mission of the Church. At that point, divestment is an option that the General Assembly may consider.”

Companies named to the focus list were selected based on criteria developed by the Committee in November 2004, which directed research toward corporations whose activities and products are used to: support and maintain the occupation; establish, expand, or maintain Israeli settlements; support or facilitate violent acts by Israelis or Palestinians against innocent civilians; support or facilitate the construction of the Separation Barrier.

The 2004 General Assembly adopted a seven-part resolution affirming its longstanding opposition to the occupation and taking action to demonstrate its convictions. It instructed the Mission Responsibility Through Investment Committee (MRTI) to begin a process of phased, selective divestment of stock in companies whose operations support the occupation.

The Presbyterian Church (U.S.A.) has 2.3 million members from the fifty states and Puerto Rico. It has been involved in the Middle East for over 150 years. The Church’s mission strategy encourages and supports a Christian presence in the region, through ministries of education, healthcare, and evangelism. Our work with Christian partners also informs our deep concern for human rights issues. In Israel/Palestine, the Church has been a consistent advocate for Israel’s right to exist and Palestinians’ right to self-determination. It has also spoken out consistently against violence, terrorism, anti-Semitism, the Occupation of the West Bank, Gaza, and East Jerusalem, and the Separation Barrier.

August 2005 Focus List for progressive engagement on the issue of
promoting peace, justice, and human rights in Israel and Palestine

Caterpillar: Number of shares held by PC(USA) entities (as of 6/30/2005): Pension Trust for retired church workers (Board of Pensions) – 68,100, Presbyterian Church (U.S.A.) Foundation/New Covenant Growth Funds – 37,500.

Description: Caterpillar is a large manufacturer of heavy equipment used by the Israeli military and privately-owned companies under contract with Israeli government authorities. The equipment is used for demolition of Palestinian homes, the uprooting of olive trees, construction of roads and infrastructure in the occupied territories for use only by Israeli settlers, and facilitating military incursions by widening roads for the passage of tanks and armored vehicles.

Previous engagement: MRTI has had periodic contact with Caterpillar over the last twenty years on a variety of issues.

Citigroup: Number of shares held by PC(USA) entities (as of 6/30/2005): Pension Trust for retired church workers (Board of Pensions) – 481,322, Presbyterian Church (U.S.A.) Foundation/New Covenant Growth Funds – 304,575.

Description: Citigroup is a large international bank cited by the Wall Street Journal on April 20, 2005, for having “moved substantial sums for the same suspected terrorists who used Arab Bank…” This involved transferring funds to Arab Bank from charities based in the United States, Saudi Arabia, Kuwait and elsewhere, later seen to be fronts in part for funneling money to terrorist organizations. Some of these funds ended up as payments to the families of Palestinian suicide bombers.

The bank’s defense is that it “has ‘industry-leading’ controls against money laundering,” and follows rigorous procedures throughout its business.

Previous engagement: MRTI has had regular contact with Citigroup over the last twenty years on a variety of issues.

ITT Industries: Number of shares held by PC(USA) entities (as of 6/30/2005): Pension Trust for retired church workers (Board of Pensions) – 20,080.

Description: ITT Industries is a diversified manufacturer that supplies the Israeli military with communications, electronic and night vision equipment used by its forces in the occupied territories.

Previous engagement: MRTI has had little contact with ITT Industries over the last twenty years.

Motorola: Number of shares held by PC(USA) entities (as of 6/30/2005): Pension Trust for retired church workers (Board of Pensions) – 428,500, Presbyterian Church (U.S.A.) Foundation/New Covenant Growth Funds – 215,900.

Description: Motorola is a large electronics and telecommunications company with a wholly-owned subsidiary in Israel that has extensive ties to the Israeli military. For example, it recently won a contract to develop encrypted wireless communications for the military that it uses in the occupied territories. The company also is a majority investor in one of Israel’s four cell phone companies. The investment is controversial because the cell phone companies, according to the Oslo Agreement of 1995, must be licensed by the Palestinian Authority to operate in the West Bank and Gaza. This is not followed as the companies place their equipment in Israeli settlements with sufficient capacity to cover every Palestinian community. Without regulation, the companies have undercut prices and threatened the ability of the Palestinian cell phone company to survive. They also take advantage of the Israeli government policy of delaying or prohibiting the importation of modern equipment into Palestine. In addition, such practices evade taxes (estimated at over $40 million) that could help the Palestinian Authority develop its economy, and deprive Palestinian operators of revenue (estimated at over $500 million). The lost taxes and revenue go into the Israeli economy, and probably into the settlements through fees for placing equipment and discounts for cell phone service.

Previous engagement: MRTI has had periodic contact with Motorola over the last twenty years.

United Technologies: Number of shares held by PC(USA) entities (as of 6/30/2005): Presbyterian Church (U.S.A.) Foundation/New Covenant Growth Funds – 56,000.

Description: United Technologies is a large military contractor whose subsidiary has provided helicopters to the Israeli military. They have been used in attacks in the occupied territories against suspected Palestinian terrorists. The company also provides other military hardware.

Previous engagement: United Technologies was previously on the General Assembly’s military-related divestment list, but was removed following revisions to the policy a few years ago. MRTI has not had contact with the company.

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