(First published in Norwegian 27 Nov 2005)
By Erik Hagen
The Nobel Foundation’s wealth is administered without ethical guidelines, and the foundation will neither disclose the portfolio nor comment on specific investments. The foundation’s annual report does, however, state the names of the fund managers administering the fortune amounting to SEK 3 billion (€300 mill).
Norwatch recently examined the funds of the American company T Rowe Price, one of the fund managers, showing that the Nobel Foundation’s assets may be invested in companies connected with the production of cluster bombs, deliveries to the American defence industry, controversial gene technology, and a series of other notorious companies that have been excluded by Norwegian fund managers.
Even the Peace Prize may consequently be financed through investments in controversial weapons industry.
“A Good Kind of Manager”
Alfred Nobel himself is supposed to have believed that equity investment is objectionable, and his testament explained that parts of his inheritance were to be invested in real estate and interest-bearing securities. The return on his enormous fortune was to finance annual awards to people who had been of great benefit to humanity.
In conflict with Nobel’s testament, however, the Nobel Foundation has chosen to invest a constantly greater portion of the fortune in shares. During the past 10 years private fund managers have taken over the management of most of the fund’s capital, and more than half of the SEK 3 billion (€300 mill) is today invested in shares, by far the greater part of it in the USA. In 2004 the capital had a good value increase of 8%. As a result, the Nobel Foundation is able to pay out NOK10 million (€1,2 mill) annually to each of the prize winners.
Nonetheless, the foundation does not wish to go into detail about exactly where the funds are invested and told Norwatch that they are confident that the managers “are of a good kind” and that they invest the capital wisely. Norwatch’s examination shows that this may be an inadequately considered strategy. The foundation’s managers invest in companies that are in strong contrast with the prize winners’ noble work. The managers have even invested in nuclear weapons firms.
“No, the managers have no restrictions, such as not being able to invest in tobacco companies or similar firms,” Åke Altéus, deputy executive director of the Nobel Foundation, told Norwatch. “But we discuss these questions with them, just as we also discuss other important aspects of the management with them.”
He felt sure that the managers do not invest in unethical shares. “The managers we have chosen are of the kind that in no case would invest in shares that are inappropriate for the Nobel Foundation,” Altéus told Norwatch.
Secret Nobel Portfolio
The deputy executive director can neither confirm nor disprove that they have shares in various firms that Norwatch confronts him with. He claims that there is no special reason for not wanting to inform us about what shares the foundation invests in.
“There are terribly many shares. We would then have to place the portfolios from all our managers together, and that we have already said that we won’t do.”
“Do you envisage any problems in not keeping this open?”, Norwatch asked
“No. But it is quite open in any case. We report which managers we have and how much they invest, and so forth. We have to draw the line somewhere, for practical reasons.”
“Can you, off the cuff, tell us whether the foundation owns shares in Total, the French oil company?”
“No, I do not have a list with me to give you. As I said, we do not comment on individual firms. That is probably the plainest way to say it.”
Nobel Peace Prize winner Aung San Suu Kyi calls Total “the largest supporter of the military regime” in Burma. While Suu Kyi has been under house arrest for 10 years and calls for total boycott of Burma, Total has been able continue its oil adventure in the country. Several lawsuits are in progress against the company for having employed slave labour there.
The Nobel Foundation cannot inform us to whether they invest in cluster bombs, nuclear weapons, greedy biotechnology firms, or notorious companies like Total. There is nevertheless much to indicate that they have done just that.
Today The Nobel Foundation has contracted seven companies to administer its capital. Norwatch has looked more closely at the portfolios of one of the fund managers, the American T Rowe Price.
The assets invested in T Rowe Price by the Nobel Foundation are, according to the annual report for 2004, divided in three: Large-Cap, Mid-Cap, and Small-Cap companies. A look at T Rowe Price’s Internet pages shows that the manager has three trust funds named Large-Cap, Mid-Cap, and Small-Cap Funds.
Åke Altéus points out to Norwatch that they themselves do not utilize these funds but have separate portfolios, “which can entail certain differences from the corresponding fund,” according to Altéus.
This is consequently the closest Norwatch could get to clearing up which companies the Nobel Foundation is part owner of: portfolios that “can entail certain differences” from the T Rowe Price funds Large-Cap, Mid-Cap, and Small-Cap.
Unless there are great differences between its portfolios and the three T Rowe Price funds, the Nobel Foundation has invested in an ethical quagmire, since the three funds are packed with companies with a bad ethical record.
In 2002 the Nobel Prize in Medicine was awarded to British John Sulston for his lifelong project to map the human genetic material. He has also worked to direct attention to the controversial race to patent human genes. When he gave his speech of acceptance in Stockholm, and at the request of the Nobel Foundation, he criticized the companies that profit from the patenting of human genes.
Ironically, it now seems that the Nobel Foundation may own shares in precisely those companies that Sulston has used most time and effort in criticizing. His work has been directed especially towards criticism of the company Myriad Genetics.
In the nineties an American research team discovered a mutation in two human genes with significance for whether women developed breast cancer. But today this discovery has limited possibility for benefiting patients and further research. The reason is that the American biotechnology company has succeeded in patenting both these genes.
“Myriad now has total control of these genes,” Sulston informed Norwatch on the telephone.
In his book “The Common Thread: A Story of Science, Politics, Ethics and the Human Genome” (2002), Sulston describes how the company stole the patent, even though they were not the ones who made the discovery. Furthermore, the researchers who had made the sensational discovery must today pay expensive license fees to Myriad so that they may carry out further research on what they themselves discovered. “It seems to me that companies such as Myriad are going for short-term profits at the expense of long-term benefits to human health”, Sulston wrote in his book.
“Through its monopoly on these genes, the company can demand US$2500 from each woman who wants to be tested for these mutations. This is of course possible for some of the women in the USA, but not for many women in the rest of the world. If Myriad succeeds in getting away with demanding US$2500 from all women in the world, I believe other firms will try to do the same,” Sulston told Norwatch.
Lucrative license fees like this make Myriad an attractive investment object. The company may therefore be a good investment for the Nobel Foundation, which must finance its annual Nobel Prizes in, among other fields, medicine.
Nevertheless, the greatest sinner among the companies that the Nobel Foundation probably has invested in is the weapons producer Alliant Techsystems, an American producer of components for air-delivered cluster bombs. Because of its cluster bomb production the company has been excluded from, among other things, the governmental Norwegian Petroleum Fund. The Norwegian Ministry of Finance believes that Alliant Techsystems’ cluster bomb production “violates basic humanitarian principles.”
Another controversial company is Specialty Defense Systems (SDS), which makes defence materiel for warring soldiers (see picture). According to the parent company, Armor Holdings, SDS is “an innovator in the development and manufacture of equipment to make the war-fighter and tactical operator more mobile, lethal, and most importantly, survivable in the line of duty”.
Another of T Rowe Price’s investments is the company Oshkosh Truck, one of the leading suppliers for the American Department of Defense. A spokesman for Oshkosh Truck told the local press in Wisconsin in 2002 that “If we had another Gulf War…Oshkosh Truck may get a little boost.” Soon afterwards 6500 Oshkosh vehicles were put to use in the invasion of Iraq, and since then their shares have become a very popular investment object.
The three funds are also owners of a long series of other suppliers of equipment for the American defence industry. In addition, they have investments in a handful controversial mining companies (Newmont Mining, Lihir Gold and Meridian Gold), which have come into conflict with the local population in Asia, Africa, Latin America and the Pacific Ocean.
T Rowe Price Full of Dirty Companies
In addition to managing the three above-mentioned funds, T Rowe Price invests capital in a series of other companies, through several other funds. Even though T Rowe Price, according to Altéus, is “of the kind” that in any case would not invest in ignoble companies, the manager places assets in numerous companies that are blacklisted by European funds, such as producers of components for nuclear missiles.
Controversial investment objects in T Rowe Price which are excluded by various funds in Norway:
Is supposed to have lent boats and helicopters to Nigerian security forces in connection with attacks on villages in southern Nigeria. Also claimed to have dumped large amounts poisonous waste in Ecuador.
According to reports from the ILO, two trade union leaders in Colombia have been killed. It is reported that Colombian Cola bottling plants collaborate with paramilitary forces to discourage union organisation.
Disclaims responsibility for the Bhopal accident, which claimed the lives of several thousand people in India in 1984.
The oil company is claimed to have contributed to corruption in Equatorial Guinea to obtain access to the country’s oil resources.
Produces components for cluster bombs.
Important in American nuclear weapons programme.
Works on assignment for Morocco in oil exploration offshore occupied Western Sahara.
Production of components for cluster bombs and development and production of advanced nuclear warheads.
Dumping of quicksilver near a factory in India. The company has no plans for cleaning up.
Is claimed to have violated the freedom to organize in the USA. Women who apply for work at a Wal-Mart factory in Guatemala have to state whether they are pregnant.
29.03.06 The Nobel Foundation contradicts itself