JOINT COMMITTEE ON FOREIGN AFFAIRS díospóireacht

Situation in Zimbabwe: Discussion.

Chairman

The committee will now discuss the worrying and deteriorating situation in Zimbabwe. I welcome the Minister for Foreign Affairs, Deputy Martin, who is accompanied by Mr. Rory Montgomery and Ms Iseult Fitzgerald from the Department of Foreign Affairs. Also in attendance is Ms Tendai Madondo, a Zimbabwean citizen living in Ireland, who is accompanied by Mr. Seamus Collins of Trócaire who will update the committee on the current situation in Zimbabwe.

Members will be aware of recent media reports, particularly in The Sunday Tribune, of allegations that taxpayers’ money is being invested by the National Pensions Reserve Fund in companies operating in Zimbabwe. In was reported in the edition of 6 July that Progressio, an Irish NGO, had alleged that the NPRF had invested in 14 companies operating in Zimbabwe and that investment in the country accounted for 3% of the total reserve fund. I understand the journalist who wrote the report, Mr. Mark Hilliard, is in the Visitors Gallery. To discuss these allegations, I welcome Mr. Emmet Bergin from Progressio and Mr. John Corrigan from the National Pensions Reserve Fund.

Before we commence, I advise witnesses that whereas Members of the Houses enjoy absolute privilege in respect of utterances made in committee, they do not enjoy absolute privilege. Accordingly, caution should be exercised, particularly with regard to references of a personal nature.

The deteriorating situation in Zimbabwe in the past few months has been of great concern to the international community and to Ireland. President Mugabe hijacked the election process twice in the most blatant manner possible, first in March and again in the so-called run-off election in June. He did so shamelessly, before the eyes of the international community, and made little or no attempt to conceal what he and his supporters were doing. I am sure members have seen on television the attacks and beatings that were inflicted on opposition politicians. Prior to both elections, President Mugabe's henchmen in the ZANU-PF party and rural thugs unleashed vicious campaigns of violence and intimidation against campaigners who supported the Movement for Democratic Change, MDC, the main opposition party led by Morgan Tsvangirai, and against anyone who voiced opposition to President Mugabe. Such was the level of threats and intimidation to his supporters, Mr Tsvangirai decided not to participate in the June election as to do so would have led to the death or injury of many more of his supporters.

Efforts by the international community to resolve the crisis in Zimbabwe have made little headway. South Africa's attempts to mediate a compromise between President Mugabe and Mr. Tsvangirai have not been successful. Efforts by the African Union at its summit in Sharm el Sheikh in early July to initiate dialogue between President Mugabe and Mr. Tsvangirai have proved ineffectual.

Some countries outside Africa appear to be prepared to put their economic interests in Africa above the human and democratic rights of the Zimbabwean people. This was seen last weekend in the failure of the UN Security Council to pass a strong resolution on Zimbabwe. The EU is actively considering strengthening its own measures against President Mugabe and his closest supporters. What is happening in Zimbabwe is an international scandal. Inflation is destroying the economy which is now in virtual collapse. There may no longer be paper to print money although the currency is useless as it is. People are hungry and hundreds of thousands have fled abroad, mainly to South Africa.

This morning a number of people will bring the joint committee up to date on what is happening in Zimbabwe. Our first speaker is the Minister for Foreign Affairs, Deputy Micheál Martin, who will be followed by Ms Tendai Madondo, Mr. Emmet Bergin of Progressio and Mr. John Corrigan, director of the National Pensions Reserve Fund. I ask the Minister to make his introduction.

Minister for Foreign Affairs (Deputy Micheál Martin)

I am very pleased to appear before the Chairman and the members of the committee to discuss the current crisis in Zimbabwe. I know and appreciate the deep concern within the Oireachtas on this matter, which has been demonstrated in a number of important debates in recent months.

The Irish people and members of the Oireachtas, as their elected representatives, feel a deep affinity with Zimbabwe and its people and have an abiding wish to see the country emerge from the profound political and humanitarian crisis which it is undergoing. It is relevant to recall again the dimensions of the current crisis. Inflation is at 10 million% per annum, there is 85% unemployment and 5 million Zimbabweans face food and security catastrophe in coming months. Approximately 3 million Zimbabweans have been forced to seek work or refuge in neighbouring countries. That figure may even be higher.

These are shocking indicators and demonstrate clearly that what we are now confronted with in Zimbabwe is a complete failure of governance which increasingly poses a threat to the economic and social well-being of the entire south Africa region. The responsibility of the Mugabe Government for creating this sorry state of affairs and for failing to uphold basic human rights in Zimbabwe in recent years would be enough to indict them in the eyes of most right thinking people. However, what has been truly horrendous to witness in recent weeks and months has been the open and flagrant contempt of President Mugabe and his ruling clique for even the basic tenets of democracy, human rights and humanitarian law. It has been clear that the ruling elite in Zimbabwe will stop at nothing in order to trample over the democratic process and hold onto the reins of power. The brutal violence and intimidation which characterised the run up to the elections of June 27 has been well described in many reports and in international media.

Unfortunately, it is clear this violence has not ended and that the militias and groups of youths organised by the ruling ZANU-PF party continue to engage in violence and intimidation directed at the democratic Opposition. Reports suggests that a clear attempt is under way to subvert the democratic majority secured by the Movement for Democratic Change, MDC, in the parliamentary elections last March, with a number of MDC MPs having been assaulted, arrested or kidnapped.

Mr. Mugabe's chilling remarks that he would never accept the MDC democratically securing power in Zimbabwe and making clear that the only alternative he envisaged to his continued rule was war to be visited upon his own long suffering people gives an insight into the mindset of a veteran autocrat who is becoming increasingly delusional and seemingly immune to all pleas for reason. In the circumstances, it is clear there is no way in which either the outcome of the 27 June run-off vote or the reinauguration of President Mugabe resulting from it could be regarded as legitimate. None of the regional organisations, including the African Union, the Pan-African Parliament, and the Southern African Development Community, SADC, which observed the election was able to judge the vote as in any way free or fair.

The growing international consensus in recent weeks has been encouraging. This includes some of Zimbabwe's African neighbours and the G8, rejecting the results of the 27 June election and holding that Mr. Robert Mugabe's government can no longer be regarded as legitimate. The UN Security Council's unanimous expression of deep concern in advance of the election was no less important and welcome. This is why last Friday's failure to agree on a Security Council resolution was particularly disappointing and regrettable. I continue to believe that the UN and the Security Council have an important role to play in helping to resolve the current crisis, including possibly as part of an expanded international mediation effort.

The failure by the UN Security Council to agree on a limited package of smart sanctions means there is now a greater onus on the European Union to review its existing restrictive measures, and consider how they might be extended in order to increase pressure on the Mugabe regime, without in any way adding to the suffering of the Zimbabwean people. In this regard, it is important to dispel any notion that the EU's existing sanctions have in some way contributed to the current economic collapse in Zimbabwe. This is clearly not the case, with the EU's sanctions targeted solely at the ruling elite and aimed at restricting their travel to the EU or any attempts on their part to siphon off ill-gotten gains in EU bank accounts.

I have already stated that I strongly support further European Union action to introduce measures against those who are responsible for state-sponsored violence and intimidation in recent months. It is very important that the EU maintains, indeed increases, the pressure on the Mugabe regime to enter into negotiations with the opposition in good faith. Appropriate targeted sanctions are compatible with a genuine commitment to mediation and dialogue. It is equally important to sustain pressure until verifiable progress has been attained.

I will meet my EU colleagues next week and urge that we work on strengthening existing restrictive measures, such as extending the existing travel ban and asset freeze, without impacting adversely on ordinary Zimbabweans who have suffered enough. At the same time, the Government has been and continues to be strongly supportive of the negotiating efforts undertaken by African leaders, including the African Union and by President Mbeki of South Africa on behalf of SADC. If we adopt a carrot and stick approach now, combining support for current mediation efforts while also being prepared to ratchet up diplomatic pressure, it is only because we know well from experience that Mr. Robert Mugabe is very adept at procrastination and negotiating to no good effect from a position of power.

We believe Zimbabwe's African neighbours, above all South Africa, retain the greatest potential influence and leverage on the current situation. I conveyed this to the South African ambassador at a meeting earlier this month to discuss the situation and make clear our concerns and she undertook to transmit this to her authorities. At the same time, this must be coupled with a frank acknowledgment and expression of disappointment that the results of the extensive mediation efforts to date, stretching back over several years, have so singularly failed to produce results in terms of an agreed agenda and programme for democratic change in Zimbabwe.

This disappointment extends to the outcome of the recent AU summit in Sharm-el-Sheik in which considerable hope had been invested. Committee members will be aware that a number of preliminary rounds of discussions between ZANU-PF and both the wings of the MDC took place in South Africa last week and there have also been South African mediated talks about talks in Harare this week. It appears that little progress has been made so far. Moreover, it also appears that the Zimbabwean Parliament will not convene tomorrow, as had originally been expected. Nevertheless, the Government hopes that these discussions will prove successful and will lead to an agreed transitional outcome and one which fully respects the wishes of the Zimbabwean people.

What Zimbabwe needs is a true transitional government leading to fully free and fair elections, under international supervision, within a short period. Such a transitional government offers the only formula which will allow all Zimbabweans to decide on the appropriate prescriptions for dealing with the profound crisis in their country. In the meantime, Ireland and its EU partners will continue to work closely with our African partners and others in the international community in support of a genuine, negotiated outcome in Zimbabwe.

Committee members will be aware that Ireland has been extremely active throughout in working with both regional organisations and the countries of the Southern Africa region to address the crisis in Zimbabwe. This includes the provision of financial support, through the UN, to assist deployment of SADC election observers in Zimbabwe.

Our missions in Africa will continue to be active in expressing our concerns to their host governments and urging greater engagement on their part. I highlight the excellent work and reporting provided by Ambassador Wrafter and his colleagues at the embassy in Pretoria on Zimbabwe, arising from their very regular visits there, including to observe both rounds of the discredited election. The embassy also plays a vital role in meeting and liaising with the Irish community in Zimbabwe, as does our honorary consul in Harare, at a time when many in the expatriate community in Zimbabwe feel under great threat and pressure.

The Government will also continue to provide humanitarian assistance for the people of Zimbabwe, via non-governmental organisations, missionaries and UN agencies. Irish Aid support to the Zimbabwean people has totalled over €25 million since 2006. At a time of unprecedented humanitarian crisis and when ordinary Zimbabweans are suffering terrible deprivations and economic hardships, the decision of the Zimbabwean authorities last month to suspend the activities of NGOs working on the ground was appalling. The Government will continue to work with others to have this cruel decision overturned and any remaining ban fully lifted so that the vital work performed by humanitarian organisations can resume unimpeded. It is important also to acknowledge the bravery and dedication of humanitarian workers on the ground in Zimbabwe, including from Irish agencies such as Concern, in operating under such difficult conditions.

I express my thanks to the committee for the opportunity to re-state once again the Government's deep concern and efforts to improve and bring about genuine dialogue, reform and progress in Zimbabwe. The issue will continue to be one to which I personally and the Government will accord the highest priority. I very much welcome the strong interest in Zimbabwe and support for the Government's efforts among Oireachtas members and look forward to continuing a dialogue on the situation as it evolves.

Chairman

Trócaire is also deeply involved. Our next contributor is Ms Tendal Madondo.

Ms Tendal Madondo

I thank the joint committee for allowing me this opportunity to speak and also for its support in the Zimbabwean crisis. I want to say on behalf of Zimbabweans and members of the diaspora like myself that women are being butchered and battered by the government militia and the military. Men and young boys who are being used by this regime should continue their own personal interests. Each time we speak about President Mugabe we should look at him as an individual. Each time we hear about President Mugabe we are talking about a regime. We are talking about a figurehead behind whom stands a crowd of cronies more vicious than him who have a vested interest in the Zimbabwean situation. They have invested too much wealth and business in the country of Zimbabwe for them to let go of the situation now. It does not suit them to relinquish power at this stage. It must always be remembered that we have a much more vicious regime behind Robert Mugabe. This regime would comprise the army commanders, the prison officers and the commanders of the war veterans association. It is a group of cronies who have control of almost the entire country and the state machinery. Unfortunately, the people in Zimbabwe do not have any leverage to speak out because if they try to do so they will be battered and butchered. The media, both the print and the electronic, cannot speak out. The only media one hears in Zimbabwe is the media that is controlled by the state.

I want to give an example of the militias that are unleashing violence on the people of Zimbabwe. These are men and young boys and young girls who have no other opportunity in life because they cannot afford education in Zimbabwe. These are people who have been grouped together by the cronies of the Mugabe regime. They are indoctrinated against anything that has to do with the west. In every constituency in Zimbabwe these government militias are placed strategically. They are like Big Brother watching anybody who appears to support the west or the Movement for Democratic Change, MDC, in general.

These militias are unleashing violence with impunity. There are more than 10,000 government militias in every constituency and if the people who have been battered and butchered in Zimbabwe go to the hospitals, they are told not to say they have been battered and butchered by people who support ZANU-PF. They must say they have been battered and butchered by the MDC for them to get treatment. If they say it was ZANU-PF supporters they will not get treatment. If they say it was the MDC, all the cameras will be on them and the national broadcaster will then show the brutality of the MDC. A huge amount of propaganda is being unleashed in the country as well.

I want to highlight a humanitarian crisis that is happening in Zimbabwe. As members are aware, last year there were many floods and many people did not harvest. Agriculture is a mainstay of the economy in Zimbabwe but there are no crop yields this year. This is a drought year for Zimbabwe. More than 4 million people in Zimbabwe are now at the edge of starvation because there were no crop yields last year. In terms of what is happening now, the government agencies which have been helping and giving food aid to all those people have been told to stop their operations. Men and children in Zimbabwe are suffering and are at the edge of starvation because of that and, unfortunately, the majority are orphans. As members are aware, there are approximately 3,000 AIDS deaths every week. We have many child headed households in Zimbabwe and more than 200,000 young people have been displaced by the conflict in Zimbabwe. These people are in limbo. The majority suffered during the operation clean out in 2005. They do not have any food on their tables. They do not have any clothes on their backs. This is winter time in Zimbabwe and they have no food, blankets or anything else.

If someone is prosecuted in Zimbabwe they go to prison. Many people who have not committed any crimes are in prisons but the conditions in the prisons that are controlled by government cronies are inhumane. People do not have food in the prisons. The toilets in the prisons do not flush. That is how inhumane the situation is in prisons. It is unfortunate that the cronies are unleashing violence and control over the entire country.

We thank the members for the support they have offered for the people in Zimbabwe but because we are faced with a humanitarian crisis as well as a political crisis, I ask that they use the leverage they have to intervene. Ireland has diplomatic ties with African countries in the SADC, the African Union, the United Nations and even the European Union. I ask that it uses the leverage it has to deal with the humanitarian crisis, at least while the political negotiations are taking place.

There is no food on the table for the majority of the Zimbabweans who are suffering under this regime. Will the committee at least ask those people in the South African Government with which it has leverage to make sure that food is available for the vulnerable widows, orphans, elderly men and children in the Zimbabwean nation? Will the it ensure that short-term measures are implemented to support the people in Zimbabwe?

In the long term, will the committee ensure that people realise that the mediation process has not worked? It has not worked with the South African Government - we can all see that. It is not only up to the South African Government to say it has not worked, but the people who mandated the South African Government should be able to say it is has not worked and therefore ask what else can they do.

Will the committee ensure that action is taken in regard to Zimbabwe because the President is not a president because he was not democratically elected? He is unleashing violence on the people whom he is supposed to be supporting. More than 10,000 people who have been injured in Zimbabwe cannot access treatment. Will the committee ensure that happens? Will it use its leverage to make sure that treatment is available for the people who have been injured? When the militias go out to cut off people's limbs, they ask the people do they want a short sleeved or a long sleeved amputation, giving them options as to how they can be butchered and battered. They do not have the money to pay for the health services they need. If they tell the health services that they have been butchered and battered by the ZANU-PF militias, they will not receive treatment.

Will the committee ensure that short-term and long-term plans are introduced to help the vulnerable people in the context of the very high level of inflation in Zimbabwe? I spoke to my brother at the end of June and he told me that he had got his salary of ZWD63 billion, but by 9 June, the price of bread - if one can get it - has gone up to ZWD100 billion. He has five children. How will they survive in terms of having daily transport costs? His daily transport costs for July will be ZWD150 billion, yet he only got a salary of ZWD63 billion at the end of June to sustain him until the end of July. How will he and his family survive? I am talking about my brother who can, to some extent, afford this cost, but the majority of the Zimbabweans live in the rural areas. How will they survive?

I thank the Irish people present, the Minister and the committee for the continued support they have given Zimbabwe but I plead with them to bear in mind that a great deal of information on what is happening in Zimbabwe does not get through because the media there is hugely interfered with. I thank the committee for giving me this opportunity.

Chairman

I thank Ms Tendai Madondo for her presentation. I invite Mr. Emmet Bergin, representing Progressio, to make his presentation.

Mr. Emmet Bergin

I thank the Chairman and members of the committee for this opportunity. First, I will briefly introduce what Progressio does. It has been working in Zimbabwe for about 25 years, sending development workers, including Irish volunteers, to offer expertise and support to what was once, notwithstanding the Matabeleland massacre in the 1980s, generally regarded as quite a well governed southern African nation.

In recent years, as the regime in Zimbabwe has cracked down on NGOs, Progressio workers have been arrested and our offices ransacked. We have had to become more careful in our public statements in Ireland and in the UK in case we would endanger the lives of our development workers. We have had to become especially careful when we are addressing issues - as I am here today - that impact directly on Mr. Mugabe's inner circle who have amassed personal fortunes while overseeing the steepest decline of a peacetime economy and of a population's life expectancy that has ever been recorded.

The background on Zimbabwe has been given. I would like to specifically address the National Pensions Reserve Fund investments in companies operating in Zimbabwe. Through direct contact with foreign embassies in Zimbabwe, contacts with the companies and a review of annual reports, Progressio has identified 15 companies operating in Zimbabwe in which the National Pensions Reserve Fund has invested. The members may have an appendix in the presentation listing these companies. The fund's holding in these 15 companies was valued at more than €596 million and consists of 3.17% of the fund's total value at the end of 2006. In case there is any confusion in regard to media reporting, Shell recently divested from Zimbabwe but two further companies were identified, which brings the fund's holding in this respect up to €596 million. It is an ongoing process of change. A number of these companies have direct links to President Mugabe but all companies operating in Zimbabwe, through their presence and the way in which investment transactions are structured, provide crucial currency financing for the government.

The NPRF invests in and holds shares in three financial institutions - Barclays, Standard Chartered Bank and Old Mutual plc. They are required as commercial banks operating in Zimbabwe to invest 40% of their profits in government bonds. This licence agreement means these companies provide the regime with steady access to foreign capital. Barclays Bank is one of the companies most under the spotlight. It has made substantial loans to President Mugabe supporters given land seized from white farmers. By 2007, according to its own annual report, Barclays had made concessionary loans worth US$86 million through the infamous land redistribution scheme. The bank also faced allegations in 2007 that it breached EU targeted sanctions by providing personal banking services for two former Minsters named on an EU sanctions lists. However, it has a 64% owned subsidiary and was able to avoid censure. Barclays has increased its lending in recent years, which is not well known, but it is widely considered to be a lifeline to the Mugabe regime.

Perhaps Old Mutual plc, the London insurance firms that holds investments worth approximately 61% of the total stock market in Zimbabwe, is equally significant. It is regarded as the most significant commercial group operating in the Zimbabwean economy. The company also has a stake in Zimbabwe Newspapers, which publishes the Herald and the Chronicle, two of the main propaganda tools of the Mugabe leadership. Like Barclays, the NPRF invested. Standard Chartered Bank is being investigated in the UK for allegedly breaching EU sanctions against Zimbabwe. It has part of an estimated US$1 billion loan to the ruling elite in the country.

The NPRF still invests in two military companies, BAE Systems and Finnmechanica, despite disinvesting from cluster munitions companies. It still owns shares in 11 arms production companies. BAE Systems has been heavily criticised for supplying aircraft parts for Zimbabwean fighter jets in contravention of the EU arms embargo on Zimbabwe. The fund's list also includes Anglo American, which recently announced plans for a US$400 million investment in the mine at Unki, Zimbabwe. Its latest expansion plans have drawn international condemnation, including by Denmark's public pension fund, ATP, which is considering selling its stock, as is a private pension company and insurer, Legal and General, which is the company's largest shareholder.

Any natural resources company trying to operate in Zimbabwe must follow an indigenisation and empowerment Bill. It is compulsory for all foreign-owned companies to cede 51% of shares to indigenous Zimbabweans. Unfortunately, without tighter EU sanctions, much of the new investment is certain to fall into the hands of those who have perpetuated violence against their own people. The NPRF also invests in tobacco, mining and banking companies operating in Zimbabwe. As part of the fund's emerging market investment portfolio in which it is seeking to increase its allocation to 5% of total assets from 2% currently, it is likely there will be many more multi-million euro investments in firms supporting the Mugabe regime. If carried out under existing investment criteria, this increased emerging market investment will include substantial investment in Chinese companies, many of which are active in Zimbabwe currently and support the regime. Zimbabwe is the second largest exporter of platinum and China is the largest importer, which is a win-win for everybody, except the Zimbabwean people.

There is a precedent for disinvestment. In March, the NPRF consented under Government pressure to withdraw €27 million in investments from six international companies involved in the production of cluster bombs. Paul Carty, fund chairman, in a letter to the then Minister for Finance, Deputy Brian Cowen, was quoted in the The Irish Times in March saying, “In our view the maintenance of such investments could give rise to growing public outrage and be contrary to Government policy”. Similarly, one could ask how the National Pensions Reserve Fund’s investment in companies which are active in Zimbabwe is not contrary to Government policy.

Since 2000, the Department of Foreign Affairs has disengaged from any bilateral aid relationships with the Zimbabwean Government. Irish Aid works in partnership with non-governmental agencies, missionaries and international organisations without providing funding for the Zimbabwean Government. However, the National Pensions Reserve Fund, which is another arm of the Irish State, holds shares in companies which are active in Zimbabwe. The value of those shares is more than 50 times greater than the amount of Ireland's annual aid to Zimbabwe. It provides a lifeline for the Zimbabwean regime, in direct contradiction of the Government's stated approach.

Progressio and many other development organisations welcomed the National Pensions Reserve Fund's public statement of 10 July last, in which it said it is "raising with these companies" operating in Zimbabwe "the concerns that have been expressed". While the statement was somewhat reactive, it was welcome. However, it is not an adequate response to the scale of the problems which have been identified. I am sure members are aware that the fund's remit, which was drawn up when the fund was being established by the then Minister for Finance, Mr. Charlie McCreevy, is "to secure the best possible financial return subject to prudent risk management". Many non-governmental agencies believe this narrow remit is no longer appropriate, in light of the amount of money the National Pensions Reserve Fund invests in private companies each year. It expects to invest almost €20 billion in such companies in 2008. That figure increases by approximately €3 billion each year. When one considers the moral and ethical problems associated with some companies, it is clear that this investment needs to be re-examined. Many non-governmental organisations are keen to ensure that a system of public oversight - an ethical framework for the fund's decisions - is introduced. A similar system was introduced by the Norwegian Government when its equivalent fund was established.

The members of the committee and the Minister are aware that Mr. Mugabe and Zanu-PF have been largely impervious to political pressure. Diplomacy from inside and outside Africa has been largely ineffective. Therefore, we call on the Government, through the National Pensions Reserve Fund, to ask companies in which the fund has invested, and which have proven links to the Mugabe regime, to pull out of Zimbabwe. If they do not comply, the fund should withdraw its investment from such companies. The Government should ask the fund to have all the companies in which it is investing, and which are operating in Zimbabwe, independently scrutinised. There should be an onus on such companies to prove they act in a manner that does not directly or indirectly finance the Zimbabwean regime. The fund should threaten to withdraw investment from such companies if they cannot prove they are independent of the regime. These two proposals can be implemented immediately.

The Government should work with the Joint Committee on Foreign Affairs on the introduction of legislation that sets ethical investment guidelines for the National Pensions Reserve Fund and establishes an independent ethical advisory council on environmental, social and governance issues to review the fund's investments. While these are long-term requirements, they are equally necessary. Progressio, like the other non-governmental organisations across Europe with which it has been in contact on this issue, hopes that any movement towards the withdrawal of investment from pension funds in Zimbabwe on the part of the Irish authorities will spread to all other European countries. In that way, the position taken by this country could have a real effect on the Mugabe regime.

Chairman

I ask Mr. John Corrigan of the National Pensions Reserve Fund to address the committee.

Mr. John Corrigan

I welcome this opportunity to discuss with the committee the work of the National Pensions Reserve Fund, with particular reference to recent press reports that the fund has invested €578 million, or 3% of its value, in Zimbabwe.

I would like to speak briefly about the fund's objectives and its governance and management arrangements. The fund was set up in 2001, under the National Pensions Reserve Fund Act 2000, with the objective of meeting as much as possible of the cost of social welfare pensions and public service pensions to be paid from 2025. The fund's investment mandate, as set out in section 19 of the Act, provides that moneys should be invested in a way that secures the optimal risk-adjusted financial return. This commercial mandate is not qualified by any ethical investment criteria. The Act further provides for an independent board, known as the National Pensions Reserve Fund Commission, to control, manage and invest the fund's assets in accordance with its investment mandate. The National Treasury Management Agency is appointed under the Act as manager of the fund - to act as agent of the commission - for a period of ten years at the end of which, that is, in April 2011, and at five-yearly intervals thereafter the commission, acting with the consent of the Minister for Finance, may reappoint the NTMA as manager or such other person as it considers to be best qualified. I am the director within the NTMA who is responsible for the management of the fund.

The question of ethical criteria was expressly considered when the fund was being created. The then Minister for Finance told the Dáil in October 2000 he had considered whether the fund's investment policy should be qualified by ethical criteria or whether it should strictly commercial. The Oireachtas decided a strictly commercial mandate should be given to the fund. Any decision to pursue an ethical approach is a matter for the Government and the Oireachtas. The commission and the NTMA will implement whatever is the fund's statutory investment mandate.

The fund has gone as far as possible within the limits of its statutory investment mandate to adopt and implement a responsible investment policy. In that regard it was one of the founding signatories to the United Nations' sponsored principles for responsible investment in 2006. The aim of the principles is to integrate consideration of ethical, social and governance issues into investment decision-making and active ownership practices. The question of excluding or banning investment in companies whose ethical, social or governance behaviour is deemed unacceptable was considered at length by the international representative group drafting the principles but was not adopted because in a significant number of cases it clashed with the fiduciary duty of investors to their stakeholders. Since the principles were designed for funds with globally diversified investments and standard commercial investment mandates, they do not call for screening or avoiding stocks. Instead, the principles promote a policy of engagement with companies where shareholders regard themselves as long-term owners of companies and raise concerns directly with company management.

In that context the fund has pursued a responsible investment policy with a commitment to active ownership at its core. In practice, that means trying to effect change through a detailed programme of engagement with companies on environmental, social and governance issues and through the exercise of shareholders' voting rights. To that end the fund last year appointed Hermes Equity Ownership Services, part of the executive arm of the BT pension scheme, the UK's largest pension fund, to execute proxy votes on the fund's behalf and to engage with companies on behalf of the fund and other like-minded Hermes clients, which include the BBC Pension Trust Limited and the Public Sector Pension Investment Board of Canada.

I wish to turn to the recent media reports concerning investment in Zimbabwe. It is incorrect to state that €578 million, or 3%, of the National Pensions Reserve Fund is invested in Zimbabwe on the basis that it owns shares in companies such as Barclays Bank, BP, and Nestlé. The fund has shares of more than 2,500 companies in its global equity portfolio. Among them are multinational companies with a presence in dozens of countries around the world including, in some cases, Zimbabwe. Ten of the 14 companies identified as having operations in Zimbabwe also have operations in Ireland. It is inaccurate for press reports to describe Barclays Bank, BP, Nestlé and other such companies as Zimbabwe-based on the grounds that they have a presence in Zimbabwe and it is incorrect to attribute their entire worth to their business interests in that country, which is the basis for the reported figure of €578 million.

The fund accepts that the situation in Zimbabwe is appalling and is actively pursuing via its participation with Hermes the concerns that have been expressed with respect to its involvement in Zimbabwe directly with the companies mentioned as part of the fund's ongoing engagement programme.

Chairman

I thank Mr. Corrigan. We will take questions and then return to the Minister and the panel. I understand the Minister has to leave by 1 p.m.

Deputy Billy Timmins

I thank all the contributors and Ms Tendai Madondo. There is a general consensus among members that the regime in Zimbabwe must come to an end. It is not just about one man. A ruling class is propping up the regime and it is in its interest to do so while the general populace is suffering. Until now verbal condemnation of the regime has not worked and has had no impact on the Southern Africa Development Community, SADAC, or the African Union. We must examine the tools we have to increase the leverage on the regime.

The only remaining options are military intervention, which is not practical and for which there is no will, and economic sanctions to bring the regime to its knees. How can Ireland contribute to the economic sanctions? Those implemented to date by the EU may have caused some restrictions. However, that Barclays Bank can operate there through a subsidiary shows they can easily be overcome. They need to be more rigid.

It is important not to paint the National Pensions Reserve Fund as the big bad wolf. I appreciate it is operating to legislation passed by the Oireachtas, albeit some Opposition parties questioned the commercial concept in its exclusion of ethical criteria. Is it feasible to move to an ethical criteria model for the fund? Would it still be able to operate? Is there leverage in the existing principles to have an impact on policy in Zimbabwe? Is there a tangible way to use the National Pensions Reserve Fund to assist in the economic isolation of Zimbabwe.

The messages sent to Mr. Mugabe and the South African President simply have not worked. The South African ambassador must attend the committee to relay our concerns and express our disappointment at Mr. Mbeke's failure to do anything. He has much responsibility in this matter. He is out of tune with his own ANC on this matter but has given sustenance to Mr. Mugabe.

Very few member states of the African Union, with the exception of Nigeria, Botswana and Kenya, have been forthright in their criticisms of Mr. Mugabe. I know overseas development aid is untied. We must, however, reiterate to African Union member states that all parties in the Oireachtas are dissatisfied with the situation in Zimbabwe.

Deputy Rory O’Hanlon

There is a consensus among the committee members to see a satisfactory solution to the situation in Zimbabwe. We are very concerned at the levels of brutality, poverty and disease, as Ms Tendai Madondo informed us, that prevail in Zimbabwe. I have a difficulty about introducing ethics legislation because we all have our own view of what is ethical. Personally, I would not invest in a tobacco company. It would be very difficult to find criteria that would satisfy everybody in the House. While it is obviously an issue that can be addressed, we have to be very careful in framing legislation, if we go down that road, to ensure we do not destroy what has been a very successful facility for this country, the benefits of which will not seen until it is 25 years in operation.

The Minister referred to the fact Mugabe is immune to all pleas for reason and he certainly behaves in a deluded manner. The question is what we can do. I fully support the Government in what it is doing. As Deputy Timmins said, we must consider other ways and means of bringing pressure to bear. The African countries should certainly be playing a more active role because it is in the interests of the whole of Africa, not just Zimbabwe. The European Union should ascertain what more meaningful action can be taken.

One of the areas with which I have greatest difficulty is the role of the United Nations. I would have liked to see proper reform of the United Nations at its 50th anniversary because the world has moved on a lot in the past century. For example, what we have achieved in Europe through the European Union in terms of peace is something we often underestimate and something of which we, as Europeans, should be very proud. In this day and age, there has to be some meaningful intervention to ensure that where there are high levels of brutality, tyrannical governments and individuals guilty of genocide and serious abuse of human rights, there must be some way of dealing with this. We cannot stand by or just take verbal action. There must be a formula that will be objective and without vested interests.

I recognise the risks if we go down the road of intervention that people with vested interests may well influence decision making but in this day and age the United Nations should be considering a meaningful way whereby we can ensure that nobody in the world suffers the level of brutality we see in too many countries at present. While it is only a small number of countries, it is still too many.

Senator David Norris

I will begin by remarking on the Chairman's words in a very positive light. We are used to diplomatic language from our leaders, including the Minister for Foreign Affairs and the Chairman in his role. I have rarely heard the Chairman being less diplomatic in his language when he talked about the shamelessness of the hijacking of elections, and I very much welcome this. I welcome the Minister's use of the word "appalling". The relatively undiplomatic language used by very senior people in our political life is a measure of the catastrophe we are witnessing in a country that should have been a shining light and leading example. I hope this wonderful country may come back to that but it must get rid of this regime.

I hope there will be a revision by the Department of Foreign Affairs of some of its briefing material to put it in a more unambiguous light. It is not appropriate for our briefing to carry the news that the Head of State is President Robert Mugabe, which I do not think he is. He is not at all legitimate. The elections were exactly as described both by the Minister for Foreign Affairs and the Chairman. We should use some form of words such as "self-styled" or "self-appointed". He is not a legitimate Head of State. No European country and no decent country should in any sense give him support by purporting to accept that he is Head of State because he is not. He is a murderous tyrant. The sooner we accommodate ourselves to using this kind of language, the better. It may well bounce off his hide, but it may give pause for thought to some of his allies.

I greatly welcome the Minister's speech. However, with the greatest respect, he was far too soft on South Africa. President Mbeki has been a serious disincentive. I completely agree with Deputy Billy Timmins's comments in that regard. President Mbeki has provided camouflage under which President Mugabe can continue. He has offered a lifeline to him in diplomatic terms and been disowned by his own people, elements of his own Government and his own brother. People in South Africa are openly asking what President Mugabe has over him. While I do not know whether there is an element of political blackmail or leverage, his behaviour with regard to Zimbabwe is as bizarre as his rather unscientific notion that one can cure AIDS by eating asparagus or whatever it was.

Deputy Brendan Howlin

I believe it was beetroot.

Senator David Norris

It was some vegetable or other. That point needs to be made.

I welcome the Minister's diplomatic moves in Dublin and his conveying of various views, including the view that neighbouring countries can be involved, to the South African ambassador. Can the Minister give the joint committee an assurance that he will talk to the representatives of all the surrounding countries directly, not simply through the South African ambassador? That would be very welcome.

Deputy Micheál Martin

I indicated in a debate in Seanad Éireann for which the Senator was present that I was already doing so.

Senator David Norris

Is the initiative continuing?

Deputy Micheál Martin

That meeting will be held next week.

Senator David Norris

Splendid. I greatly welcome it and I am glad of the Minister's confirmation because it was not mentioned in his speech. However, I accept this and consider it to be good.

The difficult problem arising from China's intervention has been mentioned. I welcome the contribution of Tendai Madondo who I had the pleasure of meeting yesterday. It is very important for members to hear details they would not hear otherwise and be apprised of the extent of the propaganda machine within Zimbabwe and aware people will not receive treatment unless they allege they were attacked by the MDC, although President Mugabe's supporters were actually responsible. Moreover, it would be a mistake to assume this pertains to one person only, as there is a nest of them. The Minister's corrective remarks were useful in this regard. The joint committee and perhaps the Minster for Foreign Affairs or some other agency should reconsider the extent to which international banks, European banks in particular, are involved in assisting such people to squirrel away money or are protecting them. I am particularly interested in Barclays Bank for this reason and will return to the issue.

The Minister should provide members with some information on the question of Irish aid to Zimbabwe. It is a difficult issue. The behaviour of the Zimbabwean Government is so strange and piratical that it certainly is possible that such money is being sequestered illegally by it. I hope the Minister can give assurances that such aid is going directly to the people and being monitored. The situation makes it much more difficult to cut it off because of the suffering of the people.

Deputy Micheál Martin

It is not going to the government.

Senator David Norris

That is welcome. That said, I have heard Zimbabwean people advocate that it should be cut off to bring the crisis closer. I am unsure of this because it is a decision I would find difficult to take. Everything must be considered.

A message should go out from this meeting to salute the courage of the ordinary Zimbabwean electorate and, in particular, those who did not vote. It is extremely difficult for people in Europe to understand what it meant and how much courage it took not to go out and face mutilation of the kind described. I refer to the callous cutting off of limbs or being battered to death. People had the heroic courage not to vote. Members must have a certain amount of courage, which puts in context all their concerns about the economics.

I exonerate Mr. Corrigan and his colleagues. I have been interested in this issue for a number of years. At the behest of a very fine young postgraduate student who carried out research in ethical investment, I raised with the then Minister of State, Deputy Conor Lenihan, the question of investment in companies associated with Darfur. Mr. Corrigan may have some recollection of that. I was very heartened by the positive response I got from this Government in its previous incarnation.

A commitment was given to look into this and to examine again the idea of ethical investment. I was looking at producing a Bill but I understand that either the Labour Party or the Green Party--

Deputy Brendan Howlin

The Green Party.

Senator David Norris

The Green Party produced a Bill at which we should look again. Perhaps this committee could have a look at it and give a view on it because it clearly comes under the area of foreign affairs. That is very important.

I am glad we have signed up to the UN principles. The former Minister of State, Deputy Conor Lenihan, told me about this. However, I wonder how binding and clear they are. There may be difficulties, such as those indicated by Deputy O'Hanlon, but even though I occasionally sneak a fag, I would be very much in favour of not investing in cigarette companies because they are ruthlessly dishonest and always have been.

Mr. Corrigan used the word "engagement". That is always a red flag as far as I am concerned. I have heard it used with regard to East Timor and Darfur. Everywhere one goes, it has never once worked. I never remember it working. Again, it is a camouflage for doing nothing. I have heard it used with regard to the human rights protocols attached to the external association agreement between Israel and the European Union but it has had no effect whatsoever. We hear that there was constructive engagement. Forget it; it means nothing is happening, so I am not impressed by that one.

Mr. Corrigan said that it is incorrect to state that €578 million, or 3%, of the National Pensions Reserve Fund is invested in Zimbabwe on the basis that it owns shares in companies such as Barclays Bank, BP, and Nestlé. I am sure that is right. Mr. Corrigan is correct with regard to this business of ethical investment. The Oireachtas did not insist upon it. I believe it should have but I also completely understand because persons in Mr. Corrigan's situation and other members of his group could have been found in dereliction of duty if they had not obeyed the mandate to get the best return on the money. The responsibility comes back to us as politicians but, as a result of the evidence of Mr. Bergin, I do not think there is any doubt that Barclays Bank has a special branch and section that deals with and in Zimbabwe and is one of the major props of that government. There are very real concerns about that.

I believe that this committee can play a role in this matter and I hope it will. We are not accusing Mr. Corrigan. We are all grateful to Mr. Bergin, a very distinguished name in Irish theatre. Is this a religious organisation? I have never heard of it before but it obviously does very good work.

Mr. Emmet Bergin

It was formerly known as the Catholic Institute for International Relations. While we have Catholic roots, it is a development organisation.

Senator David Norris

It is doing a very good job. I will end by urging the committee to take this matter very seriously and to support our Minister in the strong line he is taking. Where we think it is not strong enough, as I do and which I made clear in the Seanad to the Minister, on the question of President Mbeki, let us make our views known. We can have an effect because representations to the then Minister of State, Deputy Conor Lenihan, had some impact with regard to Darfur and raised issues like this. The Green Party has a Bill dealing with this.

Cluster bombs were mentioned. This committee played a significant role in that and in raising that matter with the former Minister, Deputy Dermot Ahern. We were very glad when he made the important announcement of divestment from companies involved in this horrible business during a special debate on cluster bombs in the Seanad.

This is a very important meeting and I am very glad to have had the opportunity to have listen to the people involved.

Deputy Darragh O’Brien

I will not go over some of the points raised. I thank our guests, particularly Ms Madondo, for their submissions.

The committee has discussed the situation in Zimbabwe and many of us contributed to the debate in the Dáil. It is of grave concern to the Oireachtas. The Minister and the Department have played an active role. I wish to be associated with Senator Norris's remarks on South Africa. The manner in which President Mbeki has approached the issue is amazing, as South Africa has a major role to play. I hope that when Mr. Jacob Zuma takes over, there will be a change. That South Africa is propping up Zimbabwe makes no sense. We must sustain pressure on the South African ambassador in this regard.

The National Pensions Reserve Fund has been discussed by other committees, of which I am a member. Getting the facts right is important. I welcome Mr. Corrigan's contribution. However, the article in The Sunday Tribune was misleading. To say our €1 billion pension fund is invested in Zimbabwe is not correct. The article stated: “Investment in Zimbabwe accounts for over 3% of the total fund”. That is not correct and I will ask Mr. Corrigan a few questions in this regard. Taking Senator Norris’s example, what percentage of the overall global market capitalisation fund of Barclay’s Bank is invested in Zimbabwe? It is small. As has been stated, ten of the 14 companies in question have operations in Ireland. One cannot withdraw from them due to some minor investments in Zimbabwe. Have we invested in the 14 companies via baskets of shares or indices or via direct purchases of shares? For the committee, it is important to point out that it is not fair to state €500 million of taxpayers’ money in the NPRF is invested in Zimbabwe. Will Mr. Corrigan address these points?

I have two questions for Mr. Bergin who has called on us to make contact with the 14 companies in which we have invested in order that we can request "companies invested in by the fund that have proven links to the Mugabe regime to pull out of Zimbabwe and if they do not comply, for the NPRF to divest from these companies". Given what we paid for the shares, has Progressio conducted a cost analysis of their divestment? No one present wants the Zimbabwean regime to be propped up, but it is a complicated matter. Are the 14 companies employing people in Zimbabwe? Were we to withdraw from them or were Barclay's Bank and so on to walk away from Zimbabwe tomorrow, what additional unemployment would there be?

Deputy Brendan Howlin

I thank the Chairman for giving me the opportunity to address the joint committee and ask a few questions. I welcome the seizing of this important issue by the committee. The investment matter is a subset of the appalling situation in Zimbabwe which has been the subject of two full debates in the Houses. I do not recall too many international issues getting that level of focus. There is a cross-party view that Ireland can take a significant initiative in confronting the terror regime of Robert Mugabe and bring some kind of succour to the people of Zimbabwe, with whom we have much affinity over many decades, particularly through our missionary and education work.

Regarding the Minister's speech and relying on the UN, the disappointment expressed by Deputy Timmins and others is echoed here. We saw what happened in Kosovo where, for political reasons, one country allowed ethnic cleansing until there was a different formulation to intervene. The bona fides of the UN structure, about which Senator Norris is right, are under threat if it cannot, as a world organisation, take action where the scream is as compelling as it is from Zimbabwe.

I have no confidence that we can overcome the veto power of China, because of its massive investment across Africa. This applies not just to Zimbabwe but everywhere. China is building parliament houses in some instances, infrastructure in almost all instances and signing contracts for raw material as a result.

We have residual influence in the EU and that is where we must take action. As a State, we must take action. I disagree with the comments of Mr. Corrigan and Deputy O'Brien on scale, as if that was the relevant issue. We took a moral stand on cluster bombs, in which the investment was €27 million. Whether it is €1 million or €1 billion, the moral issue does not change because of the scale. That article could be misleading and I accept that point.

Senator Norris made the point that the understanding that the investment criteria of the National Pensions Reserve Fund on the basis of section 19 of the parent Act is a fiduciary one. On that basis, investing in banks is not the most splendid investment we could examine. The National Pensions Reserve Fund Commission is telling the Oireachtas that it has views on the world but that if it changes the law, the commission will act accordingly. That is the subtext of what is being said. We need to change the law. There is, as Senator Norris said, an extant Bill that was introduced into the Dáil in 2006 and defeated by the Government. The parents of that were the Deputies of the Green Party who are in the current Government. Senator Boyle has indicated that the Green Party wants to retable that Bill. I would be interested to hear if it is in gestation. However, we cannot wait for that and the people of Zimbabwe cannot wait for the next session of the Dáil. As Mr. Bergin said, there is precedent for action to be taken, notwithstanding the confines of section 19 of the Act.

Mr. Corrigan has told us that the National Pensions Reserve Fund Commission is a co-founding signatory of the UN principles for responsible investment. The National Pensions Reserve Fund website shows that the interpretation of the moral responsibility is that it will not invest in these tricky places because the investment would be at risk, as opposed to it being the right thing to do. Perhaps I am wrong or I am overstating the case but that is my interpretation. On its website the commission states that it "believes that environmental, social and governance issues impact on long-term investment performance". The UN states that it recognises that "applying these principles may better align investors with broader objectives of society".

There are two precedents. The Sudan divestment task force resulted in a dialogue and there was a strong statement by the then Minister of State, Deputy Conor Lenihan. Following a discussion with the National Pensions Reserve Fund Commission, he stated:

The Commission, which is fully independent of Government in its investment decisions, has ambitious plans to provide greater scrutiny and oversight of companies in which it invests, from an environmental, ethical and human rights perspective ... I very much welcome the fact that the NPRF are now going to considerable expense and effort to ensure greater scrutiny and oversight when it comes to these important issues.

Does this not apply to the investments we are considering? The will of the Oireachtas is clear, even if we have not yet legislated in that regard. I understand from Deputy O'Hanlon's contribution that difficulties will arise in terms of our ethical considerations on divestment because, as a people, we will be divided on certain moral issues. I am sure some would put forward a moral argument against investing in companies that produce condoms. However, we were able to reach a consensus on certain moral issues such as cluster bombs and divestment in Sudan. I hope that, in advance of changes in legislation, the fund will be able to take the initiative from a moral perspective.

I concur with Deputy O'Brien that our actions will not have an impact on their own. However, the organisation, which I chair and of which many of my colleagues are members, AWEPA, has activated this movement in every parliament in Europe and several parliaments are moving in the same direction. I do not know whether pensions reserve fund managers across Europe have entered into dialogue with regard to the actions that can be taken. Norway has established a legislative and ethical standard for its very considerable investment fund. Denmark has decided to take action on Zimbabwe and that could be the start of a positive domino effect. It was noticeable, however, that the Minister made no mention of divestment, even though that was the principal issue which we wanted him to address.

Deputy Micheál Martin

I thought the principal issue was Zimbabwe.

Deputy Brendan Howlin

We invited the chairman of the NPRF and others for a reason.

Deputy Micheál Martin

I will comment later but I think the Deputy is being unfair.

Deputy Brendan Howlin

I would be interested in hearing the Minister's opinion. I concur with the opinions expressed on the role of South Africa. Some members of SADC have been more courageous than South Africa and we need to put pressure on that country's authorities through its ambassador to Ireland.

Deputy Michael Noonan

I have listened to the debate with interest. The longer I stay here, the more the past returns. I was finance spokesman for Fine Gael when the then Minister for Finance, Charlie McCreevy, introduced the National Pensions Reserve Fund Bill 2000. We held a lengthy debate on this issue and amendments were proposed to legislate on ethical criteria for investments. I cannot recall whether we pressed or withdrew the amendments but there was certainly general agreement at the end of the debate that the best way forward was the approach taken by the Minister to invest the fund on commercial grounds, with a suggested protocol for the contracted fund managers to take ethical considerations into account.

The amendments fell on the problem of reaching agreement regarding what one could consider as ethical. There was general agreement across the House that one would not invest in armaments companies, especially cluster bombs and anti-personnel weapons. However, when it came to tobacco companies, the smokers stayed silent because they had by then been beaten into a corner and it was politically incorrect to make a case for tobacco. It was clear, however, that they saw no ethical problem in investing in tobacco companies. Other issues were more problematic.

If we invested in an energy company, for example, that was generating electricity through nuclear power, the Green Party would be very much against that as a general principle. Many other people, however, would see no problem with that and would feel that the Green Party position is somewhat hypocritical, given that we are buying electricity from Britain through the interconnector, which is generated in nuclear power stations. Other issues along the lines raised by Deputy Howlin also arise.

Should we invest in pharmaceutical companies that are involved in widespread family planning or population control activities? Should we invest in companies providing free condoms to charities working on anti-AIDS campaigns in sub-Saharan Africa? Many of us would argue that is a great idea, but others would argue that it is unethical because they do not believe in the use of condoms. Should we invest in food companies, some of which are active in Ireland, which are involved in the manufacture of baby foods if, as part of their marketing, they run advertising campaigns arguing that compounded baby foods are better than breast milk and are convincing mothers in poor countries to switch from breast-feeding to using their products? When one examines the range of areas which can be viewed as ethical, or the opposite, depending on one's point of view, it becomes very difficult to formulate any proposal that is other than a motherhood and apple pie type of amendment, which would leave it to the pensions fund at the end of the day.

What is being suggested here now is another great leap forward. The contributors are arguing that it should not be the case that an investment in any company involved in any particular activity be deemed unethical. Rather, they suggest that we should move on and adopt an approach whereby there are pariah countries, in which any investment, regardless of its merits, is unethical. Perhaps that is the way to go but I would have thought that such an approach would be placed under the heading of UN sanctions. Indeed, I am sorry that the UN Security Council did not reach an agreement on applying sanctions.

If we are to go down the road of disinvestment in a particular country, it should be done under the heading of sanctions imposed by the UN rather than under the heading of unethical behaviour by individual companies. Barclays, for example, does not appear to be involved in anything unethical. One might say that it is underpinning a pariah regime by investing and if it pulled its investments out, together with all other companies that are investing in Zimbabwe, the economy would collapse completely and the regime would fall. That is a valid argument.

Chinese businesses are very active in Africa, supported by Chinese foreign policy. They are trying to get a grip on commodities, which are the big scarcity in the world. They are investing in Africa to ensure a flow of commodities into China. That is one of the reasons they exercised their veto and the old alliance of China and Russia prevailed again at the UN. Would the witnesses argue that European and American companies should, in the absence of a UN sanction regime, stay out of Africa and give the Chinese a free run? This is not simple.

I agree with Senator Norris that it might be an idea to have the debate all over again. One can argue the point either way. I have endeavoured to indicate to the committee the point at which the debate had arrived in 2001 and the reason it did not proceed beyond the protocol suggestion which the NTMA took up and which I understood was operating effectively. It would be a major leap forward if, as well as drawing up a list of unethical activities in which an Irish pensions fund would not be involved by way of investment, we also drew up a list of pariah countries in which it would be unethical to invest.

The other important issue is that it is very difficult to know where a bank invests. If we have learned anything in the past 12 months from the sub-prime fiasco, it is that we have no idea - even bankers have no idea - about many investments. I have no idea. A person has a house in Seattle, gets an extension to his house, buys a yacht on Seattle Sound and sails around. Then bad times come. In the meantime, the crowd that gave out the mortgage packs it into a financial instrument and sells it on, with a portfolio of instruments worth $100 million. It ends up in Northern Rock or Bank of Ireland or BNP Paribas. The people who buy it do not know what is in it because part of the game is to mix the good with the bad. Nobody is sold a portfolio of sub-prime financial instruments. They shuffle them like a stack of cards and put very strong secure mortgages into the package which is then bought. I do not know how the National Treasury Management Agency, NTMA, will take responsibility for knowing the commercial activities of a bank in which it had invested. Does the Senator know in what his bank is involved?

Senator David Norris

I would say it is involved in quite a few little bits.

Deputy Michael Noonan

Perhaps our local banks are providing mortgages that end up in the drug trade in Crumlin, funding that trade. They probably are and do not know it. It is not an easy issue and that is the point I am making, not intending to take from anything Mr. Bergin said. I can see the problem and it would be good if we could deal with it directly. The strongest suggestion we had today concerning how to deal with a dreadful regime is that the Minister should, through Iveagh House and through Europe, try to influence the South African Government. That country seems to have its hand on the lever and we must try to have the lever pulled. I do not believe the regime could last if South Africa were actively opposed to it.

Senator David Norris

Hear, hear.

Deputy Michael Noonan

I do not believe it could last six months if South Africa were opposed. Most of Zimbabwe's trade is across the South African border and its access to markets, to the sea, to investments, is routed through South Africa. That is the way forward.

Deputy Seán Ardagh

I thank all of the contributors and Tendai Madondo, in particular, for painting such a vivid picture of the current situation in Zimbabwe and the feeling among its people. Clearly, what is required are sanctions that will not affect the people of Zimbabwe but will have an effect in improving the political situation there. On the sanctions, the Minister at all times has stressed sanctions that would not affect the people detrimentally in so far as restrictions apply to travel and other matters which would not, to any great degree, affect people's daily lives.

On the National Pensions Reserve Fund and its investments, I note the investments in the banks are in excess of 50% of the total amount invested in what is set out by Progressio. I hope it has done better than the Irish banks in respect of investment.

It is likely, as Tendai Madondo, said that President Mugabe's cronies will have to stay in position in some way when negotiations start with the MDC. It will not be good for Zimbabwe if one crowd is wiped out and the other comes in and is as bad as its predecessor. There must be a way for the two to work together and it is important that negotations commence towards this end, as happened in Kenya recently, where a government is now in place which, although not perfect, is better than what preceded it.

Does the Minister have a position on the National Pensions Reserve Fund investments that have an effect in Zimbabwe? Does he, as head of the Department of Foreign Affairs, believe anything should happen in respect of those investments? On the ethical position, I note the NPRF was a founding signatory to the UN's principles for responsible investment. Has the NPRF developed these further? Has it met other signatories and tried to increase the number of funds that are signatories, so that there could be a universal responsible investment climate developed by the major fund investors in the world?

Senator David Norris

Can I very quickly enter a strong dissent from something Deputy Ardagh said? I listen to him always with great respect, but it would be a disaster if we allow the type of election which occurred in Kenya to be replicated in Zimbabwe in any form and then become a template for democracy in Africa. That was another appalling exercise in the frustration of democracy. The only reason for having any brief transition would be to sweep the whole of the ZANU-PF party out of government. I cannot agree that this type of partial democracy would be appropriate as a model.

Chairman

Will the Minister reply? It is not necessary to answer all the points, as we know they will be noted by both the Minister and his colleagues.

Deputy Micheál Martin

I will make several points. I spoke of Zimbabwe in general as I believed the invited guests wished to discuss the issues under their remit and I will deal with that issue later. My speech should not be interpreted as advocating a reliance on UN intervention. I strongly articulated the Government's disappointment with the UN decision. We believe the previous, unanimous UN intervention prior to the election was very helpful and useful. It mattered to have a unified response from the United Nations, which would have put pressure on the regime, and we are very disappointed that this did not subsequently happen. It now falls to the European Union which has had a consistent position to try to tighten the squeeze on the regime.

I am much taken by Ms Madondo's comments. This is not just one man, it is a regime with a significant State machinery used to suppress a people. At the next meeting of foreign Ministers we will examine the possibility of expanding the number of people encompassed by the sanctions and the possibility of other economic sanctions. However, any decision is always taken with a view that we do not wish to harm the ordinary people of Zimbabwe, but rather to keep the focus on the ruling regime.

We have been criticised, to use the words of Senator Norris, for being soft on President Mbeki. Language is simple in this case and it is easy to use the language of condemnation. However, the aim is to arrive at the type of settlement we seek and to get a transitional government, which I called for in my speech. This is not a government of national unity as such, rather a transitional government that facilitates full, free and fair elections in due course. We are clear about the direction in which we see progress.

I suggest Senator Norris refers to the Seanad debates and reads the remarks of Senator Feargal Quinn which represented a very measured contribution. We must always count to ten and keep our eye on the big picture. Ultimately, it is the countries in the region - South Africa in particular - which have the necessary leverage mentioned. South Africa can play a contributory role in resolving this issue. If a solution is perceived as too external from the African region, it could compound the difficulties of implementing it. We must always be careful to recognise this no matter how frustrated or disappointed we are with the outcomes, of which I have spoken. We must ensure we work with the partners in the region.

There have been some successes in terms of the election monitoring and so on, although not as many as we wished. We will continue to keep that pressure on the ambassador. I am meeting with the African ambassadors next week. We will utilise whatever assistance we can through the EU and other countries. As I said, we are open to the idea and we believe that at some stage of the process an international dimension cannot be ruled out but it has to be in the context of a political agreement which would give it the best opportunity of success.

Irish Aid support to the Zimbabwean people has totalled €25 million since 2006. This was provided mainly through non-governmental organisations, missionaries and UN agencies, approximately €11 million of which was for humanitarian aid, €4.5 million was for HIV-AIDS in Zimbabwe in 2006 and 2007 and a further €3 million will be provided in 2008 which again will be channelled through local and non-governmental organisations, UN development programme, Irish missionaries and local and civil society. We do not provide any funding for the Zimbabwean Government. It is targeted at the people on the ground. We estimate there are about 4 million people at risk from the effects of weakened social services and the erosion of livelihoods in Zimbabwe and so on. The EU heads of mission in Harare are constantly monitoring the situation. In terms of the decision that has been taken, we know that the NGOs have been constrained. That is a significant serious issue. We are anxious to work our way through that to ensure NGOs can perform in the country.

The third issue was the ethical investment issue. The Minister for Finance has agreed to examine the overall issue and to look at international examples of how other countries deal with this issue and to report back. There are no proposals on the table at this stage. There are different views on this. While it is not for me to say how the committee should do its business, we need to ascertain objectively whether the €450 million is an accurate figure. Are we saying that if international pensions funds invest in a multinational company, which has multiple locations across the world, that all of which they invest in that company is automatically into one location as opposed to the other ten? We need clarification on that. Is the figure accurate and valid? Some works needs to be done on that.

While I am in the Department only two months we have made much progress on this issue. There may be an alternative to the all-embracing legislative framework approach. To be fair to Deputy Noonan, his contribution was a masterful articulation of the complexities involved in trying to frame a legislative response to this issue. I am not saying I am against legislation but I thought his was an interesting contribution from one who had experience of dealing with the debate. He raised all kinds of issues that we instinctively know need to be addressed. Any time we have engaged with the National Pensions Reserve Fund it has been responsive.

I cannot fault our engagement on cluster munitions. My predecessor and the present Taoiseach, when Minister for Finance, took this matter to the NTMA and we have a definitive response, so much so that we will have a legislative response in the context of cluster munitions eventually in the autumn. Perhaps that is a better way of dealing with it. In other words, when the issues are surfaced, is there a specific way we can deal with them? There is much consensus in the House about what is acceptable and what is not acceptable in terms of human rights, rogue states and corrupt leaders like President Mugabe. I do not think anybody here has a motivation to prop up such a regime. Are there mechanisms by which we can ensure we are not either directly or indirectly prop up the regime?

Deputy Noonan raised the issue of sanctions. The main focus of our sanctions is to try to avoid any propping up of the regime. I would be concerned, in line with some of the evidence given by Mr. Bergin, if some of the investments were indirectly doing so. There is no evidence as yet. In this regard we do not want to have anything to do with those former Ministers or people who have been part of the state machinery which has engaged in the suppression of people, violence, intimidation and so on. If there are mechanisms by which we can avoid that we should always explore them.

With respect to Zimbabwe, we recognise the appalling situation in that country but looking to the Norwegian fund as the leader in this area, of the 14 companies that were mentioned in the original Progressio report, that fund invests in 12 of those companies.

I appreciate the committee is pressed for time but on the question of engagement, engagement can be a slow process but I would have to disagree with Senator Norris that it is ineffectual. We followed up on the representations made to us with respect to Darfur and Sudan and I am pleased to report that it had positive results in some respects, and we are still working on it. Siemens, for example, withdrew from Sudan on the basis of the representations that had been made to it by funds such as ourselves and like-minded funds. Equally, Rolls Royce has withdrawn from operations in that country. I would accept that the process is slow but I hope the members will accept that I do not--

Senator David Norris

I congratulate Mr. Corrigan but I am referring to country to country engagement, which has never worked. Mr. Corrigan has done marvellous work.

Mr. John Corrigan

I thank the Senator.

Chairman

I thank Mr. Corrigan and each of the contributors. I apologise for the delay in concluding. If Mr. Corrigan wishes to give us a further note in terms of points he would like to make--

Deputy Brendan Howlin

Since he was referenced in some of the comments subsequently, would Mr. Bergin not be entitled to contribute? In justice terms he is entitled to that.

Mr. Emmet Bergin

To ensure clarity, the amount of money invested is €596 million. That figure is correct. These companies operate in Zimbabwe.

An example was given of companies involved in the manufacture of cluster munitions. One could also cite the example of Thales, which is responsible for the supply of radars in Dublin Airport, which may be seen to be a reason to withdraw investment from that company. The company referred to earlier is involved in the manufacture of munitions, but not all the money invested in that company goes into the manufacture of cluster munitions, which is similar to the example given of Barclays.

It is possible to point out the complexities and that is why discussion is required, but there is a danger that the issue is fudged in doubts or complexities. We are not advocating blanket divestment from such companies. The managers of the fund need to identify those specific companies that have links with the Mugabe regime. In doing that, they can then unpick what seems to be a complex problem and identify those companies and then signal that the activities of companies operating in Zimbabwe in that way will not be tolerated.

Chairman

I thank Mr. Bergin for his contribution. I apologise for being so rushed. I also thank Mr Seamus Collins of Trócaire for attending and supporting us and Ms Tendai Madondo who spoke so eloquently about the situation on the ground.

When the Minister meets his EU colleagues next week he will realise he has strong support from the committee for advocating measures such as extending the existing travel ban, the asset freeze without impacting adversely on ordinary Zimbabweans, who have suffered more than enough, and particularly the focus on people behind and around Mr. Mugabe. That was a very good point and it is one with which we would all agree.

We welcome the direction of the official humanitarian aid of €25 million since 2006 and the fact that it is so well targeted. We welcome the agencies firm and resolute approach and action at every level. In regard to their efforts, which are very much in the frontline, they should not underestimate the direct influence Ireland can have with our African colleagues in the process. We have a good reputation and involvement at EU and UN level, of which the Leas-Cheann Comhairle, Deputy Howlin, who has been particularly deeply involved, will be very conscious.

The influence of Ireland with our African colleagues can be extraordinary at times. I will not say any more about it because I know of particular instances where that has been especially important and where people were prepared to do things in discussion with Ireland but did not want the big powers saying to them this is what they had to do.

I thank all the delegates and members for their valuable contributions. If there are any further points the delegates wish to make to us, they can send us a brief note on them. I thank Ms Mala Roche of Trócaire, who is in the Visitors Gallery, for the help she gave the clerk in preparing for this meeting.

The joint committee adjourned at 1.25 p.m. sine die.

JOINT COMMITTEE ON FOREIGN AFFAIRS díospóireacht - Wednesday, 16 Jul 2008

Situation in Zimbabwe: Discussion.

Ms Tendal Madondo

Mr. Emmet Bergin

Mr. John Corrigan

Mr. Emmet Bergin

Mr. John Corrigan

Mr. John Corrigan

Mr. John Corrigan

Mr. Emmet Bergin

JOINT COMMITTEE ON FOREIGN AFFAIRS díospóireacht -
Wednesday, 16 Jul 2008