BRITISH BANKS FUND CLUSTER BOMB

BRITISH banks are still investing in the making of cluster bombs via a “lethal loophole”, it was claimed last night.

The bombs have taken over from landmines – which Princess Diana campaigned to abolish – as the world’s most hated, indiscriminate weapons,

One MP called for “urgent action” after being told that 12 financial institutions are still investing in at least eight companies that make them, including firms in the US, Russia and China.

Britain was one of 116 nations to sign up to the Convention on Cluster Munitions, making it illegal to use, produce, stockpile or transfer cluster munitions, or to assist any other party to do so, from 2010.

The loophole allows banks to render “general purpose” assistance or invest in companies that produce cluster bombs.

A report published in May by IKV Pax Christi and Netwerk Vlaanderen cited eight main manufacturers of cluster bombs and components, though these are thought to be only the “tip of the iceberg”.

Britain was one of 116 nations to sign up to the Convention on Cluster Munitions

They were US firms Lockheed Martin, Textron and Alliant Techsystems (ATK), plus two from South Korea, one each in Singapore, China and Russia.

Listed as giving financial services to one or more of them were Aberdeen Asset Management, Aviva, Barclays, Baring Asset Management, Henderson Global Investors, HSBC, Invesco, Lloyds Banking, Newton Investment Management, Prudential, Royal Bank of Scotland, and Veritas Asset Management.

Bailed-out RBS underwrote bonds worth Ł65million for Lockheed Martin and ATK last year.

Last night, a spokesman acknowledged it was legally obliged to adhere to existing contracts but said: “In September we suspended services to a number of clients and we have not made any new investments with companies listed in the report, or their subsidiaries.”

Barclays, which invested Ł75million in combined shares and bonds with Textron in 2009, would not comment on the agreement, but said its policy “prohibits financing trade in landmines, cluster bombs or any equipment designed to be used as an instrument of torture.”

Last night campaigning MP Martin Caton called for ministers to take “urgent action now” to ensure UK firms comply with the convention.

Handicap International also urged the Government to close the “general purpose” loophole and to demand “much more transparency”.

Cluster bombs are made of a large outer casing that breaks, scattering bomblets indiscriminately. At least 90 per cent of their victims are civilians. Children are attracted to them because they are brightly coloured.

AVIVA – a clarification
In our article “British banks fund cluster bomb makers” published on 11 December 2011 we stated that Aviva was named in a report, by Pax Christi and Netwerk Vlaanderen, as one of several financial institutions that provided financial services to the manufacturers of cluster bombs. Aviva told us that it does not hold securities linked to these manufacturers on its own account and prohibits its own capital from being invested in securities associated with companies involved in the manufacture of cluster munitions. We are happy to clarify the position.