Super fund linked to weapons sales

A super fund is under pressure to dump its shareholding in a firm said to be exporting weapons to Saudi Arabia.

Chief executive of Electro Optic Systems Ben Greene at the company headquarters in Canberra.

A major fund manager owned by the union and employer-backed industry superannuation fund sector is under pressure to dump its major shareholding in a Canberra company facing claims it is exporting a weapons system destined for Saudi Arabia.

International corporate activist group SumOfUs will today launch a campaign, organised to coincide with the fourth anniversary of the civil war in Yemen, urging IFM ­Investors to divest from the company, Electro Optic Systems.

According to the Australian ­Securities Exchange, IFM Investors owns a 6.6 per cent stake in Electro Optic Systems, making the fund manager the largest single shareholder in the defence industry manufacturer, which has designed a remotely operated vehicle-mounted platform that holds cannons, machineguns and missile launchers.

The Greg Combet-chaired IFM Investors is the jointly owned international asset manager, ultimately controlled by Industry Super Holdings, an investment ­vehicle co-owned by several of the largest industry super funds in Australia.

An IFM spokesman said the defence technology industry was “one of the most heavily regulated industries on Earth” and that it had “received assurances by the company that Australian government and Saudi internal processes around this purchase will mean that EOS platforms will not be ­deployed in Yemen”.

Last month, it was reported that Electro Optic Systems had agreed to provide weapons systems for use ultimately by Saudi Arabia. The company has an arrangement with a US-based arms manufacturer that has an independent supplier arrangement with Saudi Arabia.

“No defence company in the world has a product that is more controlled than ours,” Electro chief executive Ben Greene told The Australian.

SumOfUs senior campaigner Nick Haynes said a UN investigation had accused the Saudi-led ­coalition of committing war crimes in Yemen and that an increasing number of countries were moving to suspend arms deals with Saudi Arabia.

Foreign Minister Marise Payne has said a ban on the sale of weapons to Saudi ­Arabia was under review.

Mr Haynes said: “The world community is condemning Saudi Arabia but Australian arms dealers, egged on by our government, are cashing in. Now we have uncovered that our super funds are too.

“This is not just tacit approval of Saudi Arabia’s actions. We are arming them. And up to 3 million Australians could be unwittingly profiting from it through their super.’’

The nation’s largest fund, the $140 billion AustralianSuper, which has a major interest in IFM Investors, said although the fund manager was invested in the stock, AustralianSuper was not invested in any of the funds that hold an exposure to Electro Optic Systems.

Over the past five years, the value of shares in Electro Optic Systems has ­increased more than 600 per cent, turning the company into a $270 million group.

Revenue growth for the current financial year is expected to be more than 100 per cent over the 2018 fiscal year.

IFM Investors has grown to manage more than $117 billion in assets across the world.

It has been a signatory to the UN-supported Principles for Responsible Investment since 2008 and has a group corporate environmental, social and government policy that determines its approach to the governance of companies in which it invests.