No police action on KiwiSaver cluster munitions, weak law blamed
The police investigation into whether KiwiSaver providers broke the Cluster Munitions Prohibition Act is over, and nobody has been charged.
The investigation followed a complaint from Amnesty International following media coverage of large KiwiSaver schemes which held shares in US companies involved in the arms industry.
"The Police, in consultation with the Financial Markets Authority, have completed an assessment into whether the Cluster Munitions Act is likely to have been breached by New Zealand KiwiSaver fund managers," it said in a statement.
But, it said: "There are significant threshold issues with regard to establishing breaches of the Act, and at this stage there is no evidence to indicate offending."
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It said should any new evidence come to light it would be assessed and acted on as required.
The Financial Markets Authority (FMA) said the Cluster Munitions Prohibition Act contained two "thresholds" that were a barrier to establishing whether a KiwiSaver manager had broken the law.
The first was establishing that the KiwiSaver scheme had provided or invested funds that would "be used in the development or production of cluster munitions."
The second was establishing that the people running the scheme knew the funds they were investing would be used to develop or make cluster bombs, or intended them to be used for that purpose.
"The way the law is framed, it is extremely unlikely that either threshold would be established for collective investment funds that are investing in other funds or participating indirectly in secondary markets," the FMA said.
When a KiwiSaver scheme buys shares in a company, it does not provide the money to the company, instead buying the shares off another investor.
"A feature of fund management is the fact that fund managers generally buy their securities on traded markets, so these are shares traded between shareholders as opposed to providing funds to the companies that produce these weapons," police said.
Those shares are often purchased by a manager outside of New Zealand, it said.
There are rising concerns that the Cluster Munitions Prohibition Act does not explicitly ban New Zealanders from owning shares in weapons-makers involved in the development and manufacture of cluster munitions.
It is only one of three acts designed to prevent Kiwis from being involved with three of the world's most controversial weapons: nuclear weapons, cluster bombs and land mines.
The others are The Anti-Personnel Mines Prohibition Act, and the New Zealand Nuclear Free Zone, Disarmament, and Arms Control Act.
Stuff readers believe it is time to rewrite them all.
In a poll of over 450 readers, 62 per cent agreed it was time for MPs to debate amending the acts to explicitly ban investments in companies involved in the three weapons types.
"Whether or not the law needs to change is a policy issue and for Parliament to decide," the FMA said. "But there is a broader issue here about New Zealanders asking themselves what they want to be invested in."
"The disclosure requirements under the Financial Markets Conduct Act mean that New Zealanders can see what they're invested in, and we would encourage them to ask their provider for more information if they want to know more."
"One of the features of KiwiSaver funds in particular is that they must disclose in their investment statement or product disclosure statement whether or not the fund takes into account principles of socially responsible investing and if it so, how it does this."
"So if socially responsible investing is important to you, you can look out for KiwiSaver funds that say they do take this into account and use this information to inform your decision. Or, if your KiwiSaver provider has said they don't take this into account, you might want to consider asking them to explain why."
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