04-02 On Divestment from Caterpillar, Hewlett-Packard, and Motorola Solutions—From the Presbytery of San Francisco.
Source: Presbytery Event:221st General Assembly (2014)
Committee:
[04-02] Middle East Issues
Sponsor:
San Francisco Presbytery
Topic:Unassigned Type:General Assembly Full Consideration
http://pc-biz.org/Explorer.aspx?id=4577
Assembly Action
On this Item, the General Assembly, acted as follows:
Answer with Action on another Resolution
Answered by action on Item 04-04
Electronic Vote - Plenary
Affirmative: 469
Negative: 99
Abstaining: 0
Committee Recommendation
On this Item, the Middle East Issues Committee, acted as follows:
Answer with Action on another Resolution
Answered by action on 04-04
[Counted Vote - Committee]
Affirmative:62
Negative:4
Abstaining:0
Recommendation

In service to God’s love and justice for all of the people of Palestine and Israel, and in accord with international law concerning self-determination and human rights, the Presbytery of San Francisco overtures the 221st General Assembly (2014) of the Presbyterian Church (U.S.A.) to:

1.    Instruct the Presbyterian Foundation and the Board of Pensions of the Presbyterian Church (U.S.A.), to disinvest from Caterpillar, Inc., Hewlett-Packard, and Motorola Solutions, in accord with our church’s decades-long socially responsible investment (SRI) history, and not to reinvest in these companies until the Mission Responsibility Through Investment Committee of the PC(USA) is fully satisfied that product sales and services by these companies are no longer complicit in

a.           the building and security of illegal Israeli settlements, which U.S. foreign policy, and most recent U.N. fact-finding mission determine to be an obstacle to peace;

b.           the construction and maintenance of walls and fences that illegally encroach upon Palestinian lands, destroying Palestinian rights to own property and pursue livelihoods;

c.            the management of checkpoints that dehumanize Palestinians and cut off innocent civilians from their property and natural resources;

d.           contributing to and profiting from the relentless, five decade long, military occupation of the Palestinian territories.

2.    Affirm that this action underlines the worsening situation in Palestine, calling attention to

a.           the occupation of Palestine, which destroys lives and entire cultures, and for the sake of justice between Jews, Christians, and Muslims, that it needs to end;

b.           the violation of Palestinian human rights; through home demolitions, constricting movement for work, school, personal needs, business, essential (and emergency) medical care; and the illegal mass political imprisonment of Palestinians;

c.            the disproportionate impact on the Christian minority due to restrictions on family unification, housing, the isolation of Bethlehem and other conditions of occupation;

d.           the failure to attract investors to Palestinian businesses choked by the occupation matrix, the blockade of Gaza, and restrictions on the West Bank economy, which adds more than 20 percent to business costs in Palestine.

3.    Recognize that while the 220th General Assembly (2012) called upon the church to pursue only nonviolent investment in Palestine and Israel, we still profit from companies engaged in violent pursuits in Palestine, by providing equipment and materiel supporting illegal occupation, contrary to our church position.

4.    Direct the Stated Clerk to:

a.           Communicate this action to all other PC(USA) councils and entities, and invite and strongly encourage those groups and organizations that hold assets in Caterpillar, Inc., Hewlett-Packard, and Motorola Solutions to disinvest as well.

b.           Inform our ecumenical partners of this action, nationally and globally—particularly within Israel and Palestine—encouraging them to hear this witness and to also consider applying socially responsible, human rights criteria to other companies in their portfolios that are complicit in the occupation of Palestine.

5.    Direct the Presbyterian Mission Agency and the Advisory Committee on Social Witness Policy to monitor developments in international law and related to the occupation, to continue to advocate conditioning foreign aid for Israel to compliance with humans rights law, and to support all measures designed to provide for viable statehood and a shared Jerusalem, including protection for Christian and Muslim as well as Jewish holy places.

Rationale

This rationale is in four parts:

I.     Activity of the 220th General Assembly (2012) with highlights of the report of the Mission Responsibility Through Investment Committee (MRTI) concerning its decades-long corporate engagement with companies profiting from non-peaceful pursuits in Israel/Palestine.

II.    Conclusions from the February 2013 fact-finding report of the United Nations General Assembly Human Rights Council regarding the human rights situation in Palestine.

III.   Key maps showing current conditions in Palestine, as well as the conditions that led up to this point.

IV.  Concluding statement of our responsibility as a church that proclaims the Lordship of Jesus Christ.

I. Activity of the 220th General Assembly (2012)

The 220th General Assembly (2012) (GA) was the first time the Mission Responsibility Through Investment Committee (MRTI) had brought a recommendation to disinvest from companies—Caterpillar, Hewlett-Packard, and Motorola Solutions—engaged in Israel’s occupation of Palestine and non-peaceful pursuits in Palestine, and the first time a GA standing committee ever recommended such action to the plenary. The recommendation to disinvest, approved by the Assembly Committee on Middle East and Peacemaking Issues (#15), was sent to the plenary floor by a 36-11-1 margin. Assembly Committee 15 had listened to hours of hearings and debate, and had at its disposal maps, resources, and experts to sufficiently discuss Israel’s occupation of Palestine, as well as our investment history in the three companies engaged in non-peaceful pursuits in the Holy Land. The morning of plenary debate, the Rabbi bringing interfaith greetings after being asked not to do so, said disinvestment may irreparably fracture relations with the Jewish community and implored voting against Assembly Committee 15’s recommendation http://www.youtube.com/watch?v=GZpRQBHqO8g. Commissioners lodged complaints with the denominational leadership. The 220th General Assembly (2012) vote for disinvestment failed by a two vote margin (333-331) in favor of a minority report (369-290-8), which instead called for positive investment.

Later the 220th General Assembly (2012) voted overwhelmingly (457-180-3), calling for a boycott of all products coming from illegal Israeli settlements in the West Bank. The arguments in support of this action in both Assembly Committee 15 and on the plenary floor, were in essence, the same arguments in support of disinvestment delineating how occupation and the nonstop expansion of settlements were destroying Palestinian life and culture. In both cases, Assembly Committee 15 understood the logic and consistency of those arguments, voting for both disinvestment and boycott. Though that same dynamic occurred on the plenary floor, the General Assembly chose to support boycott and vote against disinvestment.

Further confusing the issue, the plenary later voted to provide teaching elders and church workers participating in the programs of the Board of Pensions a “relief of conscience” clause so that at their request their pension funds would not be invested in these companies. The plenary voted to do this even after an official from the Board of Pensions said it could not be done, and the Moderator of the General Assembly responded by saying that with God all things are possible. Following a break the Moderator returned to the podium to announce that he was ruling the action out of order. This further indicates that the plenary, after hearing of the truth of illegal Israeli occupation of Palestine, did everything short of disinvestment to send a clear signal that non-peaceful activities by companies supporting occupation cannot be tolerated.

Since the 220th General Assembly (2012), nothing constructive regarding corporate practices in Palestine has occurred on the part of Caterpillar, Hewlett-Packard, or Motorola Solutions. Also, there has been no sign that Presbyterians employed by them have sought to bring change from within so that the business practices of their employers are consistent with the clear moral investment strategies of their church.

To review the entire Mission Responsibility Through Investment record of corporate engagement with these companies, commissioners are strongly urged to read its report to the 220th General Assembly (2012), which can be located at http://www.pc-biz.org/IOBView.aspx?m=ro&id=4021.

Here are highlights of that report:

A.           Caterpillar

An article in Haaretz, an Israeli newspaper, dated March 11, 2009, reported on the close relationship between Caterpillar’s Israeli dealership and the Israeli military. This includes selling the Caterpillar D-9 bulldozers to the Israeli Defense Forces (IDF) who has them weaponized by an Israeli company. The article notes that the IDF has used these bulldozers from the mid 1980s, and has hundreds of them in its arsenal. After that, the Caterpillar dealer provides maintenance work. The dealership’s mechanics provided maintenance in the recent Gaza war (these dealership employees maintained and serviced Caterpillar equipment near the battlefield during the Gaza War of January 2009, when more than 1,300 civilians were killed and the entire civilian infrastructure of the territory was destroyed) and the Second Lebanon War. The dealership noted publicly its close working relationship with the IDF, according to Haaretz in an article dated March 17, 2009, the IDF also “is planning to draft civilian bulldozer-maintenance personnel for reserve duty, marking the first time the army will be conscripting the staff of a private firm in wartime.” This would permit the IDF to use Caterpillar dealership employees on the battlefield in future operations.

The dialogue clarified several issues, but did not produce any progress. Company officials made it clear that the company took no responsibility for the use of its products even by its dealers (the only party considered to be a customer), had no procedure in place for monitoring or ensuring compliance with Caterpillar’s stated expectations even in a situation with a documented historic pattern of the equipment being used in human rights violations, and no desire to develop such a procedure. Further, they indicated that Caterpillar, although a global company doing business in virtually every country except where prohibited by U.S. law, had no capacity to evaluate whether particular actions are in accord with human rights conventions or international humanitarian law. Finally, Caterpillar did not provide information on whether its dealership was selling equipment to major construction companies building the illegal settlements, the separation barrier, or the Jewish Israeli-only roads in the occupied territories as requested.

The 219th General Assembly (2010) action called for continued engagement within the context of the following clear and public policy denouncing the company from profiting from involvement in serious human rights violations and obstacles to a just peace in Israel and Palestine: “… the [General Assembly] strongly denounces Caterpillar’s continued profit-making from non-peaceful uses of a number of its products. We call upon Caterpillar to carefully review its involvement in obstacles to a just and lasting peace in Israel-Palestine, and to take affirmative steps to end its complicity in the violation of human rights. We hope that, by God’s grace, Caterpillar will come to exercise its considerable power and influence in the service of a just and lasting peace in Israel-Palestine” (Minutes, 2010, Part I, p. 363 of the printed version, p. 986 of the electronic version).

While the action of the 219th General Assembly (2010) denouncing the company’s continued profiting from its involvement in human rights violations was designed in large measure to convince Caterpillar that the church was serious about the gravity of this complicity, the company remained unresponsive. On April 19, 2011, MRTI sent its own letter to new CEO Douglas Oberhelmer, expressing hope for a new spirit of conversation around these issues and requesting dialogue (see Appendix 1 in gamc-mrti-recommendations-appendix1.pdf under “Additional Resources”). There was no response. On July 26, 2011, the United Methodist Board of Church and Society retransmitted the 2010 letter (see above) from eight religious shareholders to the new CEO requesting a meeting to discuss the issues described in the correspondence. Again, there was no response.

B.           Motorola Solutions

The dialogue on June 18, 2007, focused on human rights standards and conventions, and explored the company’s involvement in the occupation through sales of military communications products, fuses for bombs, security technology for Jewish Israeli settlements on the West Bank, and operating a cell phone business in the West Bank. Motorola denied that any of its activities implicate it in the Israeli occupation, or raise human rights concerns. A shareholder resolution addressing broader human rights issues was filed by several religious shareholders in the fall of 2007. In response, Motorola requested a follow-up meeting, which occurred on January 7, 2008. The company indicated its intent to review and amend its policies but would not specify the particular changes under consideration and made clear that its human rights policies would not be applied to their business relationships with foreign governments. This lack of clarity and limited scope led the religious investors, including MRTI representatives, to decline to withdraw their resolution, which went to a vote at the annual shareholders meeting on May 5, 2008. It received more than 12 percent of the shareholder vote, enough to be resubmitted in 2009. Although the conversation with Motorola has been less productive than hoped, religious shareholders agree that more in-depth dialogue on corporate social responsibility and human rights might potentially create a more productive arena for analyzing the Israel-Palestine conflict and other world situations and ought to be continued.

A shareholder resolution similar to the one from 2008 was filed with Motorola requesting that the company amend its human rights policies “to conform more fully with international human rights and humanitarian standards. …” The resolution was co-filed by the General Board of Pensions and Health Benefits of the United Methodist Church, Mercy Investment Program, and the Episcopal Church. The company did not respond to a request in the filing letter for a meeting to discuss the resolution. When the filers tried to set one up following the annual meeting, the company declined, but offered to answer written questions. The stockholder meeting was held on May 4, 2009. Speaking in support of the resolution, which received 9.7 percent of the vote, were representatives of the United Methodist Church and the Presbyterian Church (U.S.A.). Following the 2009 annual meeting, religious shareholders requested another dialogue, but on June 12, an e-mail from Motorola’s legal department refused to meet in person saying the company would only answer questions in writing. Questions were submitted, but answers did not adequately respond to the concerns expressed. In an email of January 13, 2010, the company also declined to facilitate a meeting with Motorola Israel during the February 2010 visit of religious shareholders to Israel and Palestine. The 2010 shareholders meeting was held on May 3 where the human rights resolution was voted on again. It received a vote of 11.8 percent. Motorola also announced that it would be splitting into two new companies by the end of 2010: Motorola Solutions and Motorola Mobility.

Meanwhile, the involvement of Motorola in the Occupation lessened in some important ways. The sale of armaments work by Motorola Israel meant that it no longer made bomb fuses for the Israeli military. Motorola also announced its intention to sell its Israeli cell phone company, and has sought bids from potential buyers. The company supplied cell phones to the Israeli soldiers operating in the Occupied Territories, and built cell towers in the illegal settlements. However, the company maintained its stance of no face-to-face dialogues, but would answer some written questions.

On November 4, 2010, in the filing of the shareholder resolution on human rights for the 2011 annual meeting, MRTI expressed its hope that the company would respond positively through constructive dialogue. The company did not respond. The corporate restructure was completed on schedule. The shareholder resolution was voted on at the annual meeting of Motorola Solutions on May 2, 2011. However, this time it received a lower vote total (5.4 percent), and could not be resubmitted for 2012. At the meeting, the CEO of Motorola Solutions announced that the company would be concentrating on the Middle East for its integrated communications products. Following the meeting, MRTI sought to determine how the restructure had affected the company’s business in Israel-Palestine. Motorola Mobility confirmed that the Israeli cell phone company had been sold to a French company, and that its business was now limited to marketing cell phones in civilian markets. It also confirmed that the business lines with the Israeli government remained with Motorola Solutions. Motorola Solutions did not respond to MRTI’s information request of July 11, 2011.

C.           Hewlett-Packard

The company sells hardware to the Israeli Navy, and as a contractor manages all Information Technology (IT) including its operational communications, logistics, and planning including the ongoing naval blockade of the Gaza Strip. This blockade has included interdicting humanitarian supplies by attacking or turning back international vessels carrying the supplies, and attacks on Palestinian fishermen.

The company also is involved through its ownership of Electronic Data Systems in providing electronic biometric identification scanning equipment to monitor only Palestinians at several checkpoints inside the West Bank, including as part of the separate road system, restricting Palestinian movement. At these checkpoints, the 2.4 million West Bank Palestinians are required to submit to lengthy waits as well as the mandatory biometric scanning, while Israelis and other passport holders transit without scanning or comparable delays.

Hewlett-Packard also has extensive involvement with the Israeli Army. Soldiers in the IDF are issued a Tadiran Communications ruggedized personal digital assistant (RPDA) based on the Hewlett Packard IPAQ (handhelds and smart phones) as part of Israel’s Anog soldier modernization program. This equipment is used to enforce the Occupation. In July 2009, Hewlett-Packard won a contract for the installation of software products in a three-year IDF virtualization tender worth an estimated $15 million, with a two-year option to extend.

Hewlett-Packard also has business relationships with the illegal settlements in the West Bank. A subsidiary, HP Invent, outsources information technology services to Matrix and to its subsidiary Talpiot, which has its main outsourcing center in the illegal West Bank settlement of Modi’in Illit. By using Talpiot’s services, clients of the company are profiting from the company’s relationship with an illegal settlement and are helping solidify the occupation.

In addition, Hewlett-Packard worked with the government of the illegal settlement of Ariel in the occupied West Bank to develop specialized solutions for government data storage, and used this project in marketing publicity. Despite the fact that Ariel is deep in the Occupied West Bank, the company’s published description of this work claims that Ariel is within Israel, including the use of a map making no reference to the West Bank as a separate occupied territory.

In addition, as with Motorola Israel, its Israeli subsidiary does not disclose its equal employment opportunity record of its hiring practices.

A shareholder resolution was developed requesting a review of Hewlett-Packard’s human rights policies, and a report on their implementation. It was filed by the PC(USA), United Methodist General Board of Pensions and Benefits, and four Roman Catholic religious orders. The filing letters requested an opportunity for dialogue, and prompted a positive response by the company. On October 28, 2009, several religious participants met with company officials by conference call. The discussion reviewed Hewlett-Packard’s policies and procedures, and identified issues of concern for further discussion. Participants were grateful for the positive atmosphere, and willingness to cooperate. As the company agreed to initiate a board of directors level review of its human rights policy, and committed to positive follow-up to the issues identified in the dialogue, the shareholders decided to withdraw the resolution.

However, the follow-up was spotty in some areas, and nonexistent in others. One positive aspect of the engagement though was meeting with a representative of HP Israel in Jerusalem in February 2010. The discussion was informative about the extent and variety of Hewlett-Packard’s businesses. Requested information on the company’s employment practices and how the human rights policy influences the company’s business with governments was not provided.

The 219th General Assembly (2010) directed MRTI to continue its efforts to engage Hewlett-Packard on these issues. Although efforts began to schedule dialogue with company management in November 2010, the company repeatedly deferred and postponed this meeting. Attempts to schedule conference calls met with delays, but one was finally held on April 19, 2011. Unfortunately, it was not a productive dialogue. While the religious shareholders had communicated clearly their desire for an in-depth discussion of the biometric scanners at the checkpoints, Hewlett-Packard’s representatives, including its person in charge of implementing its human rights policy, said that they were not knowledgeable on the issue and could not discuss it. They also did not offer to set up a subsequent call with Hewlett-Packard representatives who could. In addition, they announced that the human rights assessment they were conducting (which would include Israel-Palestine) would concentrate on systems evaluation, and any specifics would not be included in Hewlett-Packard’s public reporting. Indeed, Hewlett-Packard’s public report contained no reference to its business operations in Israel and the Occupied Palestinian Territories.

Hewlett-Packard produced a Global Citizenship Report for 2010, its most recent one. It states in its Global Issues section: “At HP, we believe technology is a driver of social progress, environmental sustainability and economic opportunity. We’re committed to helping individuals everywhere use technology to connect and create a better world.” The company reviews its involvement in the United Nations Global Compact, and its support for the Universal Declaration on Human Rights. It notes that it is one of eight founding members of the Global Business Initiative on Human Rights (GBI). However, nowhere does Hewlett-Packard discuss the relationship of its policy commitments to its involvements in non-peaceful pursuits in Israel-Palestine.

II. Recent United Nations Findings

Since the adjournment of the 220th General Assembly (2012), the twenty-second session of the United Nations General Assembly Human Rights Council issued its report regarding the “Human rights situation in Palestine and other occupied Arab territories” (February 2013) and brought these conclusions:

Conclusions

100. The facts brought to the attention of the mission indicate that the State of Israel has had full control of the settlements in the Occupied Palestinian Territory since 1967 and continues to promote and sustain them through infrastructure and security measures. The mission notes that, despite all pertinent United Nations resolutions declaring that the existence of the settlements is illegal and calling for their cessation, the planning and growth of the settlements continues of existing as well as of new structures.

101. The establishment of the settlements in the West Bank, including East Jerusalem (see annex II), is a mesh of construction and infrastructure leading to a creeping annexation that prevents the establishment of a contiguous and viable Palestinian State and undermines the right of the Palestinian people to self-determination.

102. The settlements have been established and developed at the expense of violating international human rights laws and international humanitarian law as applicable in the Occupied Palestinian Territory, as recognized notably by the International Court of Justice in its advisory opinion of 9 July 2004.

103. The settlements are established for the exclusive benefit of Israeli Jews, and are being maintained and developed through a system of total segregation between the settlers and the rest of the population living in the Occupied Palestinian Territory. This system of segregation is supported and facilitated by a strict military and law enforcement control to the detriment of the rights of the Palestinian population.

104. The mission considers that, with regard to the settlements, Israel is committing serious breaches of its obligations under the right to self-determination and certain obligations under international humanitarian law, including the obligation not to transfer its population into the Occupied Palestinian Territory. The Rome Statute establishes the jurisdiction of the International Criminal Court over the deportation or transfer, directly or indirectly, by the occupying Power of parts of its own population into the territory it occupies, or the deportation or transfer of all or parts of the population of the occupied territory within or outside that territory. Ratification of the Statute by Palestine may lead to accountability for gross violations of human rights law and serious violations of international humanitarian law and justice for victims.

105. The existence of the settlements has had a heavy toll on the rights of the Palestinians. Their rights to freedom of self-determination, non-discrimination, freedom of movement, equality, due process, fair trial, not to be arbitrarily detained, liberty and security of person, freedom of expression, freedom of access to places of worship, education, water, housing, adequate standard of living, property, access to natural resources and effective remedy are being violated consistently and on a daily basis.

106. The volume of information received on dispossession, evictions, demolitions and displacement points to the magnitude of these practices. These are particularly widespread in certain areas and acute in East Jerusalem.

107. The mission noted that the identities of settlers who are responsible for violence and intimidation are known to the Israeli authorities, yet these acts continue with impunity. It is led to the clear conclusion that institutionalized discrimination is practiced against the Palestinian people when the issue of violence is addressed. The mission believes that the motivation behind this violence and the intimidation against the Palestinians and their properties is to drive the local populations away from their lands and allow the settlements to expand.

108. The mission is gravely concerned at the large number of children who are apprehended or detained, including for minor offences. They are invariably mistreated, denied due process and a fair trial. In violation of international law, they are transferred to detention centres in Israel.

109. Children endure harassment and violence, and encounter significant obstacles in attending educational institutions, which limits their right to have access to education. The occupying Power, Israel, is failing in its duty to protect the right of access to education of the Palestinian children and failing to facilitate the proper working of educational institutions.

110. Information gathered by the mission showed that some private entities have enabled, facilitated and profited from the construction and growth of the settlements, either directly or indirectly.

111. Women alone in their homes, the Bedouins and other vulnerable groups are easy targets for settler violence, creating a sense of insecurity in Palestinian society in general.

The above information may be located in the following report: Human Rights Council; 22ND session—Agenda item 7; Human rights situation in Palestine and other occupied Arab territories; Report of the independent international fact-finding mission to investigate the implications of the Israeli settlements on the civil, political, economic, social and cultural rights of the Palestinian people throughout the Occupied Palestinian Territory, including East Jerusalem.* This report in pdf format can be accessed by inputting this information in the appropriate Internet search engine: G.E. 13-10742 Human Rights Council, Twenty-second Session Agenda, Item 7, Human Rights Situation in Palestine and Other Occupied Arab Territories.

 

III. Maps

[See Maps 1 through 3 under “Additional Resources.”]

Map 1 is part of the (above) report of the United Nations General Assembly Human Rights Council.

Map 2 shows the disintegration of Palestinian land on the West Bank preventing the creation of a viable Palestinian State.

Map 3 shows the historical progression of the Palestinian loss of land from 1946 to 2005.

 

 

IV. Conclusion

The writers and endorsers of this overture are convinced that as circumstances presently stand, we can do no less than become part of a global human rights movement (ecumenical, interfaith, and secular) to disinvest from corporations whose business practices violate the human rights of the Palestinian people through occupation by the Israeli government. It is unconscionable that the PC(USA), which has already called upon Presbyterians to boycott products made in the illegal settlements, continues to invest in and profit from corporations engaged in activities that are not peaceful and labeled illegal by the United Nations Human Rights Council. If the actions of Caterpillar, Hewlett-Packard, and Motorola Solutions in regard to their business practices with the Israeli government do not violate PC(USA) policy regarding its prohibition on investments that benefit from non-peaceful pursuits, what actions ever would? It is our plea that through faithfulness towards the justice taught by our Lord Jesus Christ, the investment policies and decisions of our denomination will be consistent with the following statement: We are the Church of Jesus Christ. When the powers of the world decide that they will conduct business as usual, and that business is contrary to the teachings of Christ and the will of God for humanity, then it is time for the church to end its complicity in this sinful behavior.

Comment
ACREC Advice and Counsel

The Advocacy Committee for Racial Ethnic Concerns advises the 221st General Assembly (2014) to approve Item 04-02.

The ACREC acknowledges MRTI’s careful and methodical ten-year process and thanks them for their faithful service. The ACREC agrees with MRTI that

  1. the church has exhausted all avenues to bring about changes in the policies and practices of Caterpillar, Hewlett-Packard, and Motorola Solutions through corporate engagement;
  2. as long as the denomination’s policy is that we should not profit from “non-peaceful pursuits,” and as long as these three U.S. companies identified by MRTI remain deeply involved in “non-peaceful pursuits,” then as a matter of integrity, the church should end our investment in these companies.

New information on Caterpillar, Inc. not in the MRTI report:

On April 1, 2014, The New York Times reported that Caterpillar used a Swiss subsidiary to reduce its taxes by $2.4 billion.[1] This tax-avoidance scheme was developed by PricewaterhouseCoopers who was paid $55 million “for helping [CAT] transfer $8 billion of profits to the Swiss subsidiary from 1999 to 2012. The transfers had no economic substance and were made solely to take advantage of the lower tax rate Caterpillar negotiated with Switzerland, according to Senator Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations.” (The same article mentions HP also transferring profits offshore to avoid U.S. taxes).

During this time, CAT imposed a six-year wage freeze on its hourly workers, and awarded the current CEO massive pay increases.

•      At Caterpillar, Pressing Labor While Business Booms—NY Times article, July 2012.[2]

•      Caterpillar Chief's Pay Jumps 60%—Wall Street Journal article, April 2012.[3]

•      SEC Action Puts Caterpillar Resolution on Sudan Up for Shareholder Vote—NY State Comptroller press release[4].

In this light, ACREC believes CAT’s human rights record in Sudan and Israel/Palestine demonstrates its “Code of Corporate Conduct” is selective and only goes as far as the company prefers it to go and does not apply evenly across the board.

The ACREC believes that the same standards that have guided votes on MRTI recommendations over the last forty-two years of corporate engagement by the committee, should continue to guide the General Assembly on this vote, no matter who is committing the human rights violations, where, and against whom. To use different standards to judge the evidence is at best, discriminatory, and at worst, sets a bad precedent of exceptionalism that will diminish the effectiveness of MRTI’s future work.

The ACREC sees the following reasons for the General Assembly to approve the MRTI report and NOT to apply exceptions it:

1.    The MRTI report does not target Israel, but U.S. corporations who are profiting from a military occupation. Charging MRTI and the PC(USA) with holding Israel to different standards is a misrepresentation of the ten-year history and MRTI’s careful engagement with the three American corporations.

•      The PC(USA) will continue to hold shares in companies that do business in Israel, but are not profiting from non-peaceful pursuits, including McDonald’s, Procter & Gamble, Coca Cola, IBM, etc.

2.    While it is true that some Jewish groups and organizations have said our corporate engagement process has “damaged relationships between Presbyterians and Jews,” not all Presbyterians and not all Jews agree with this statement. In fact, in some cases, the opposite is true. The call for not profiting from the occupation has strengthened relationships between some Presbyterians and some American and Israeli Jewish groups and individuals who oppose the occupation. This is evidenced by the support for MRTI from

•      The Israeli Committee Against House Demolition (ICAHD)[5].

•      The Rabbinic Council of Jewish Voice for Peace. The rabbis of Jewish Voice for Peace maintain that the human rights violations of CAT, Inc., H-P and Motorola Solutions are not in accord with Jewish Values.[6]

The very claim that this has affected our relationships with all Jews in a blanket way commits the serious error of classifying an entire people into one monolithic category. General stereotyping can and often does lead to racism in situations where decisions are made by assuming all people of one race or ethnicity hold the same viewpoints.

Hewlett-Packard is involved in questionable human rights issues in China and Syria as well as in Israel/Palestine as cited in a shareholder resolution voted on at their 2014 Annual Meeting. Both H-P and Motorola Solutions have wholly-owned subsidiaries in Israel whose record of equal employment opportunity is deficient.

•      While more than 20 percent of the Israeli population is non-Jewish, the high-tech industry, obligated by law not to discriminate, employs between 0.5 to 5 percent non-Jewish Israelis. Neither company will disclose its employment record.

Video of CAT bulldozers destroying Palestinian homes—first 40 seconds of this trailer of 2013 film, “Where Should the Birds Fly?”[7]

 


[1] http://www.nytimes.com/2014/04/01/business/report-says-caterpillar-used-swiss-unit-to-pare-taxes.html?emc=edit_th_20140401&nl=todaysheadlines&nlid=26025810&_r=2

[2] http://www.nytimes.com/2012/07/23/business/profitable-caterpillar-pushes-workers-for-steep-cuts.html?pagewanted=all&_r=0

[3] http://online.wsj.com/news/articles/SB10001424052702304444604577338083842676136

[4] http://www.osc.state.ny.us/press/releases/mar13/032113.htm

[5] http://icahdusa.org/an-open-letter-from-jeff-halper/

[6] http://www.rabbisletter.org/

[7] http://whereshouldthebirdsfly.org/

ACSWP Advice and Counsel

The Advisory Committee on Social Witness Policy advises that this overture be approved with amendment to Recommendation 1 as shown below: [Text to be deleted is shown with brackets and with a strike-through; text to be added or inserted is shown with brackets and with an underline.]

“1.          [Instruct] [Urge] the Presbyterian Foundation and the Board of Pensions of the Presbyterian Church (U.S.A.), to disinvest from Caterpillar, Inc., Hewlett-Packard, and Motorola Solutions, in accord with our church’s decades-long socially responsible investment (SRI) history, and not to reinvest in these companies until the Mission Responsibility Through Investment Committee of the PC(USA) [is fully satisfied that] [recommends their removal from the divestment listing. The Committee on MRTI is urged to consider the following factors in determining when the] product sales and services by these [and potentially other] companies are no longer complicit in [‘non-peaceful pursuits’ and in]” [The rest of the recommendation section remains unchanged.]

The Advisory Committee on Social Witness Policy supports the recommendations of the Committee on Mission Responsibility Through Investment (MRTI) in its Advice & Counsel memorandum to Item 04-08. In that memorandum we present the theological and policy bases for supporting corporate social responsibility work, including the recommendation to divest of securities in the three named corporations. This overture performs a valuable function in examining and affirming the record from outside MRTI and, in our view, proposes considerations that may be helpful going forward if the commissioners approve the divestment and occupation-free investment MRTI recommends. Hence the amendments suggested, which also recognize that the compliance of the investment bodies of our church is voluntary, although they are agencies of the General Assembly and to be guided by the theology and ethical direction of the assembly.

The overture presents past General Assembly policy and past actions correctly, including the favorable vote of commissioners in 2012 to ask the Board of Pensions to establish a separate investment portfolio that would not hold the securities of Caterpillar, Hewlett-Packard, and Motorola Solutions, a vote that was subsequently ruled out of order.

Regarding the human rights situation in Israel and Palestine, the overture’s data from the United Nations could be supplemented by similar findings from the U.S. State Department’s annual Human Rights reports, the reports of Amnesty International, Human Rights Watch, and other nongovernmental organizations, and the reports of human rights organizations within Israel such as B’Tselem.

ACWC Advice and Counsel

The Advocacy Committee for Women’s Concern offers the following advice and counsel to the 221st General Assembly (2014) on Item 04-02.

Please see ACWC’s counsel offered on Item 04-01.

BOP Comment

Item 04-02, an overture from the Presbytery of San Francisco, and Item 04-08 from the Presbyterian Mission Agency and the Committee on Mission Responsibility Through Investment (MRTI) recommend that Caterpillar, Inc., Motorola Solutions, and Hewlett-Packard be added to the General Assembly Divestment List. The Board of Pensions offers this comment, originally approved by the Board’s Executive Committee in May 2006, to clarify its practice when corporations are added to that list.

Comment of The Board of Pensions of the Presbyterian Church (U.S.A.) on the several
recommendations relating to Divestment and Affirmative Investment

In all its corporate actions, the Board of Pensions strives to support the mission of the Presbyterian Church (U.S.A.), including the social witness policies approved by the General Assembly. Sometimes there is apparent conflict between the social witness desires of the denomination and our legal duties to members of the Benefits Plan. It is clear that our mutually approved long-term policies and procedures have worked well to avoid conflict and we urge the General Assembly to take no actions that would displace these very helpful policies and procedures.

The General Assembly has delegated oversight responsibility for Benefits Plan and Assistance Plan monies to the Board of Pensions. This responsibility makes the Board a “fiduciary,” a status that carries both certain duties and the potential for certain liabilities if carried out improperly. This delegation and separation of oversight duties is intended to relieve the General Assembly from both fiduciary duties and liabilities. The Board, acting through its Board of Directors, chooses the actual investment managers and determines how the money is allocated among various classes of securities to achieve the long-term investment objectives required of the Plans. The Board does not select specific investments (either to buy or to sell): security selection is the job of the investment managers themselves.

As indicated below, managers of individually managed portfolios are made aware of our social witness policy and are required to justify to the Board of Pensions any deviation from that policy.

These are all important separations of roles and responsibilities that are in the best interests of commissioners, of the denomination, of the Benefits Plan and of Plan members. For these reasons, the General Assembly does not direct the Board of Pensions to divest the portfolio of an investment held by the Benefits Plan and does not direct that the Board of Pensions affirmatively invest in any specific security.

The General Assembly does, however, determine the social witness policies of the Church, including how they pertain to investments of money held by or under the aegis of the Presbyterian Church (U.S.A.). It does advise the Board (and the Foundation) and it does urge us to take certain actions from time to time. We in turn are mindful of the General Assembly’s wishes.

To confuse this important definition of roles and responsibilities, would risk potential liability to the General Assembly, and possibly incur more investment risk for the Pension Trust and other benefits and assistance assets than would otherwise be desirable. We cannot, and the General Assembly would not have us avoid or compromise our legal duties and threaten the security of the Benefits Plan and Assistance Program.

There are two specific duties for us to consider when it comes to the question of divestment.

First, the Board of Pensions has a “duty of loyalty” to act in the sole and exclusive interests of the Benefits Plan members. That means our decisions must be in the interests of that group taken as a whole, not in the interests of the Board, and not in the interests of some other group or some special part of the Church. The Board of Pensions has established procedures that it believes are completely faithful to this obligation.

Second, the Board has a “duty of care” to see to it that sufficient funds are available to keep the promises made to Plan members, both current and future. Selling or buying securities based on social witness principles alone could easily translate into taking on too much or too little risk at any given point in time. The Board of Directors has adopted detailed investment policies governing the allocation of the Plan’s investments in various asset classes and the selection of managers for those asset classes. This allocation is the primary way we manage investment risk. The investment managers are responsible for the selection of individual investment holdings. We are responsible for selecting the investment managers, and this selection process is another of our risk management tools, and is an equally important separation of duties. The result is that the Board of Pensions must make its own, independent judgments based on its legal duties of loyalty and care.

Having said that, it is our often-expressed objective to support the declared social witness policies of the denomination as best we can. Fortunately, specific policies on divestment adopted by the General Assembly in 1984 have served our mutual interests well, have promoted a united voice and have avoided conflicts within the denomination.

Divestment

The Board of Pensions participates in the Church’s MRTI activities. Under the 1984 policies of the General Assembly, the denomination’s Committee on Mission Responsibility Through Investment recommends that a company be added to the General Assembly’s divestment list after several steps. Three of those steps include (a) undertaking a thorough and comprehensive research of the company’s involvement in an objectionable practice, (b) engaging the company in constructive dialogue about those practices through meetings and submission of shareholder resolutions; and (c) it is determined that no lesser alternative to divestment is available. Ultimately the General Assembly determines, upon receiving such a recommendation, what is the effective social witness action for the Church and its entities to undertake (including divestment or affirmative investment). The General Assembly has long recognized that the divestment practice of the Board of Pensions is one of a “prohibition of ownership” rather than one of an “immediate sale” of securities listed for divestment.

When and if a security is added to the prohibited securities list (there are currently 428 securities on the list), the Board of Pensions has adopted a formal process to ensure that the failure to own the security will not harm the financial soundness of the Plan. At this point, there are two levels of decision because of the differing responsibilities and accountabilities of the decision-makers. The first decision is for an investment manager. The Investment Manager must decide whether not owning a divestment list security will harm their portfolio results. If it decides that failure to own will not harm results, there is no issue as to portfolio performance, and the security is not held. Since, as a general rule our investment policies provide for observance of the General Assembly’s divestment policies, if the manager decides that failure to own will harm portfolio performance, it must ask us and provide justification for an exception.

The second decision now becomes one for the Board of Pensions. It is inappropriate for us to fail to act. In other words, we are obligated to independently decide whether or not to initiate divestment, or to grant an exception. In the event of a request for exception, if the Investment Committee determines that the request is reasonable and appropriate in the context of our duty of care, it may grant the exception. Currently, there is only one security held by the Board of Pensions under an approved exception request.

For example,

Stock A is placed on the divestment list for the first time. Manager X owns Stock A. When the divestment list is updated, we advise Manager X that Stock A may be held as a part of their normal investment program until such time as the security becomes part of the manager’s sell discipline for all clients. Any subsequent purchase requires an exception from the Board of Pensions.

If a Manager does not own the stock, any purchase requires an exception.

From time to time, securities are removed from the divestment list, and managers are so advised.

Affirmative Investment

The duties of care and loyalty apply equally as limitations on the purchase of securities. In addition, the separation of roles and responsibilities between the Board and our investment managers is breached when we begin telling our investment managers to actively purchase specific securities. At that point we become portfolio managers ourselves, and to date that is not a responsibility we have undertaken because it would impose additional regulatory burdens and administrative expenses on the Plan that we have chosen to avoid.

Shareholder Resolutions and Proxy Voting

We do hold a small portfolio of securities outside the Benefits Plan specifically at the request of the Committee on Mission Responsibility Through Investment in order that the Church can use these shares to propose shareholder resolutions from time to time. These holdings are at minimum levels required to submit shareholder resolutions.

It is also appropriate to note that the Board of Pensions does vote all shares held by or through us in accordance with the actions of the Committee on Mission Responsibility Through Investment. The Board of Pensions respectfully requests that the General Assembly take this comment into account when considering the several recommendations on Divestment or Affirmative Investment proposed to the General Assembly. The processes in place have served us well for over twenty years, and will continue to serve us well going forward.

PMA Comment

This overture supports the recommendation from the Presbyterian Mission Agency, approved at its February 2014 board meeting, calling for Caterpillar, Hewlett-Packard, and Motorola Solutions to be added to the General Assembly’s list of companies whose stocks and bonds are proscribed from investment (commonly known as the General Assembly Divestment List).

This recommendation is based upon the comprehensive report by the Committee on Mission Responsibility Through Investment (MRTI), http://www.pcusa.org/resource/mrti-report-and-recommendations-israel-palestine-c/, on its multiyear engagement of corporations involved in non-peaceful pursuits in Israel and Palestine as defined by the General Assembly.

Concurrence
Presbytery of Genesee Valley
Presbytery of New Brunswick
Presbytery of New Hope
Presbytery of Palisades
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