The Future Fund has been forced to divest about $5m in taxpayers’ money from a Chinese state-controlled weapons manufacturer that sold arms to the genocidal Myanmar military.
Last year, the Guardian revealed that Australia’s sovereign wealth fund had invested $4.9m in five subsidiaries of the Chinese arms conglomerate Aviation Industry Corporation of China (AVIC).
AVIC had sold the Myanmar military K-8 light combat aircraft, 16 JF-17M combat aircraft, 40 short-range PL-5E missiles and 24 longer-range PL-12 missiles.
The Future Fund divested from AVIC in November, a month after the investment was revealed in freedom of information documents. The government is trying to shield the Future Fund from future FOI requests about its investments.
At Senate estimates on Tuesday, Greens senator Nick McKim asked Future Fund chief executive, Dr Raphael Arndt, whether the divestment was only made due to the embarrassment of the FOI.
Arndt said the divestment was made due to US sanctions against AVIC.
“In August 2021, the US treasury announced that there would be investment sanctions against one AVIC subsidiary, being Avic Shenyang Aviation Company Ltd, which is one of the companies we had an investment in,” Arndt said.
“[We] proceeded to divest that position. Under the sanction that was issued, they had until June of this year to do that and I believe the response to the FOI request was October 2021. In November of 2021, that position was fully divested.”
UN investigators say Myanmar’s military, known as the Tatmadaw, executed 2017 “clearance operations” with “genocidal intent” against the ethnic minority Rohingya in Rakhine state. Evidence suggests the military was involved in mass killings, including of children, as well as gang rapes, arson and torture.
The UN also found in 2019 that China was breaching international humanitarian law by transferring military supplies through AVIC to the Tatmadaw.
Arndt said the $4.9m investment in AVIC was made through an index fund, and that the Future Fund doesn’t look at individual companies it invests in through index positions. That is left to third-party investment managers, he said.
But McKim said it was clear the divestment would not have happened without the FOI request.
“The Future Fund had been caught out investing Australians’ money in companies facilitating the coup in Myanmar, massacres of civilians and the brutal repression of democracy,” he said.
“Coupled with the Future Fund’s previous investments in the Adani Group, this clearly highlights why we shouldn’t allow the secrecy of making their investments exempt from freedom of information laws, as the government is proposing.”
In anticipation of the Future Fund’s appearance at estimates, an alliance of aid, human rights groups and unions wrote to the chair of the fund, Peter Costello, to express their alarm at the revelations.
The groups included Amnesty International, Justice for Myanmar, the Australian Council for International Development, the Australian Centre for International Justice, and the Australian Council of Trade Unions.
“Any Future Fund investments in companies supplying arms to, or in partnership with, the Myanmar military are fuelling the very human rights abuses that are causing the dire humanitarian situation in Myanmar necessitating the provision of humanitarian and development aid to mitigate the impacts of those abuses,” the group said.
“It undermines the Australian government’s support for a return to peace and democracy in Myanmar, its own humanitarian and development support and its support for Asean’s five-point consensus and an end to the violence unleashed by the military.”
The government is seeking to shield the Future Fund from future FOIs about its investments. The changes, if passed, would grant wide-ranging exemptions to the Future Fund from FoI law.
That prompted criticism that it was a “calculated response” to an FOI that revealed the fund’s $3.2m investment in an Adani company criticised by the United Nations for an arrangement that gave financial support to the Myanmar military.
