Cluster Bombs: RBS responds

Since yesterday more than 7,000 of you have emailed the Chief Executive of RBS, Stephen Hester and they are having a very hard time ignoring our calls.

That is why they have sent some of you responses to your emails. If you have had a response from RBS you can find out what we think about it, line for line, after the break.

If you’ve not emailed Stephen Hester yet, just go to our action page and find out what this is all about.

Our response to their response

Here is our full response to RBS’s response to your emails. Let us know in the comments if you get an email from RBS.

RBS says:
“Thank you for your email addressed to our Group Chief Executive Stephen Hester.

“The RBS Group recognises the very serious issues surrounding the production and use of cluster munitions. RBS has followed the international governmental initiative to ban the use of cluster munitions closely, and reviewed the resulting United Nations’ Convention in detail. As a result, the Group has updated its defence sector position to clearly state that RBS will not knowingly support any application for funding or financial services worldwide that directly contravenes this Convention.”

We say:
It is certainly the case that the funding and financial services which the RBS Group provides do not directly contravene the Convention.

The Convention prohibits assistance in the production of cluster munitions. To ban a weapon because of the humanitarian harm they cause, but to still allow for investments in their production is not morally acceptable, and Amnesty considers it is not legally permissible either. This goes for both direct as indirect investment.

The UK law banning the production and trade of these weapons contains a loophole, because it would allow for indirect financing such as the provision of general loans and other banking and investment services for the companies that make these weapons.

We consider this to be a very serious loophole which can enable companies which have the capacity to make cluster bombs to carry on being funded by banks without running the risk of breaking the law. This runs the risk of making a mockery of UK law and the global Convention banning these weapons. In the Campaigns view, if you provide money to producing companies, you are assisting and facilitating the production of cluster munitons.

RBS says:
“We do not invest in companies who produce cluster munitions and do not recognise the claims made in the IKV Pax Christi report. This is a serious issue and we have engaged with the writers of the report to understand these allegations.”

We say:
There is evidence to show that in October 2010 the Royal Bank of Scotland agreed an US$80million loan to Alliant Techsystems, as RBS was part of a 20 bank syndicate which provided US$1 billion to this company.

Alliant Techsystems is a well known producer of cluster munitions. It is known for producing the CBU-87/B Combined Effects Munitions and it currently produces specialised components for cluster munitions produced by US Company Textron and its CBU-105 Sensor Fused Weapons systems that delivers 40 explosive sub munitions via the BLU-108 skeet warheads.

Each CBU-105 contains 10 BLU-108 skeets, which in term each contain 4 submunitions on each skeet. This weapon is clearly a cluster munition as defined under the Oslo Convention as it “disperses 40 submunitions that are designed to function by detonating an explosive charge prior to, on or after impact”

It would appear from RBS’s statement that it does not also include specially designed components for cluster munitions, components that are currently manufactured by Alliant Techsystems.

This would be another significant and serious failing of RBS’s policy in the area because clearly a cluster bomb is made up of parts, so it’s weak to argue that components are not integral to the production of these weapons.

The control of specifically designed components is a fundamental cornerstone of responsible export control systems, as evidenced by the new 2008 UK arms trade laws that expressly prohibited the export, transfer and trade in cluster bombs, including their components.

In addition to this, in 2008 Alliant Techsystems entered into a joint agreement with American Ordnance. This agreement is set to last for at least 10 years. American Ordnance’s products include the M864 Cluster munitions and the M74 APAM Grenade – a cluster bomb sub-munitions. Details of both these cluster munitions are freely available on American Ordnances website http://www.aollc.biz/pdf/M74APAMGrenade.pdf and http://www.aollc.biz/pdf/155mmM864DPICM.pdf

Lockheed Martin has a contract to produce MLRS in a configuration that would permit the launch of cluster munitions that does not expire before 2013. Until then, and until they publicly announce to stop future production, they are to be considered a cluster munitions producer.

There is no specific reference in the RBS defence sector policy that implies the policy extends to conglomerates or other legal, ownership or controlling arrangements that the company might have, such as joint ventures, subsidiary, holding companies or other cluster bombs producing companies that may form part of a defence company group.

This is again a serious failing, and fails to adequately address the realities of current defence production that, like the provisions of component, often involves a number of different companies across the supply chain.

Until Alliant Techsystems publicly announce that they are no longer and will no longer produce cluster munitions, and until they agree to stop engaging in a joint venture with American Ordnance, or have a public and verifiable statement from American Ordnance that it no longer produces or maintains the capacity to produce these weapons they will continue to be considered as producers of cluster munitions (because they retain the capacity to produce and have produced since 2008).

RBS says:
“Our policy, including definitions, in respect of cluster munitions is based on the Convention on Cluster Munitions which came into force in August 2010. RBS does not comment on matters pertaining to our clients as this is governed by statutory and contractual confidentiality obligations. However, we have a solid internal process in place for assessing our clients’ activities against a range of RBS position statements and policies. Through that process, we have received assurances from our defence sector clients that they are not in breach of the Convention on Cluster Munitions.’

“Yours sincerely
Sandra Gordon
Senior Manager, Executive Response Team“

We say:
In the Report, “A Worldwide Investments in Cluster Bombs: A Shared Responsibility” by CMC member organisations Netwerk Vlaanderen and IKV Pax Christi both Lockheed Martin and Alliant Tech Systems are identified as producers of cluster munitions.

We would welcome statements from these companies that they no longer produce these indiscriminate and illegal weapons; however any assurances made from any cluster bombs producer about the status of its products or its production capacity should be public and be subject to robust and verifiable scrutiny.

In the absence of this, and while there is evidence to show that they do we will continue to call on RBS to withdraw their investments and put in place a policy to prevent investments in other producers of cluster munitions.

Other financial institutions (like the Norwegian pension fund) that have decided to end their relationships with cluster producers list Alliant Tech and Lockheed Martin as producers of cluster munitions and have blacklisted them from future investments.

On this basis and considering existing evidence on their current and past production it would clearly be reasonable even as a precautionary basis to end investment in Alliant Tech and Lockheed Martin until it is clear that they are no longer engaging in activities supporting the production of cluster munitions.

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