Thread by @stephendziedzic

OK, the Future Fund is up at #senate estimates in a few minutes. I'll tweet excerpts. The leadership is likely to be grilled on why it has invested in companies (including weapons manufacturers) doing business with the military junta in Myanmar 1/ abc.net.au/news/2021-11-2…

Greens Senator Nick McKim asks chief executive Raphael Arndt if he was aware that the FF was investing in AVIC, a Chinese weapons manufacturer which has armed the Tatmadaw. Arndt says no: "we wouldn't have had that information at the time" 2/

Interesting. Arndt says the Future Fund divested from AVIC in November last year. But *not* because of its links to the Tatmadaw. They got out because in August the US Treasury included the company on a sanctions list for Chinese military companies 3/

The Future Fund's investment manager (or this investment manager) is domiciled in the US, so they are bound by US sanctions. That's why it had to divest 4/

Arndt essentially says there are only so many companies it can screen out: "investing in equity market indices ... is a very common practice. Almost every super fund or retail investor investing in an exchange traded fund ... would have exactly the same exposures" 5/

I'm paraphrasing, but what Arndt is basically saying is that unless a company has been put on a sanctions list - or is screened for a specific reason as directed by the Fed Govt - then it's fair game. Can't monitor every company on all the various indices 6/

Now McKim asks about legislation the govt has put forward which would essentially shield the Future Fund from FOIs like the one which unearthed the information about its investments in AVIC 7/

Birmingham says the legislation has a "narrow scope" and there would still be transparency: "the Future Fund would still be fronting up here to answer questions from you and others" + would still have to make details disclosures 8/

Now Liberal Senator Dean Smith. He asks if the Future Fund is reconsidering the way it invests in companies with commercial links to the military junta in Myanmar in the wake of the coup 9/

A magnificently bland response from Arndt: "the Future Fund board has been interested in how we integrate this particular ESG (Environmental, Social, and Governance) issue (ie - the military coup in Myanmar) into our approach" 10/

Now Smith asks (very quietly, but pointedly) about reputational risk. Arndt again says it's a balancing act. He says yes they track media mentions but these issues are complex 11/

Arndt says many private funds would have invested in similar companies (linked to the junta) - "the positions were held through an index position, that is a commonly held wide ranging strategy - I daresay the vast majority (of funds) would have very same positions" 12/

Smith isn't convinced. He says "many Australian citizens would regard the future fund as more of a public entity than a private entity" - implying that in his view, it has greater obligations 13/