AECOM Technology is an engineering and defense contractor whose business ranges from managing the U.S. Army’s Fort Polk, including its live-fire target ranges, to operating logistics, training and repair depots for the U.S. military in Iraq, Kuwait and Afghanistan, with more than 6,000 employees working for its CSA subsidiary in Kuwait alone. They are no-bid defense contractors repairing and maintaining everything from machine guns to computers to communications equipment to tanks, among other tasks. “Employees at all levels have dedicated themselves to a wide range of assignments, from maintaining tactical equipment such as tanks, to supporting information systems, to conducting force-on-force and live-fire exercise and training programs, to providing security, environmental services, rations, uniforms and even barbed wire, as well as organizing recreational programs and special events for soldiers.” And, yes, the AECOM-CSA depot is the shipping point for ammunition into Iraq.
Of course, Pax World until only very recently advertised in publications such as E Magazine and Mother Jones: “No Weapons,” “Promote Peace,” “Take the high road” and “Green, Not Greed.” A few weeks ago, Pax World's management struck the part about promoting “reconciliation and international understanding” from the prospectus when they removed the self-prohibition against U.S. Treasury bonds. The prospectus still boasts that Pax means peace and that they would avoid investing in companies “significantly involved in the manufacture of weapons or weapons-related products.” Clearly though, words involving peace are on their way out, although Pax World's management seems to be soft-pedaling around with the funds' anti-war shareholder base. The bottom line is that this is a family of funds in transition, with fantastic posturing and actions in conflict with its claims.
To think that this is the same Pax World who, three years ago, divested $23 million of Starbucks stock for the sin of placing its name on a coffee liqueur. Pax World has different standards of behavior these days....
[Civilian contractors] “were the second-largest force involved in the Iraq war effort. More than the British. More than the Italians. They were civilians, working for one no-bid contractor or another. Using thousands of contractors allowed Rumsfeld to flex considerably more combat muscle without increasing troop numbers. It was a combat enhancement without the political fallout.”
-- Paul Rieckhoff, 1st Lieutenant, Army National Guard; executive director / founder of Iraq and Afghanistan Veterans of America (IAVA) and author of Chasing Ghosts.
“In July 1999, Combat Support Associates [an AECOM subsidiary] was selected for a Camp Doha support contract, a 10-year deal potentially worth $547 million. In March 2003, when U.S. forces invaded Iraq, demand for the company's maintenance and repair services increased dramatically as bases across Kuwait became nerve centers for American troops. The value of the contract ballooned as well — reaching well over $2 billion. According to Army Sustainment Command in Rock Island, Ill., $1.9 billion was spent between 1999 and 2007 on the Combat Support Associates contract. An additional $535 million was set aside for the fiscal year that ends Sept. 30. Court records from a whistleblower case in Florida and workplace discrimination lawsuits filed against the company in Texas and Maryland show how the company fashioned its corporate architecture. CSA Ltd. [a Cayman Islands-shell company quickly created that allowed it to duck millions in taxes and deflect U.S. lawsuits] was registered in September 1999. Its purpose was to handle the unclassified work in Kuwait. That accounts for close to 90 percent of the contract. From its offices in Orange, Calif., Combat Support Associates would perform the remaining 10 percent, which includes the classified duties requiring employees with security clearances.”
-- AP Writer Richard Lardner in “An Islands Tax Haven for US Defense Contractor”, May 7, 2008.
“As a matter of investment policy, Pax World Funds does not invest in war-related industries, companies that manufacture weapons or companies that derive more than 5 percent of gross sales from contracts with the Department of Defense. We know that a significant number of investors do not wish to profit from war, and we are here to serve them.”
-- Pax World's former President Thomas W. Grant in a Pax World press release dated March 25, 2003.
“The SRI industry is still young. Hawken [whose report critiqued the green credentials of SRI funds] is right to argue for better definition, clearer standards, and more disclosure -- for the SRI industry to 'reassess [its] terms and descriptors.' The term, 'socially responsible investing,' itself may be inadequate, and certainly there are ways that the SRI industry can better articulate its underlying goals, strategies, and standards. These are important questions, and they deserve to be addressed in a collegial and constructive dialogue.”
-- Joe Keefe, then Senior Advisor for Strategic Social Policy at the Calvert Group in his response to Paul Hawken’s “Is Your Money Where Your Heart Is?” dated December 2004.
“Exclusionary screens have their antecedents in religious investing, and in some instances they are core to SRI--the weapons and tobacco screens remain core to what Pax World is all about.”
-- Pax World President and CEO Joe Keefe in an interview titled “Pax World Drops Zero Tolerance Screens on Alcohol and Gambling” dated October 26, 2006, with journalist Bill Baue.
“Divesting each and every company that has any contracts whatsoever with the US military, regardless of the nature of the products or services involved, would be silly. It is one of the reasons why Pax World revised its former zero-tolerance screen a few years back and substituted a more practical approach.”
-- Pax World President and CEO Joe Keefe in a comment dated March 26, 2008 in response to Marc Gunther's “War and Pax”. Editor's note: Pax World has failed to inform shareholders candidly and directly that its changed approach would weaken its military screen. When the social screens were modified more than a year before, shareholders were told the Pax World funds would make several changes but that they would “retain exclusionary screens similar to those currently employed [since the inception of the funds] ... in the areas of tobacco and weapons” so as to “clarify and strengthen the Funds’ commitment to promote peace.”
“Dear Pax World,
I would welcome Joe Keefe to make his case directly to all Pax World funds’ shareholders as he has done here. In the next letter to them, describe the facts regarding AECOM. We can continue this discussion amongst the group of us as long as we like, but the bottom line is that it is not our money at stake.
Let your clients read about it! Reveal the information needed for them to make an informed decision.”
-- Eric Bright, SRIgreen.com in a comment dated March 27, 2008 in response to Marc Gunther's "War and Pax”.
“As a point of information: AECOM is not listed on the KLD database for weapons involvement. If you look at the AECOM company report, it lists no involvement in weapons for AECOM; or if you run a query for all US companies with military involvement, AECOM isn't on the list. So, KLD apparently agrees with Pax on this issue. As I have said already, this is a judgment call. In this business, we have to make them all of the time, and reasonable people can disagree. With all due respect to Eric Bright, I will probably not follow his advice and do a letter to Pax World shareholders each time he disagrees with one of our decisions.”
-- Pax World President and CEO Joe Keefe in a comment dated March 27, 2008 in response to Marc Gunther's "War and Pax". Editor's note: KLD acted to remove AECOM as a holding in its KLD 400 Social Index on May 30, 2008. So, apparently KLD disagrees with Pax World on this issue, once made aware of the facts regarding AECOM.
“Pax World willfully violated Section 34(b) of the Investment Company Act in that it made untrue statements of material fact in a registration statement, application, report, account, record, or other document filed or transmitted pursuant to the Investment Company Act, or omitted to state therein, any fact necessary in order to prevent the statements made therein, in the light of the circumstances under which they were made, from being materially misleading. Specifically, Pax World misrepresented that it adhered to the SRI restrictions set forth in the prospectuses, SAIs and other published material Pax World prepared and filed on behalf of the Funds.”
--U.S. Securities and Exchange Commission censures and fines Pax World $500,000 in its Administrative Proceeding File No. 3-13107 dated July 30, 2008.
