Harrington Investments Inc., a socially responsible investment advisory firm, joined the ranks of activist investors calling for an adoption of principles to prevent illicit financial transactions by filing a set of shareholder resolutions at key banks.
The resolutions (pdf) call for Citigroup, Bank of America and JPMorgan Chase to crack down on transactions that are the result of corruption and bribery, tax evasion, money laundering, illegal arms deals and the movement of money by drug cartels, and they request the banks support accountability measures aimed at making it easier to identify criminal money running through the financial system. Harrington said in a statement the firm has been working with Global Financial Integrity, a Washington D.C.-based nonprofit focused on illicit financial flows, to evaluate the policies of banks in which it owns stakes.
“According to Global Financial Integrity, the U.S. financial sector, especially international bankers, are under increasing pressure from government regulators to respond to the growing illicit movement of money throughout the financial system,” said John Harrington, president and CEO of Harrington, in the statement. “Shareholders, as principals, need to make sure that our agents, corporate executives and bank boards of directors, respond as responsible fiduciaries to protect our banks’ integrity and reputation by developing industry-wide standards.”
A spokeswoman for Citigroup declined to comment, and spokesmen from Bank of America and JPMorgan Chase did not return requests for comment.
Socially responsible investors, who now control nearly one-eighth of the $25 trillion under professional management in the U.S., have increasingly taken on a role in pursuing anti-corruption reform within business, going beyond their typical agenda items of climate change, executive pay and labor practices.
In April, a coalition of investors managing about $1.6 trillion in assets worked with the International Corporate Governance Network and U.N. Global Compact to write a letter to 21 companies asking them to disclose their anti-bribery and corruption risk avoidance measures. Also in April, several multilateral development banks signed an agreement, along with the World Bank, to cross-debar any companies found to have engaged in wrongdoing in MDB-funded projects.
Another firm, Ashmore Funds, disclosed in a filing Nov. 8 with the Securities and Exchange Commission it “intends to request” that companies in which it has a controlling equity investment, “adopt and implement policies” to “minimize and prohibit the direct or indirect, offer, payment, promise of payment or authorization of payment of anything of value” to government officials “in order to obtain, retain or direct business.”
A spokesman for Ashmore declined to comment.
Global Financial Integrity hailed the move by Harrington. “These resolutions are all about reducing the risk that illicit funds even get to the banks, and if they do, making it easier for banks to identify the bad actors,” said spokeswoman Heather Lowe in a statement. “We hope that shareholders also recognize the value of making a bank’s partners part of the solution to this global problem.”