Banks Face the Flak
Sandler, Dido, The Independent (London, England)
LAST WEEK saw demonstrations up and down the country to protest against Midland Bank's involvement in financing the export of defence equipment to Iraq in the lead-up to the Gulf War. Groups from the student campaign Lloyds and Midland Boycott (Lamb) dumped replica arms on the doorsteps of Midland branches to publicise the bank's alleged "continued financing of arms to oppressive regimes".
The demonstrations followed a move by Christian Aid to switch its account from the Midland to the Co-operative Bank the day after the publication of the Scott Report. "We invited the banks to tender for our business. Midland's products and services were good. But they failed in the areas of arms sales and Third World debt. This shift just after Scott is our way of signalling that there are alternatives being developed to the financial mainstream," said Paul Tyler, Christian Aid's finance director.
The World Development Movement (WDM), an anti-arms trade organisation that came to prominence when it successfully sued the Government over the Pergau Dam affair, has logged the involvement of the big banks in the international arms trade. It focuses on companies that support what Amnesty International describes as "oppressive regimes" and highlights Midland Bank for criticism. It claims that the bank was lead lender in hundreds of millions of pounds of lines of credit to Iraq backed by the government's Export Credits Guarantee Department during the 1980s.
Up to 20 per cent of this was allowed to be used to buy "non-lethal" military equipment.
Equipment classified as non-lethal by the DTI included radio systems for the president's office, night-vision range finders and jet engines.
A Midland Bank spokesman said: "We never financed sales of arms to Iraq . . . We've never made a secret of our involvement in financing the export of defence equipment. You can only do this by getting a special government licence - in so doing we followed government policy."
Barclays, Lloyds and NatWest are also criticised by WDM for exporting finance to oppressive regimes. However, unlike the other three banks, NatWest does not take government licensing as the linchpin of all lending policy. It says: "A government export licence does not automatically guarantee the bank's support."
Banks have long been criticised for their lending policies. Last year, Maxim magazine invented four bogus companies to test the ethics of the big four. A racist political party, a pornographic magazine with paedophilic leanings, a magazine for drug dealers and a chemical weapons manufacturer - all these "projects" were offered accounts by at least one of the four. …