Wednesday, 8 August 2007

Fidelity rapped over Tory donations

Nice work from Mr Gray!

Fidelity faces pension fund campaign over contributions to Conservative party

By Raji Menon

Fund manager faces criticisms that the donations are both 'fundamentally wrong' and contrary to the principles of good governance.

LONDON (Thomson IM) - Fund manager Fidelity is facing the ire of pension funds who claim that its contributions to the Conservative Party are both 'fundamentally wrong' and contrary to the principles of good governance.

John Gray, an observer at the Tower Hamlets Pension Fund, believes the manager risks posing a conflict of interest when bidding for business at Tory-run councils. According to the Electoral Commission, Fidelity has donated 360,000 stg to David Cameron's Conservatives over the past three years.

Several local authority pension funds including Bromley, Haringey, Greenwich, Norfolk, Ealing and Buckingham County Council - which all have Fidelity on its roster - now want an explanation from the fund manager over its donations to the party.

Gray told Thomson Investment Management News: 'There are two main issues here - one is of good governance. Obviously if a fund manager or any contractor of the council funds a political party, it's a fundamentally wrong.

'Scheme members are paying their [Fidelity's] wages and a lot of scheme members who don't support the Conservative party will feel aggrieved that the profits from their scheme are being used to fund a party that is unsympathetic to say the least of their interests.'

Gray, who is also chair of the Capital Stewardship Forum at Unison which aims at flagging up corporate governance issues at local government pensions schemes, said the forum would write to Fidelity, demanding an explanation.

'There may well be an explanation that Fidelity can offer us that will satisfy us - that is reasonable. Obviously if they can't offer a reasonable explanation we will ask them to review their stance; undertake not to do it further.

'If they don't agree, we urge Unison, other trade unions and labour councils to reconsider whether or not Fidelity are an appropriate company to do business with.'

Gray, who is a Labour Party supporter, insists that the matter is 'one of principle'. He said: 'It would be unwise for any fund manager to donate directly to people to whom they are actively bidding for business.'

He added that the National Association of Pension Funds also maintains that it would not 'normally' support the policy of making UK political donations.

Fidelity was not available for comment at the time of publishing.

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