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The Student News Site of Texas A&M University - College Station

The Battalion

The Student News Site of Texas A&M University - College Station

The Battalion

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Though legal, A&M’s investments raise ethical questions that remain unanswered

Graphic+by+Claire+Shepherd

Graphic by Claire Shepherd

Three are confirmed dead and 28 are still missing a week after two dams burst in central Brazil, flooding the mining village of Barra Longa with waste water and mud that reached a height of 30 feet at some points.
“The mud came through and destroyed everything — there’s nothing left,” said Valdimir Campos, a resident of Barra Longa in an interview with The Wall Street Journal.
Brazilian officials concluded in 2013 the dams risked catastrophic failure if any attempts to expand their reservoirs were made. The mining companies expanded them anyway, and the ensuing tragedy  on Nov. 5  — though a continent away — is tied to the Texas A&M System through a sprawling investment portfolio that reaches across the globe.
BHP Billiton and Vale SA — the multinational mining companies who own the failed dams — together have received approximately $17.5 million from the company that manages both Texas A&M and the University of Texas’ joint investments. A three-month investigation by The Battalion into the finances of both Texas universities revealed a pattern of indifferent investment decisions that put university system money into companies around the world facing accusations of similar neglect and abuse.
No United States or Texas law prohibits investment in these and other companies with such questionable international practices. However, the investments raise ethical questions about where the line is drawn when it comes to the Texas A&M University System’s money.
Child Labor in the Democratic Republic of the Congo
Both of  Texas’ flagship university systems have money invested in companies around the world with histories of employing exploited migrant workers and children, The Battalion’s investigation revealed. Both the Texas A&M University System and the University of Texas System declined to comment for this article.
The investments of the Permanent University Fund, a pooled endowment between the Texas A&M System and the University of Texas System, are managed by the University of Texas Investment Management Corporation, UTIMCO, located in Austin.
UTIMCO CEO Bruce Zimmerman said UTIMCO pursues a return-first policy that adheres only to the law.
“We invest according to the law,” Zimmerman said. “Many people may have a personal set of criteria that they think should apply to our investments — that’s what laws are for.”
These companies, some of which hide their involvement through subcontractors and subsidiaries, have been accused of environmental pollution, forcing native communities from their land without compensation and working conditions that have been outlawed both internationally and within the affected countries.
Most of the violations are leveled by international human rights groups against mining companies that operate in Africa and South America. One of those companies, the global mining giant Glencore Xstrata, stands accused of employing children as young as 10 years old through its subsidiary, Katanga Mining Company. UTIMCO is invested in both companies with nearly $7 million.
Katanga Mining Company was purchased in 2007 by a partnership of Glencore and Dan Gertler, an Israeli businessman with deep ties to the Congolese government and a monopoly on the diamond trade in the country, according to the non-governmental organization Global Witness. The deal was a major investment by Glencore into a country being ravaged by a sectarian conflict that killed 5 million people before it was over.
Katanga Mining Company operates the Tilwezembe open-pit copper mine outside of Kolwezi, Democratic Republic of the Congo. Although the mine has been temporarily shut down since 2007 due to low copper prices, an investigation in 2012 by the BBC revealed footage of 10 and 12 year olds working in the mine for sub-contractors of Glencore Xstrata. The company’s latest quarterly report indicates that 40,000 tons of copper from these subcontractors continues to be processed at a smelter across the border in Zambia.
Julian Gaspar, the director of the Center for International Business Studies at Mays Business School, spoke generally of how some companies avoid responsibility for labor violations by hiding their dealings through sub-contractors.
“The tendency of some companies is to sub-contract it to somebody and say, ‘Okay you do this thing,’ and maybe implicitly telling them, ‘I don’t want to hear what exactly you do, or what type of labor you use,” Gaspar said.
The management of Glencore Xstrata has often been called into question by investors and human rights activists.
The company was founded in 1974 by Marc Rich, a Belgian commodities trader who was on the FBI’s top-10 most wanted list for 18 years. The charges against Rich included, among other things, breaking international sanctions on apartheid South Africa and buying oil from the Iranians during the 1983 Iran hostage crisis. Rich left the company in 1994.
The current chairman of Glencore Xstrata is Tony Hayward, who was the CEO of British Petroleum in 2010 when the company’s Deepwater Horizon oil rig exploded in the Gulf of Mexico, instigating the largest oil spill in U.S. history.
Isaac Middelmann is the international safety coordinator at One Acre Fund in Dar es Salaam, Tanzania. Middelmann said inspections of labor conditions at mining operations in war-torn countries such as the Democratic Republic of the Congo are often left to the companies, as governments and NGOs do not have the resources to investigate mines in remote locations.
“No one actually physically goes out there,” Middelmann said. “It’s too expensive — they quite simply don’t have, or choose not to spend, the budget to send someone out.”
Middelmann said the role of a university is inconsistent with investing in mining companies that often take advantage of the conditions in Sub-Saharan Africa.
“It’s like the left hand is not talking to the right hand,” Middelmann said. “So on the left hand, you have the professor who has spent his life looking at labor rights issues and abuses in the third world, and on the right hand you have the money manager that is making money off labor rights abuses.”
Investments in these mining companies have not been profitable for UTIMCO. The price of Glencore Xstrata stock is down 66 percent since the last time UTIMCO reported their holdings in the company. Katanga Mining Company has lost 67 percent of its stock price in the same period.
World Cup 2022
The 2022 FIFA World Cup was awarded to Qatar in 2010, kicking off billions of dollars in contracts awarded to international construction companies, including Hyundai Engineering and Construction Company and Vinci Construction — two companies UTIMCO is invested in.
With a nation of only 2.2 million people, construction companies operating in Qatar have been forced to fly in workers from Nepal and the Philippines to complete their projects. The International Trade Union Confederation reported that there are 1.7 million migrant workers in the country who are routinely denied rights by laws that human rights activists liken to legalized slavery.
Qatar law requires migrant workers to be “sponsored” by their employer, which includes handing over their passports to the sponsor upon arrival, a requirement many human rights activists, including Amnesty International, believe allows construction companies to abuse their workers by intimidating them with threats of deportation.
Vinci Construction contracted the use of migrant workers for the construction of the FIFA headquarters for Qatar 2022. An Amnesty International investigation into the operation found migrants working 12 hour shifts in upwards of 120 degrees Fahrenheit temperatures. Qatari law outlaws any shifts over 10 hours.
Hyundai Engineering and Construction Corporation was involved in the construction of Hamad Medical City, a 450,000-square-meter hospital in Doha, Qatar. Hyundai contracted the work to PSCI Specialties Qatar, which routinely denied workers’ requests to return home by refusing to return their passports or approve their exit permits, according to an Amnesty International report. Workers were held in housing without working air conditioning or running water for up to four months after their initial requests to leave.
Starving workers in Qatar
In its report, Amnesty International  also investigated an incident that did not involve a UTIMCO invested company but did make direct allegations of negligence against the Texas A&M System. The Texas Engineering and Extension Service is a department of the Texas A&M System that is headquartered in College Station. In 2009, TEEX signed a contract to supply emergency trainers to the Ras Laffan Emergency and Safety College in Northern Qatar.
Amnesty International wrote to TEEX and A&M University System Chancellor John Sharp’s office in July 2013 claiming 36 Nepalese and Indian workers were being forced to work at the site with no food provisions and had been denied regular requests to leave the site by their employer who had not paid them in eight months. Amnesty International requested that the Texas A&M System provide food aid to the starving employees and help them receive the required papers from their employer to leave the work site. In an email response, TEEX denied any role in the construction of the facility and did not respond to requests for food aid.
“TEEX not (sic) does not have any role in the management and supervision of the labor force at the facility,” the July 13, 2013 email from TEEX Director Gary Sera said. “TEEX currently has 4 employees at Ras Laffan who are focused on the training of the emergency responders who have been accepted into the program.”
When contacted for a comment for this article, Brian Blake, TEEX Director of Communications, contradicted Sera and denied any TEEX employees were present during the construction of the facility. News releases on the TEEX website state employees have been present at Ras Laffan since 2009. Requests to clarify this discrepancy went unanswered at the time of publication.
Rescue workers are still sifting through the damage of Barra Longa, the latest example of negligence and human rights abuses among companies in the UTIMCO portfolio. As they continue their search tomorrow, The Battalion will discuss how other universities handle the decision to divest from unethical companies versus UTIMCO’s investment policy.
This is Part Two of an investigative series into Texas A&M’s investments in companies tied to human rights violations. The series’ articles will be published throughout the week in The Battalion, as well as at thebatt.com.

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