Australian investors review Transfield holdings as HESTA divests over human rights

A number of Australian superannuation funds are reviewing their holdings in ASX-listed outsourcing firm Transfield Services after HESTA divested the firm this week for breaching international human rights law.

HESTA, the A$36bn (€24bn) superannuation fund dedicated to health and community services, announced yesterday that it had decided to divest from Transfield after finding that its asylum seeker detention operations breach international human rights law.

Last year, Sydney-based Transfield won a 20-month A$1.2bn tender to run the Australian federal government’s asylum seeker detention centres on Manus Island and Nauru.

But the operation has been marred with allegations of sexual abuse against women and children. A government-commissioned review into Nauru found asylum seekers were “apprehensive about their personal safety and have concerns about their privacy in the centre”.

Just last month, Transfield told an Australian Senate inquiry that it had received 67 allegations of child abuse and 33 allegations of rape or sexual assault. And in April, the Guardian reported that staff had been cautioned not to “embarrass” the company or the government or reveal how asylum seekers are treated.

As a result of these concerns, and a general opposition to mandatory detention, a number of campaign groups have been calling on super funds to exit Transfield.

HESTA itself was subject to a targeted campaign by a group called #hestadivest which urged protestors to write to the fund.

The Australian Services Union, whose National Executive member Lisa Darmanin sits on the HESTA board, had called on it to divest last year – and supported the new decision.

In a statement, HESTA said it had engaged with Transfield on its concerns and reviewed its investment against its ESG policy, which includes criteria on international law compliance.The fund concluded: “A number of independent non-government organisations have found that mandatory, prolonged, indefinite, and non-reviewable nature of detention at asylum seeker processing centres breaches the fundamental principles of human rights law.”

HESTA’s Chief Executive Debby Blakey told the Sydney Morning Herald there was a “substantial body of evidence” about the negative impacts of prolonged mandatory detention of asylum seekers. She added that allegations assaults risked legal action against the company and a negative impact on its business and share price. “So it was in the best financial interest of our members to divest the stake,” she said.

Blakey said strict confidentiality clauses in Transfield’s government contracts meant the company was unable answer questions from the fund.

The Australian Financial Review reports that the Australian Council of Superannuation Investors (ACSI), which represents 30 super funds managing around A$400bn, have been engaging with Transfield for more than a year. And VicSuper has reportedly instructed its fund managers to seek better disclosure on alleged human rights allegations at Transfield’s detention services.

Cbus, the pension fund for the construction and building industry, also confirmed to AFR that it was reviewing its holding in Transfield.

In a statement to Fairfax Media, Transfield said: “We understand one investor has recently divested its interest, while at least one other has increased is interest. Shareholders including major funds continue to support the company.”

Meanwhile, HESTA has launched its first Reconciliation Action Plan (RAP), outlining steps it will take to engage with Aboriginal and Torres Strait Islander stakeholders. Link