Global Health Ideas

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Dark cloud over global health work of Gates Foundation

There is an article in the LA Times today discussing the tension between ethical stock investment choices and the mission of philanthrophy at the Gates Foundation. The article tone is decidely one-sided against investments the Gates Foundation has made and seems to equate their investments in, for example, pharmaceutical and industrial companies in “the South”, with the deeds of particular projects of those companies (pollution, extremely high priced drugs and extended patent protection in developing countries, etc.). I find this insinuation a bit ridiculous and while I do not disagree with the overall point and ideals on which this article is based, the issue is much more complicated than discussed. Nevertheless, it is an interesting article with some good points:

January 7, 2007 – Dark cloud over good works of Gates Foundation
By Charles Piller, Edmund Sanders and Robyn Dixon

“Ebocha, Nigeria — Justice Eta, 14 months old, held out his tiny thumb. An ink spot certified that he had been immunized against polio and measles, thanks to a vaccination drive supported by the Bill & Melinda Gates Foundation. But polio is not the only threat Justice faces. Almost since birth, he has had respiratory trouble. His neighbors call it “the cough.” People blame fumes and soot spewing from flames that tower 300 feet into the air over a nearby oil plant. It is owned by the Italian petroleum giant Eni, whose investors include the Bill & Melinda Gates Foundation.”

“The Gates Foundation has poured $218 million into polio and measles immunization and research worldwide, including in the Niger Delta. At the same time that the foundation is funding inoculations to protect health, The Times found, it has invested $423 million in Eni, Royal Dutch Shell, Exxon Mobil Corp., Chevron Corp. and Total of France — the companies responsible for most of the flares blanketing this [Nigerian] delta with pollution, beyond anything permitted in the United States or Europe. Indeed, local leaders blame oil development for fostering some of the very afflictions that the foundation combats.

“The foundation has gotten much more in financial gains from its investments in the polluters than it has given to the Durban microbicide study to fight AIDS…Just as the Gates Foundation investments in Mondi, BP and Royal Dutch Shell have been very profitable, so too have its holdings in the top 100 polluters in the United States…”

“Microsoft monopolies in computer operating systems and business software depend upon the same intellectual-property and trade-law approaches favored by drug companies…’The Gates Foundation is in a position to change the dynamic, to make sure that drugs get first to the places they are most needed,’ said Daniel Berman, of Doctors Without Borders. “But it conflicts with the interests of Microsoft.”

Full Article

UPDATE: It was just brought to my attention that Busby over at the HIV politics blog felt similarly to myself and the first comment by Jose below. He states in part: “So, the LA Times has a semi-hatchet job on the Gates Foundation today, basically lambasting the Foundation for investing in companies that are socially irresponsible… something in the piece strikes me as an effort by the journalists to go after the Gates Foundation because they can and because the Foundation has gotten far too much good press. I guess I’m bothered by the effort to cherry-pick a handful of examples just to make the Gates Foundation look bad.” Read the full post here: “Semi-Hatchet Job on Gates Foundation in LA Times“.

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Written by Aman

January 7, 2007 at 8:22 pm

5 Responses

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  1. The issue is not whether or not some of the Gates Foundation’s investments are behaving badly, but rather how the foundation reacts to those corporate practices that create or contribute to the global health problems the organization has committed to tackle? The article eloquently describes the contradictions faced by the Gates Foundation, but I would argue that these contradictions exist to one degree or another for all foundations. As an institution, foundations arose as a way for those individuals that have accumulated vast amounts of wealth in an era of global capitalism to restribute the spoils back to society as a whole. As a result, the institution of the ‘foundation’ is intertwined with a process that creates few winners and many losers. This connection need not necessarily be severed, but rather can be used to affect change. Albert O. Hirschmann published a book entitled Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States where he explored the various mechanisms by which firms that have degraded in some fashion could be reformed – bad environmental practices could be considered such a degradation. At a basic level, two options exist, one can exit the situtation and choose substitutes or one can express their voice and advocate for a change. Hirschmann describes the conditions under which these options may achieve results, but what is relevant here is that the Gates Foundation is in a powerful position to affect change because of its position as a major shareholder in many of the world’s largest multinationals. How that change is achieved need not only entail socially responsible investing? Perhaps it is better for society as a whole to have a socially responsible organization such as the Gates Foundation invested heavily in some of the globes worst corporate citizens. The Gates Foundation may be in a better position to advocate for a change in corporate behavior then say the Nigerian government.

    Mahad Ibrahim

    January 10, 2007 at 9:46 am

  2. I disagree with the opinion that maximizing funds for development related expenditures can/should be considered a worthy goal if one trusts the organization to spend it well, as is probably the case with Gates Foundation. I agree that the article has its sensationalist moments and nitpicks etc, but on the whole, the premise is fair and it is necessary to make some sorts of investments pariah, especially for organizations that claim a public service mandate.

    Joyojeet

    January 9, 2007 at 11:27 am

  3. The LA Times published another piece in this series yesterday – Money clashes with mission – though this one is not focused on the global health activities of the Gates Foundation. I don’t find fault with the overall argument of these articles, but I do with the tactics. Singling out Gates of the many foundations with similar investment strategies seems a ploy to gain readership. And some of the arguments are reaching:

    The Gates Foundation has at least $224 million invested in companies dedicated to gambling, such as the Las Vegas Sands Corp., MGM Mirage Inc. and Penn National Gaming Inc.; or dedicated to alcoholic beverages, including the Tsingtao Brewery Co. in China, Kirin Brewery Co. in Japan, and the United Kingdom’s Diageo, maker of Smirnoff vodka, Guinness beer and Johnnie Walker whiskey.

    The foundation says it does use one investment screen — to avoid holdings in tobacco. Nonetheless, as of December 2005, it held at least $43 million worth of investments in companies tied directly to tobacco profits. They included Alcan Inc., one of the largest producers of cigarette packaging; and President Chain Store Corp., the Pantry Inc. and Seven & I Holdings Co., which earn a substantial part of their revenues from the sales of tobacco products.

    The foundation did not respond to written questions about its investments in companies that profit from alcohol, gambling or tobacco.

    These numbers represent a tiny fraction of the overall investments of the Gates Foundation. Further, while companies such as President Chain Store Corp. do earn money from tobacco, they also make money from many other products – in the case of President, that includes everything else that 7-Eleven sells in Taiwan and that Starbucks sells in places like Shanghai.

    Jaspal

    January 9, 2007 at 10:42 am

  4. A similar conclusion was reached on the Politics of HIV blog. The LA Times could have picked a more appropriate divestment target. Public sector pension funds are classic bellweathers in ethical investment debates. The University of California pension system for instance led the apartheid divestment movement in the 1980s and the more recent Sudan divestment efforts.

    bellows

    January 7, 2007 at 11:02 pm

  5. I think the article makes some relevant points but it also is a backhanded approach to pick on the big kid. While having a completely altruistic investment screen is a nice idea, the fact is I’d rather have Gates recoup that much more money knowning they are going to give it away—and do it effectively and do it without fear. You can’t always have what you want. Also–if they pulled their investments in the polluters–do you REALLY think the Exxon’s of the world would say “oh darn, what do we do now?”

    Jose

    January 7, 2007 at 9:29 pm


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