Bezeq fails to dissuade Norwegian fund from disinvesting

The Israeli telecommunications company Bezeq tried for several months to prevent the Norwegian sovereign wealth fund from withdrawing investment in it, with political and commercial arguments that were ultimately not accepted. This week, the Fund published its decision to sell its share in the company amounting to $24 million (0.76% of it) for ethical considerations, on the basis that the company helps violate international law through the services it provides to West Bank settlements. And to the Israel Defense Forces.

The Norwegian fund still holds shares in 76 Israeli companies with a total value of about $1.4 billion. The value of the fund at the date of its last quarterly report amounted to $1.8 trillion, and among its objectives is managing an ethical investment portfolio in accordance with the standards set by a special ethics council.

In the past, the Norwegian fund withdrew its investments from Israeli companies Shapir Engineering, Ashstrom, Electra and Dania Sipos, due to their involvement in construction outside the Green Line. Last year, the Fund came under intense pressure from politicians, human rights organizations and local media to tighten its standards regarding Israel. The International Court of Justice’s ruling that Israel’s occupation of the West Bank is illegal contributed to increasing pressure.

The stricter criteria were formally adopted last summer, making it more likely that the fund would stop investing in US defense companies that supply weapons to Israel, but also expanding legality insofar as the Norwegians were interested in excluding more Israeli companies.

The announcement of the decision to sell Bezeq ownership by Norges Bank, Norway’s central bank, which manages the wealth fund, said: “The executive board of Norges Bank has decided to exclude Bezeq, the Israeli telecommunications company Ltd., due to an unacceptable risk that the company will contribute to serious violations.” To the rights of individuals in situations of war and conflict.

According to a summary of the decision published by Norges Bank, the fund contacted Bezeq in February, and the company responded at that time that it was cooperating with Palestinian telecommunications companies for the benefit of all residents living in Area C of the West Bank.

In May 2024, according to the bank’s announcement, Bezeq representatives met with representatives of the wealth fund. At the meeting, Bezeq explained that although it provides services to West Bank settlements, it does not do so to illegal outposts, that it operates under the terms of the Oslo Accords, and that it serves Israelis and Palestinians equally in Area C. The company also clarified that it is not state-owned and is not the long arm of the Israeli authorities.

In June, Bezeq wrote to the Fund that it was acting directly under Article 36 of Annex III of the Oslo Accords, which states that “communications services in Area C of settlements and military bases… will be the responsibility of the Israeli side.” It also made clear that it had a legal obligation to provide communications services to West Bank settlements and could not avoid doing so.

All these explanations were not enough for the Ethics Council, which decided that the company, through the services it provides to the settlements and the IDF, helped violate international law. It found that communications, such as roads and water supplies, were part of the infrastructure of the Israeli occupation. It also ruled out the use of the Oslo Accords, and in order to explain why Bezeq violated international law, it based its decision on the interpretation of the International Court of Justice regarding the illegality of the Israeli occupation in the territories. “The Council notes the company’s assertion that it also provides communications services to the Palestinian areas in the West Bank. However, the Council does not believe that this outweighs the fact that the company, through its physical presence and provision of communications services to Israeli settlements in the West Bank, helps facilitate the maintenance and expansion of these settlements, Which is illegal under international law, and by doing so, the company itself contributes to the violation of international law,” the Ethics Board decision said.

So far, analysts have estimated that the decision to be made in the summer on tightening investment standards by the Norwegian wealth fund, which owns 1.5% of the shares of all companies traded on stock exchanges around the world, will mainly affect American supplier companies. Weapons to Israel. The fund has already divested in most defense and arms companies in the past few years. It now turns out that the decision served as the basis for divestment from Bezeq.

The decision raises concerns about the fate of the Norwegian fund’s remaining investments in Israeli companies. Two years ago, it was reported that the fund’s ethics board discussed selling all investments in Israeli banks and financial institutions, due to their possible involvement in activities outside the Green Line. But after an examination lasting about six months, the Ethics Board and the Fund decided that there was no basis for such a decision at that stage. But now new standards, combined with an International Court of Justice ruling, may lead to a reconsideration of these investments.

Among the Fund’s main investments in Israel on June 30, 2024, were Teva ($575 million), NICE ($127 million), Bank Hapoalim ($121 million), and ICL ($100 million). Mizrahi Tefahot Bank ($60 million), as well as Bank Leumi. First International Bank of Israel, Discount Bank of Israel, Phoenix Holdings, Enlite Renewable Energy, and other companies.

In response to the report, Bezeq said: “No comment.”

Published by Globes, Israel Business News – en.globes.co.il – on December 5, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.