An Edinburgh investment firm that is a major sponsor of cultural organisations is under fire over investments worth £60m in the owners of a Scots dockyard that is linked to state-owned Israeli arms manufacturers, the Herald on Sunday can reveal.
Filings over the investments seen by the Herald show Baillie Gifford held 11,177,350 shares in Babcock International on May 14, 2024, which at the time would be valued at £58.066m. Their value as of Friday would be £60.97m.
Babcock, which owns and operates Rosyth Dockyard in Fife and has amassed underlying pre-tax profits totalling £331.7m in its last two financial years has been working in partnership with Israeli arms companies including state-owned Israel Aerospace Industries (IAI) and Rafael Advanced Defense Systems.
It has also worked in partnership with a subsidiary of Israel-based international military technology company and defence contractor Elbit Systems which supplies 85% of land-based equipment used for the Israeli military and produces many of the drones used by the nation's forces.
On Thursday it emerged that the investment firm had cancelled all of its remaining sponsorship deals with literary festivals in the wake of controversy over investments in fossil fuel companies and firms linked to illegal settlements and Israel’s “brutal occupation” of Palestinian territories.
Campaigners say that the latest action by Baillie Gifford was understood to have been taken in advance of publication of their links to investment in firms linked to arms manufacture in Israel.
Details of the investments shared with the Herald have partly come from an interrogation of the Bloomberg Terminal, the database that enables professionals in the financial service sector and other industries monitor and analyze real-time financial market data.
Campaign group Fossil Free Books (FFB), which has called on the company to cease its investments in the fossil fuel industry and also demanded it divest from firms linked to the illegal settlements said the new revelation gives a shocking new weight to their concerns.
It believed that at one point Baillie Gifford in the past year BAE also had held stock value at over £20m.
The investment company says that it no longer holds shares in BAE and that the link related to holdings in the LF Wales PP Global Growth Fund – is a multi-manager sub-fund - which had several fund managers, of which Baillie Gifford was one. They say that one of those managers might have been responsible for the BAE shares, but it was not Baillie Gifford.
It comes as concerns grow over the depth of Israel's military campaign in Gaza to destroy Hamas in response to the cross-border attack on October 7.
Over 36,000 people have been killed in Gaza in almost eight months of fighting, according to the Hamas-run health ministry.
FFB, which has been tracking Baillie Gifford investments were concerned over the "vilification" of authors who have put pressure on the Scots investment firm to divest from from investments in the fossil fuel industry and those that are linked to having "problematic operations in occupied territories".
More than 200 authors including Naomi Klein, Sally Rooney and George Monbiot signed a statement by the group which put increased pressure on the investment management firm, who are sponsors of the Baillie Gifford prize for non fiction.
A number of literary events across the UK had seen sponsorship deals with Baillie Gifford end.
Baillie Gifford has previously defended its record, saying it is not a major fossil fuel investor and described claims that it had significant amounts of money in the occupied Palestinian territories as "offensively misleading".
A Fossil Free Books spokesman said: "Bombs are falling on Palestinians sheltering in Rafah right now. We must stop the flow of money to the arms companies complicit in genocide.
“Baillie Gifford is not, and has never been, a sustainable or ethical source of funding for the arts - as their withdrawal from all UK festivals shows. Baillie Gifford has been aware of its investments in arms companies supplying Israel throughout our campaign asking them to divest from all companies complicit in Israeli occupation, apartheid and genocide.
“We hope it is now clear that the claims they have made against authors, which have sadly been repeated by festival management, are disingenuous. The vilification of authors who have called on Baillie Gifford to divest must stop. We call on the UK literary industry to put aside the ‘culture wars’, and build a literary culture with human life and freedom of expression at its core.”
The Israeli–Palestinian conflict has been an ongoing military and political battle over land and self-determination which has its roots in the late 19th and 20th centuries within the territory of the former Mandatory Palestine - a geopolitical entity that existed between 1920 and 1948 in the region under the terms of the League of Nations, the first worldwide intergovernmental organisation whose principal mission was to maintain world peace.
It has escalated after the October 7 attack on Israel by Hamas.
Wigtown Book Festival on Wednesday confirmed the investment firm had withdrawn from its partnership following announcements by the Edinburgh International Book Festival and the Borders Book Festival.
A short statement from the board of the Dumfries and Galloway event said it was announcing the news "with regret".
Video: An advert for the Borders Book Festival titled: Baillie Gifford - Proud Title Sponsor of the Borders Book Festival
The company has been a supporter of the festival - staged this year from September 27 to October 6- for more than a decade.
The Edinburgh International Book Festival and the Hay festival in Wales were followed on Tuesday by the Borders Book Festival in Melrose. Baillie Gifford's sponsorship of the Cheltenham Literature Festival has also ended.
Babcock has been linked to the supply and manufacture of arms in Israel.
Babcock International, which says it does not supply arms to Israel, has been working in partnership with state-owned Israeli military companies including state-owned aerospace and defence manufacturer Israel Aerospace Industries (IAI) which designs, develops, produces and maintains civil aircraft, drones, fighter aircraft, missiles, avionics, and space-based systems.
In 2022, Babcock signed a a Memorandum of Understanding (MoU) with the IAI Group and subsidiary ELTA Systems to develop a 'deep-find weapon locating radar' search-and-destroy system for the UK's Ministry of Defence.
The agreement with IAI came a matter of weeks after Babcock inked a deal with another Israeli state-owned company to propose technology to the British Army — on this occasion to offer a battle management, command, control, communications, computers and intelligence capability for a new ground-based air defence capability.
Babcock signed the memorandum of understanding with armament developer to offer Rafael's Micad platform for the defence ministry’s Sky Sabre GBAD [Ground-Based Air Defence] program.
“It makes clear sense for both parties to further develop the collaboration so that Micad can be readily offered into the wider land GBAD program,” Simon Holford, intelligence, surveillance and reconnaissance director at Babcock said at the time of the signing.
Babcock and Rafael have worked together in the delivery and maintenance of the Sky Sabre system since 2017, with the first units introduced to British forces in the Falklands.
Rafael Advanced Defense Systems Ltd was founded as Israel's national research and development defence laboratory for the development of weapons and military technology within the Israeli ministry of defense. It was incorporated as a government-owned company in 2002.
Babcock has also worked in partnership with Elbit Systems UK. It is owned by Israel-based international military technology company and defence contractor Elbit Systems which was founded in 1966 and has become the primary provider of the Israeli military's land-based equipment and unmanned aerial vehicles.
Three years ago the UK's Ministry of Defence awarded a £100m contract to a Babcock-led partnership with Elbit Systems UK to deliver new electro-magnetic warfare system systems to the Royal Navy.
Elbit UK’s Israeli parent company markets its drones as the “backbone of the Israeli Defence Forces”.
According to an analysis by the Campaign Against Arms Trade of UK government data Babcock made 37 export licence applications for military goods between 2008 and 2021 and 12 were for Israel.
Amidst the propaganda war, the United Nations Office for the Co-ordination of Humanitarian Affairs (OCHA) states that the number of reviewed and verified Palestinians and Israelis who were killed or injured since 2008 in the occupied Palestinian territory (oPt) and Israel in the context of the occupation and conflict numbered 7,253. Some 6,926 were Palestinian, with just 327 Israeli.
Casualties in the context of the ongoing hostilities in the Gaza Strip and Israel following the October 7 attack on Israel by Hamas are only added when independently verified.
Unverified accounts quoted by the OCHA say that over 36,000 Palestinians have been killed since the October 7 attack against over 1,200 Israelis.
Friends of the Earth Scotland divestment campaigner Sally Clark said: “It's long past time for Bailie Gifford to turn the page and end its huge investments in weapons of war and fuelling climate breakdown.
“The arms and fossil fuel industries have repeatedly shown they have no respect for either human rights or a safe climate.
"Financial institutions like Baillie Gifford must not be allowed to try to artwash their reputations with sponsorship deals for cultural festivals when they are continuing to invest in these destructive industries that are driving suffering and injustice around the world.”
People and Planet, the network of student campaign groups in the UK added: “In supporting companies producing deadly, destructive and divisive technologies, institutions such as Baillie Gifford are driving an incessant cycle of violence and profit which perpetuates suffering and injustice across the globe. From students to artists to civil servants, it is impossible to ignore the momentum of the movement demanding an end to genocide, border violence and climate breakdown. Baillie Gifford must divest.”
Baillie Gifford said that it no longer held BAE Systems stock and declined to comment further.
Babcock was approached for comment.
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