TIAA-CREF Hoax – Clarification

After watching the Presbyterians vote down divestment another 3-4 times on Friday (and seeing them boo someone trying to continue to drag it back on the agenda), I decided I could take a couple of days off before wrapping up the PCUSA story.

But before that, it’s time to keep a promise I made before the Presbyterians took center stage to clarify any remaining confusion over the recent TIAA-CREF divestment story/hoax.

Now that a week or so has passed before that story broke, we can now say with certainty that any story indicating TIAA-CREF itself has engaged in BDS activity (i.e., politically motivated divestment from Israel) is unambiguously false.

The company still maintains close to a billion dollars worth of investments in Caterpillar Tractor, and they have made statements before, during and since the recent “divestment” announcement that they are neither making investment or divestment decisions based on Middle East politics (Israel-related or otherwise), nor are they responding to any political campaign (by Jewish Voice for Peace or anyone else) to make politically motivated divestment choices.

So stories that announce or imply that CREF has done anything but make automatic buy and sell choices based on existing indexes (financial or otherwise), especially those like this one that assign specific human and political motivation to such decisions, should be seen for what they are: a deliberate attempt to deceive the media and the public.

The second story associated with recent events has to do not with TIAA-CREF but with MSCI, an indexing organization that is followed by CREF and others.  This organization, which maintains an investment index based on Environmental, Social and Governance (ESG) issues, did recently remove Caterpillar from its list of approved investments.  And because MSCI indexes are followed by TIAA-CREF, this is the reason why CREF removed Caterpillar from the one fund it maintains that is tied to MSCI’s ESG-related recommendations.

Now to be fair, MSCI did release a statement saying that “The key factors determining the rating include a January 2012 labor dispute and subsequent plant closing in Canada, an on-going controversy associated with use of the company’s equipment in the occupied Palestinian territories, management of environmental issues, and employee safety.”

But the company also made another statement indicating that they use an “established methodology” to determine which companies are listed and de-listed.  But, as previously noted, the company has an unambiguous way to specify a prohibition on certain countries (a prohibition they place on countries like Sudan, but not Israel).  It could be that MSCI was responding to campaigns by JVP and others which put Caterpillar on their radar.  The trouble is, MSCI also makes it clear that “decisions are not based on representations from interest groups.”

Fortunately, this most recent statement published by MSCI finally clears up this seeming inconsistency.

In it, they indicate where issues like the Middle East conflict fall into their decision-making matrix (as a component of “Community & Society” which constitutes 10% of their overall score for a company).

Significantly, they state explicitly that their analysts “do not make judgments on the positions of the interested parties” but rather follow political controversies (Middle East related and not) to determine if they might cause a risk to the investments or reputations of index members.  In other words, because a controversy regarding Caterpillar and Israel exists, MSCI is professionally obligated to follow it (as they must follow any political controversies related to an investment), but only to determine if they pose financial or reputational risks to investors (not to make moral or political judgments on the parties or issues involved).

Given that MSCI is not a BDS organization, they most likely don’t see the Arab-Israeli conflict as the only issue impacting “Community and Society” in the universe.  So, at most, this controversy must weigh as just a fraction of the 10% MSCI assigns the “Community and Society” category as a whole.  But was this fraction of a percentage enough to tip the scales against Caterpillar this year?

Well apparently, this item has been incorporated into MSCI’s calculus since 2004, an eight year period during which it caused no changes to Caterpillar’s status.  So was 2012 the tipping point when the boycotter’s cause célèbre finally got Caterpillar bounced?  NO according to MSCI, (the horse’s mouth), who says that this political factor “did not trigger the rating downgrade in February 2012.”

So there you’ve got it.  TIAA-CREF did not divest from Israel (again, defining divestment as the BDSers do as a decision to sell assets in order to make a political statement).  And if MSCI used as a factor in its decision making “an on-going controversy associated with use of the company’s equipment in the occupied Palestinian territories,” that factor (1) could only have been weighted as fraction of 10% of their decision; (2) reflected no political or moral judgment on the part of MSCI regarding Caterpillar, Israel, the Palestinians or anyone else; (3) has been included in their decision-making for close to a decade without affecting MSCI’s inclusion of Caterpillar in their ESG indexes; and (4) did not play a role in this year’s decision to remove Caterpillar from their list of recommendations.

Walking through these details takes some time, and I’m sure the “TIAA-CREF/MSCI divested!” meme will continue to propagate and morph faster than this speed at which the truth can catch up.  (In fact, a comment left here has somehow merged the TIAA-CREF, MSCI and Presbyterian stories to create a fiction whereby TIAA-CREF had divested not just from Caterpillar, but from other BDS targets – Motorola and Hewlett Packard as well.)

Now it is the propagandist’s job to stress any information that supports their version of events (even if it consists of a single phrase in a press release) and ignore all other information that might get in the way of their storyline (such as the subsequent statements noted above which provides the context and clarification needed to genuinely understand the issue).  And I don’t in any way want to deny BDS activists the right to do their job.

But the rest of us are allowed to look at a picture bigger than JVP et al would prefer others to not think about.  And we are also allowed to take into account the boycotter’s multi-year track record of trying to pass off business decisions as politically (i.e., BDSily) motivated, only to be exposed as trying to sell false information in an effort to generate momentum for their otherwise flailing cause.

TIAA CREF and PCUSA: BDS Friends or Foes?

At first, I was annoyed that last week’s TIAA-CREF BDS hoax was going to take time away from things I wanted to say about the upcoming Presbyterian divestment vote.  But then it dawned on me that these two stories were intimately connected.

Before explaining how, I wanted to first highlight one important aspect of last week’s TIAA-CREF tale that has gone unmentioned until now.

When the BDS “movement” was resurrected in 2009 and began using the strategy of fraudulently claiming institutions were divesting from Israel, one of the big payoffs for them was free media coverage.  The Hampshire hoax was their biggest success in this regard in that the story made national news for weeks before the truth finally got out.  In fact, I read about Hampshire while vacationing in Montana that year (and started this blog soon thereafter).

Once bitten, the mainstream media became a bit shyer about taking BDS press released at face value, which meant that a series of hoaxes related to various financial institutions (such as Blackrock, PGGM and TIAA-CREF) were only covered in some corners of the Jewish press.

But these stories mostly provided those of us who write on the subject an opportunity to debunk this new series of fraudulent BDS claims, which meant that even the Jewish press finally got tired of being had by BDSers looking to manipulate both them and the public.

This time around, the “TIAA-CREF Divested!  No wait!  We mean MSCI divested!” story has gotten virtually no coverage outside of blogs and web sites dedicated to promoting or fighting against BDS.  The closest they came to genuine media coverage was The Forward which last week published a brief story based on a Jewish Voice for Peace press release, only to take down that original piece and replace it with a more accurate one a day later.

In a media age when anyone can be a publisher and mainstream media has been shedding things like fact checking (especially for smaller stories), the currency for getting your story published is a reputation for credibility.  And after years of being caught time and time again fraudulently trying to pass off financial decisions by major institutions as politically motivated, the credibility of the BDS brigade (regardless of how much they huff and puff on their own web sites) seems to be shot.

Getting back to what the CREF story might say about PCUSA, keep in mind that both of these institutions are not considered enemies of Jewish Voice for Peace and similar BDS organizations but potential allies.  As such, you would think the normal way of recruiting people to your cause (such as engaging in conversation, presenting reasonable arguments, and listening to their concerns) might represent good strategies.

But think for a moment how TIAA-CREF has been treated by the boycotters over the years.  In 2010, the divestment cru sent out press releases declaring that CREF had followed its lead and divested from specific Israel-related assets for political reasons (a lie), which required CREF management to spend time and effort clearing the air by alerting the media and angry investors that the story was a fake.

Rather than explain themselves or apologize (or simply avoid the subject of TIAA-CREF altogether out of fear of further embarrassment), instead Jewish Voice for Peace declared that their biggest campaign for 2011 was going to be getting TIAA-CREF to actually do what they just pretended they did the year before.

And after more than a year of that campaign going nowhere, last week they reverted back to hoax mode taking a simple indexing measure that required no conscious decisions by TIAA-CREF and using it to declare the academic retirement as all aboard the “Dump Caterpillar” BDS bandwagon (throwing in the fantasy that CREF made these decisions in defiance of JVP’s political enemies for good measure).

When I penned this little parody that involved my BDS protagonists torturing the CEO of TIAA-CREF while trying to convince him to do their bidding, I thought nothing could ever come close to my time-wasting fantasy.  But the whole Hoax – Campaign – Hoax sequence we’ve seen over the last three years has convinced me that fantasy has got nothing on BDS reality.

How does this relate to the upcoming PCUSA debate?  Well keep in mind that the boycotters will be showing up in droves at the upcoming Presbyterian General Assembly bearing two messages: (1) other institutions are dumping Caterpillar (and so should you); and (2) trust us.  And like TIAA-CREF, the Presbyterian Church is not seen as an enemy, but as a potential ally of the BDS “movement.”

Now it may be that they can keep up enough momentum from their fraudulent CREF/MSCI story going to convince some of the more credulous Presbyterians already in their camp of precedence for the votes they are being asked to take.  But if word gets out regarding not just this most recent BDS fraud but the BDS “movement” history of trying to pass off hoaxes, then that will undermine both of their messages (especially the message that the boycotters should be trusted to tell the truth – either about themselves or about the Middle East in general).

And if the Presbyterians start wavering in their support for divestment, we’re likely to see the kind of hostility and misbehavior we saw during the recent Methodist divestment debate (which ended in yet another BDS failure), wrath one would normally see a political organization direct at its political enemies, rather than someone you are feigning friendship towards.

TIAA CREF BDS Hoax – Social Investing

Having gotten caught with their hand in the cookie jar for the umpteenth time, the boycotters are trying to find some way to make their recent “TIAA-CREF Divestment Victory” hoax not simply seem like yet another example of them being exposed trying to deceive the media and the public. 

But a fraud so blatant that it was exposed within hours requires extraordinary spin to recover from.  Which is why their storyline has morphed over the weekend from “Our campaign to get TIAA-CREF to divest from Israel was a smashing success!” to “Never mind about TIAA-CREF, why aren’t you congratulating us about an even bigger victory with a financial indexing firm we never mentioned before?  Oh, and by the way, isn’t it great TIAA-CREF has divested from Israel?”

The most recent BDS hoax is similar to previous instances where the boycotters have tried to portray simple (sometimes automated) business decisions as political choices made by one or more investment firms.

In this case, TIAA -CREF apparently made no decision itself regarding buying and selling shares in Caterpillar (despite having been portrayed as doing so in defiance of a US Congressman in BDS fantasy press releases).  Rather, one (and only one) of CREF’s many funds sold its Caterpillar shares as part of a routine indexing mechanism after the Morgan Stanley company MSCI dropped the company from their ESG social responsibility index that is followed by CREF.

ESG is just one of many indexes retirement and investment funds tie themselves to.  For example, S&P funds are only chartered to buy and sell stocks listed on the S&P 500.  And if a company ever finds itself de-listed from the S&P, its stock would be removed from hundreds of indexed portfolios – automatically.

The fact that the CREF story is based on an index that falls under the heading of “Socially Conscious” or “Ethical” investing has given the boycotters a hook to distract the public from their now-exposed TIAA-CREF fraud.  For rather than continuing to claim that people within TIAA-CREF were responding to the boycotters campaigns, they are now claiming those campaigns bore even bigger fruit by causing Caterpillar to be de-listed from the MSCI index.

Now Caterpillar was indeed removed from the MSCI list several months ago and, strangely, this alleged marvelous, fantastic, humungous “victory” never even made the BDS press.  In fact, it only seems to have been discovered over the weekend while the BDSers were trying to change the subject from their recently exposed TIAA-CREF fraud.

But doesn’t Caterpillar’s removal from an index labeled “Socially Responsible” mean that it is now considered an evil company, an opinion in alignment with BDS activists who have been harassing Caterpillar for years?

As several commenters here have pointed out, the world of Socially Responsible investment is not quite so clear cut.  For unlike indexes designed around specific market sectors (such as energy or manufacturing) or certain regions (such as Asian or European funds), the choice of which company represents an “ethical” investment varies based on non-economic belief systems.

Generally, investments in tobacco, alcohol, gambling and weapons manufacturing are avoided by Socially Responsible investment funds (which increasingly travel under the banner of ESG for “Environmental, Social and Governance” investing).  But as that new label implies, other factors such as environmental impact and corporate governance (usually referring to the state of state of employer-employee relations) are also taken into account when deciding who is in and who is out. 

And even within these categories, lines are not clear cut.  If you look at slide 13 of this presentation, for example, the MSCI ESG index under discussion apparently does allow investment in cigarette, liquor and arms manufacturers, but draws the line at specific revenue percentages from these controversial industries.

But the most important bullets on this slide are the second and third from the bottom which illustrate what divestment from a country actually looks like.  For here MSCI lists two specific countries (Burma and Sudan) that have been specifically targeted as countries where investment should be avoided.  In fact, the MSCI index is even harsher on these countries than they are on specific industries (for example, you can make half your revenue on liquor or firearms and still be in the index, but you can’t be invested in companies that support tyrannies in Sudan or Burma).

Needless to say, a comparable inclusion of Israel into a similar blacklist is nowhere to be found within any ESG or TIAA-CREF materials, which makes the whole notion of drawing self-serving conclusions from who is included or excluded from those funds at best an act of speculation.

As it happens, there are a host of reasons why Caterpillar might be considered marginal in this specific ESG listing.  It is involved with the military (although at less than the 50% threshold).  And the company has also had challenging labor issues recently, which included shuttering a plant after failure to settle a union dispute.  Most importantly, any fund must contain only a finite number of investments, which means companies roll on and off these funds all the time – if only because they have been replaced by other firms that suit the fund’s portfolio more effectively.

Absent any official word from MSCI regarding this decision, the BDSers have had to make do with offhand comments by unnamed people at both MSCI and TIAA CREF implying that Middle East issue played some marginal role in the MSCI decision.  But naturally, no genuine proof (such as an official statement from either company) is offered since none exists (although the boycotters have gone into overdrive to condemn other people making equally speculative statements regarding why Caterpillar was delisted as liars and frauds – mirror, mirror).

The fact that some of this speculation appeared in a Jewish news source has allowed the boycotters to play the increasingly tired “See it’s not us making these claims, it’s the Jews!  So you have to believe it!” game.  But until we have more concrete information to work from, the BDS victory boasts of “TIAA-CREF divested from Israel and the MSCI de-listing of Caterpillar is an even bigger victory for us!” bombast would better be translated into a more reasonable claim of:

TIAA-CREF did not make any political divestment decision, but simply acted on a third-party indexing mechanism within its Social investment portfolio.  And reasons why Caterpillar was removed from that specific index are currently unknown. 

Not quite the bumper sticker quote folks like Jewish Voice for Peace are looking for, but it does conform a bit more closely to what the rest of us would call “reality.”

TIAA CREF BDS Hoax – Motivation

While the world of modern finance can sometimes seem mind-bogglingly complex, the notion of divestment (as used by the BDS “movement” as their own middle name) is remarkably simple to understand.

For “divestment” (as the BDSers use the term) is specifically a political act consisting of the decision by an institution (such as a school, church or financial firm) to sell off assets for the sole purpose of making a political statement (usually in protest of the company or country associated with the assets being sold).

Such political divestment is not only distinct from other activities that also involve the selling of assets (such as selling stocks because you feel they will soon decrease in value), it is often in opposition to motivations behind these other sorts of selling activities (especially if political divestment involves selling  assets that might otherwise benefit an institution financially in order to make a political statement).

As a political decision, divestment must be a public act.  For divesting secretly (i.e., not explaining to anyone WHY you are selling off specific assets) drains political divestment of all political meaning.   And just as critically, the people who must ensure the world knows why they are divesting for political reason are the people who are actually doing the divesting.

This seems so obvious it feels strange to have to explain it.  But in nearly every case of a BDS boasted “victory,” (such as Hampshire or TIAA-CREF), you’ve got a situation where someone other than the organization allegedly doing this divesting (Students for Justice in Palestine – or SJP – in the case of Hampshire, Jewish Voice for Peace – or JVP – in the case of CREF), has claimed the right to speak in the name of and assign political motivation to a third party.

To show you how such claims must be considered bogus, consider if I was to claim that TIAA-CREF continuing to hold millions of dollars in stocks from companies on various BDS blacklists as representing the retirement giant’s faith and devotion to the Zionist enterprise and contempt for the BDS “movement.”  In such a situation, most BDSers would legitimately cry foul and explain that CREF has bought those assets for purely financial reasons.

Yet when organizations like Hampshire or CREF sell off just a small portion of these same assets (while retaining others), in swoop these same BDSers claiming that such decisions were not only political, but were the direct result of their own BDS-related activities and campaigns.

Even when the organizations allegedly doing all this divesting strenuously deny that they made any political decisions, the boycotters continue to fire off their victory press releases and create more and more convoluted explanations as to why an organization like CREF (which has made statement after statementregarding their rejection of JVP positions and requests) are actually in the BDS camp.

In the past, I’ve attributed this behavior to a post hoc fallacy in which the boycotters claim (and maybe even believe) that because their own political activity preceded the decision by an institution to sell off assets on the BDS blacklist, that their campaigns caused these sell offs.  While such an explanation seems ridiculously simple-minded and self-serving, it at least gives the BDSers some wiggle room to claim logical incompetence, rather than the desire to deceive, as the motivation behind their many fraudulent statements (especially in cases where the sell-off of assets represented pure business decisions or automatic decisions made by computers – as the result of indexing mechanisms, for example).

But in the case of the most recent BDS hoax related to TIAA-CREF, the spearhead organization behind the CREF divestment campaign (the aforementioned Jewish Voice for Peace) is not just claiming that because CREF sold some Caterpillar shares after JVP’s divestment campaign started that CREF was thus responding to their campaign.

Rather, they are assigning specific, human decision-making to the TIAA-CREF organization which they claim in their press release not only sold the shares specifically for political reasons, but did so in defiance of a named US Congressman.  And while post hoc fallacy can explain an argument that because A preceded B that A caused B, assigning make-believe motivation to human decision makers who clearly did not make the decisions being described can only be seen as a deliberate act of deception.

And so the claim by JVP and others that TIAA-CREF has divested from Israel is exposed as a lie for the simple reason that TIAA-CREF has NOT divested from Israel (presuming divestment means what it means when the BDSers themselves use the term).  Now JVP et al can always prove me wrong by holding a press conference with the decision makers at CREF to confirm their version of the truth.  But absent that, we can only conclude that the BDSers have returned to old habits of hoaxing.

Lacking the ability to get TIAA-CREF itself to confirm their claims that TIAA-CREF is now in the BDS camp, the BDSers have been reduced to spinning wild tales about an organization that, as far as I know, has never come up in any BDS discussions to date: the financial indexing firm MSCI.

As far as I can tell, the boycotters are trying to say that we should ignore the fact that TIAA-CREF has refused to divest and continues to deny that they have divested, and to instead assign a CREF divestment victory to them because of the decisions of this third party.

And who is MSCI and what did they actually decide?  More on that tomorrow.

PennBDS: The TIAA-CREF Campaign

This is part of a series of articles based on the program of the upcoming PennBDS conference. Check out this landing page to find out more.

In some language (probably Yiddish) there exists a word that combines the notions of chutzpah and clownishness.  And if one needed an example to illustrate this concept, one need look no further than the biggest campaign on the BDS agenda:  the one asking the massive educational retirement fund TIAA-CREF to divest from the Jewish state.

What makes this campaign so absurd is that, according to the BDSers themselves, TIAA-CREF already complied with their wishes and divested from Israel back in 2009!

If the chronological paradox of a group launching a major campaign to get CREF to do what the boycotters claimed they have already done sounds like a badly written Doctor Who episode, you need to understand that 2009 was what I refer to as the Year of the BDS Hoax.

The hoax that Hampshire College divested in 2009 was exposed years ago (and confirmed with absolute certainty just a few weeks back).  But in that same year, the BDS presses were running hot with stories of major investment firms following their wishes and pulling funds from the dreaded Zionist entity.

The story behind the original TIAA-CREF hoax was that the retirement fund sold off shares in a company called Africa-Israel, a company headed by a controversial figure who had been targeted by anti-Israel activists.  But more importantly, it was a highly leveraged company heavily invested in real estate that was struggling with massive debt after the financial crisis of 2008.  And CREF’s decision to sell off shares had everything to do with the company’s financial woes, and nothing to do with politics.

The story behind subsequent divestment hoaxes was that in 2010 Israel emerged as a First World economy, exemplified by the country joining the Organizationfor Economic Cooperation and Development or OECD (over the protests of the usual suspects).  The Israel economy, you see, has nearly doubled in size over the last decade (i.e., during the very years the boycotters were working tirelessly to bring that economy to its knees).  This fast growth, coupled with sound governmental financial management, transitioned Israel from a developing to developed economy, similar to the transition the so-called “Asian Tiger” economies went through in the 80s and 90s.

This transition had counter-intuitive consequences in the financial markets since many institutional investors have funds specifically chartered to only invest in developing economies.  And once Israel left that developing category by joining the OECD, those funds were legally required to sell their Israel-based assets.  Now there is always a lag between when such required/automatic sell-offs take place and when investors chartered to buy stock in developed economies get around to doing so.  And so, ironically, First World economic status led to a transition period where more selling (i.e., “divestment”) than buying (i.e., “investment”) of Israeli equities took place.

In the case of sell-offs related to the Africa-Israel’s financial crisis and OECD-related financial-timing issues, the BDS brigade took advantage of ambiguity regarding the word “divestment” to claim that these sell-offs were a result of their work and should be seen as acknowledgement of their Israel = Apartheid message by the financial community.  You see, there is “divestment,” the selling of stock for any reason (the usual one being expectation that it will down in price), and “divestment” the deliberate action by an institution to sell shares in certain companies purely as a political statement (something I refer to as “political divestment” to avoid the aforementioned ambiguity).

Now we all know what real, genuine political divestment looks like.  We saw it with regard to South African during the Apartheid years, and we see it now in connection with countries like Sudan and Iran. In each and every case, it is the people actually performing political divestment that explicitly tell the world they are doing so. Political divestment done in secret is utterly meaningless, so the one and only way you know that divestment is political in nature is that the organization doing this type of divestment (be it TIAA-CREF, Hampshire College or some else) say so themselves.  And just as Students for Justice in Palestine cannot speak in the name of Hampshire College, so too divestment advocates don’t get to project their own political motivations onto the actions of financial institutions.

To state the obvious, neither TIAA-CREF or other organizations claimed by BDSers as political divestors did anything of the kind.  And they were none-too- amused that partisan political organizations were trying to stuff propaganda into their mouths by claiming purely financial decisions were actually political.  So within a few days of the BDS press releases going out, claims of divestment by TIAA-CREF and others were thoroughly debunked.

Now most normal people would either own up to such dishonest behavior (if they want to act ethically and morally) or shut their mouths, pretend the whole thing never happened and never mention TIAA-CREF again (if they’d rather avoid the whole ethics and morality thing).  But what are we to make of the fact that less than a year after getting their hand caught in the cookie jar the BDS “movement” announced that their brand new, biggest campaign yet was going to consist of getting TIAA-CREF to actually do what the boycotters just pretended they did the year before?

I actually played with the whole time-travel notion in this epic time waster (which you are free to read during the PennBDS/Jewish Voice for Peace session on this topic).  But here in the purely linear temporal space you and I call reality, the idea of fraudulently claiming an organization like TIAA-CREF as your ally one year only to turn around and campaign to get them to really do what you claimed they had already done qualifies as positively weird.

Beyond this weirdness, this story also raises the question of whether one should trust anything (including claims about Middle East realities) coming from the mouth of a “movement” that would lie about something so blatantly.  And given that the facts noted above are just a .13 second Google search away, it makes you wonder when they decided that everyone but them is a complete and total idiot.