Investing in apartheid Israel: Ideology or economic interest?

The Intercept has recently revealed that David Fingold, a pro-Israel investment fund manager, has dubiously invested $500M for Scotiabank in Elbit Systems, an Israeli arms firm involved in war crimes against Palestinians, despite the Canadian bank’s core investment policy of “advancing human rights.”

Ethical investing activist group Eko, formerly SumOfUs, protested at the recent Scotiabank annual general meeting, presenting a petition signed by 12,000 calling on the bank to divest from Elbit Systems. “This is a company whose weapons have caused countless civilian deaths,” said Angus Wong, Eko’s senior campaign manager. “The question is not why they own shares — it is why they are the biggest foreign shareholder in Elbit. We demand to know why Scotiabank is investing hundreds of millions of dollars of funds from middle-class families in this company.”

Elbit Systems is a main supplier of weapons, including military drones, to the Israeli occupation army. Its weapons are regularly used in the perpetration of war crimes, especially against Palestinians in Gaza. The company has also provided surveillance equipment to Israel’s wall in the occupied Palestinian territory that was declared illegal by the International Court of Justice in 2004.

Fingold, whose social media posts show virulent anti-Palestinian racism and fervent support for Israeli apartheid, has also disproportionately invested the bank’s money in other Israeli companies and banks involved in war crimes, including one listed in a UN database of firms profiting from illegal Israeli settlements in the occupied Palestinian territory, including East Jerusalem.

Scotiabank in 2021 shed all its shares in Unilever at the height of a massive divestment and smearing campaign waged by Israel and its lobby groups against the company to force it to overrule its subsidiary Ben & Jerry’s decision to withdraw from Israel over its human rights record. Unilever’s enormous pressure on Ben & Jerry’s independent board notwithstanding, the socially responsible ice cream maker ultimately ended in 2022 all involvement in Israel.

The Intercept’s report on Fingold’s “eyebrow-raising investments” in Israeli companies involved in grave human rights violations is only the latest of recent reports exposing how commitment to Zionism and Israeli apartheid has played a decisive role in the flow of billions of dollars of foreign investments into Israel’s high tech and weapons companies.

A few weeks ago, Intel’s Israeli VP Tzahi Weisfeld admitted convincing managers of huge multinationals to invest in Israel “because I'm a Zionist and a proud Israeli.” Many of those conglomerates had questioned, for obvious reasons, the wisdom of investing heavily in Israel.

Intel has invested billions in Israel’s economy despite the exceptional risks involved. Its main factory is in Kiryat Gat, a settlement built on top of the Palestinian village of Iraq al Manshiya, ethnically cleansed by Israel after the 1948 Nakba. By doing so, Intel has exposed itself to possible lawsuits from Palestinian survivors of the Nakba on whose stolen land the company has built its factory. Kiryat Gat is also very close to the occupied Gaza Strip, where over 2 million Palestinians have suffered under Israel’s brutal siege conditions that constitute “incremental genocide,” in the words of progressive Israeli historian Ilan Pappe.

A fund manager is obliged to “put personal interests or ideological commitments aside.” Basing an institution’s investment decisions on such biases – such as commitment to Zionism, white supremacy, other forms of racism, apartheid, etc. – that directly contradict its public commitment to social responsibility and human rights deceives the institution’s clients and violates its default obligations. This clear conflict of interest constitutes a breach of fiduciary duty, not to mention a violation of the UN-stipulated obligation for all businesses to respect human rights. 

Given that some 90 percent of all investment in Israeli tech comes from foreign sources, human rights advocates wonder how much of that investment is ideologically and politically motivated.

The BDS movement’s call for divestment from apartheid Israel was recently echoed by 250 Jewish American business leaders. Warning the far-right Israeli government that its judicial overhaul may lead to the “destruction” of Israel’s economy, they said they may be compelled “to reevaluate their reliance on Israel as a strategic destination for investment.”

According to senior Israeli analysts, “Investments in Israel in recent months have almost disappeared” due to “a poor appetite for investments on the part of foreign [and Israeli] investors,” as a result of the far-right government’s judicial “coup,” corruption and authoritarianism.

There are many moral and legal reasons to divest from a state like Israel perpetrating the crime against humanity of apartheid, mainly to avoid complicity in grave violations of human rights. But it is also important to consider fiduciary reasons for divestment, including these 12 recent financial developments.


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