The ethics of investing for dictators

Rob Armstrong (0:09)

Toby, tell me what you do for a living.

Toby Nangle (0:12)

Well, Rob, I'm a contributing editor for the Financial Times and an independent analyst.

Rob Armstrong (0:17)

And before you did those things, you did something else. What was that?

Toby Nangle (0:23)

Yeah, I spent 25 years in asset management, most recently as global head of asset allocation for a large asset manager.

Rob Armstrong (0:30)

I can only imagine your mother's dismay when you left the perfectly respectable profession of managing other people's money to write things in a British newspaper. What brought that about?

Toby Nangle (0:44)

Yeah, well, I mean, well, it was a case of, okay, I need to get my head in this. I felt increasingly uncomfortable about the idea that I was working for a firm dedicated to managing money for authoritarian regimes which were engaging in some pretty hewness stuff.

Rob Armstrong (1:11)

This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. Today, we are talking about sovereign wealth funds, the ethics of managing money and many other things. My guest is Toby Nangle, who is a contributing editor to the FT, a sometime consultant and a former asset manager. Toby, thanks for being on the show.

Toby Nangle (1:39)

Great to be here. Thanks very much, Rob.

Rob Armstrong (1:41)

I'm very interested by the decision you made when you left the asset management industry. Talk a little bit about how your mind changed and what the Damascene moment was for you.

Toby Nangle (1:54)

So, I mean, I've been managing money for a long period of time since 1997 We managed a lot of money for different sovereign wealth funds or central banks or pension funds or insurance company. It was sort of a normal array. And then there was, I became increasingly kind of uncomfortable by news. I was learning about coming out of Xinjiang in China, about things that were coming out of saudi Arabia, most notably the assassination of Jamal Khashoggi, who people might remember as someone who used to write for the Washington Post and was assassinated after he was lured to the consulate in Istanbul. And then I met up with an old college friend who was working at a capital punishment NGO. And he told me this story that he'd been sort of covering and working on, which was about this kid in saudi Arabia who'd been arrested for attending a pro-democracy rally. And this kid was basically up for execution. They were just waiting for him to be old enough to execute him. For attending a pro-democracy rally, I thought, wow, these are basically clients, right?

These are folks who are major clients for the industry I'm in. And I'm basically working as a senior outsourced civil servant for a variety of governments if I remain in the industry. So I didn't feel that was something I could really kind of do in all honesty.

Rob Armstrong (3:24)

I feel a lot of sympathy for what you're saying. And of course, as journalists, the Khashoggi murder, which was a state murder by saudi Arabia, we can be quite sure, was horrifying for all of us. But let me press you here a little bit.

Is there really a causal connection here? You have these pots of money that are run by these states, and they have a lot of different uses for them. And then you have the sort of security, intelligence, secret police aspect to these states. Is there really so much overlap here?

Toby Nangle (4:02)

No, I mean, you can, I mean, listen, listen, I'm not going to overstate it here. I'm not saying that you work in asset management and you're some kind of, I guess, sort of hired gun or anything like that. But what you are is you're working as an outsourced government employee, is what you're doing. You mean, the whole point of the job is to make your clients wealthier. And some of your clients can use this enhanced wealth to send their kids to college, they can honor pension promises made to their employees, or they can use it to murder journalists. If your purpose for work is to make your clients richer and increase their agency, then that's something that you're going to feel a little bit complicit about.

Rob Armstrong (4:39)

We all have our own moral compass, or to use a slightly different metaphor, lines that we won't cross in our own professional or personal lives or whatever. But there is a kind of question that occurs to me about where this stops. We draw the line in murder, or is it unethical working practices, or is it climate stuff, or putting aside governments? At what point do you disagree with the company enough that you won't? Do you know what I mean? How do we make the gradations that allow us to make the kinds of decisions or not make them that you made?