FTSE 100 firms hand billions in dividend payouts to Qatar investors

Critics say everyday UK consumer spending has funnelled billions to controversial World Cup host since 2010

Some of the UK’s largest listed companies including water and energy giants have handed almost £500m to Qatari state-owned investors this year, raising concerns that blue-chip company profits are supporting the controversial World Cup host.

The dividend payouts are the result of the Gulf nation’s investments in a raft of FTSE 100 firms, including Barclays, Shell and utility firm Severn Trent, which have reported strong profits amid a cost of living crisis and the worst UK drought in centuries.

The figures, compiled by the Guardian, cover funds distributed to Qatari state-owned shareholders in the 10 months leading up to the controversial tournament in November.

However, the Qatari state’s income from UK-listed firms is likely to have been in the billions of pounds since it won the rights to host the Fifa World Cup in 2010.

The figures will raise concerns over how everyday spending by British consumers, through bank transactions, grocery shopping and air travel, may be inadvertently supporting the Qatari host, which has criminalised homosexuality and been accused of exploiting migrant workers to build World Cup infrastructure.

Although the shareholdings of listed companies are publicly available, there is little awareness about the types of investors that hold shares in UK firms.

Amnesty International UK’s director of economic affairs, Peter Frankental, said British firms needed to be more upfront about the destination of dividend payouts.

“Qatar’s considerable wealth and its extensive portfolio of overseas investments have been accompanied by the systematic exploitation of its vast migrant labour force, many of whom have toiled for years for abusive employers with the connivance of the Qatari authorities,” Frankental said.

“UK companies need to be transparent about any human rights abuses that may have occurred in their investor chain, including those originating in Qatar’s notorious construction sites.”

Qatar’s $450bn (£389bn) sovereign wealth fund, the Qatar Investment Authority (QIA), has taken a huge interest in UK-listed investment in recent decades, spending billions to acquire stakes in a raft of British blue-chip firms such as the London Stock Exchange Group and Royal Dutch Shell.

UK stocks make up nearly a fifth of the QIA’s equity portfolio at 17%, and are worth a combined $8.8bn. That makes the UK the third-largest destination for the authority’s equity investments, behind Germany which makes up 29% of the portfolio at a value of $15bn, and Qatar where shares make up nearly 19% of the portfolio at $9.6bn.

Those UK stakes have meant that the investment authority – and therefore the Qatari state – have benefited from British companies’ profits, which have subsequently been handed to shareholders through buybacks and dividends.

Guardian analysis of publicly available data shows Qatari vehicles, including QIA, have pocketed around £475m in dividends since January alone, helping support Qatari finances at a time when the state is estimated to have spent about $200bn preparing to host the World Cup.

That includes Shell, which handed nearly $17m worth of dividends to Qatar in a year when it reported record profits on the back of surging energy prices linked to the shortages caused by the war in Ukraine.

Meanwhile, the QIA earned £13m through its 4.6% holding in Coventry-based water company Severn Trent, which has come under fire for bumper executive payouts – including £3.9m for its boss Liv Garfield – even though the country suffered under the worst drought conditions in centuries.

The QIA also earned £11m from the London Stock Exchange Group, in which the QIA still holds a 7% stake, and further £33m from its shareholding in supermarket chain Sainsbury’s.

That is on top of £64m from a 6.3% stake in banking giant Barclays. Its holding in the UK bank is a hangover from its controversial involvement in the bank’s emergency fundraising at the height of the 2008 financial crisis. The funding arrangement helped Barclays avoid a public bailout that would have placed it under government control, but later led the Serious Fraud Office to accuse three former Barclays bankers of funnelling secret fees to Qatar in exchange for the emergency funding. A jury found those executives not guilty in early 2020. The bank itself is now appealing against a regulatory fine over the deal.

One of the biggest sources of UK dividend revenue came from UK-listed mining giant Glencore, which paid Qatar Holding – a subsidiary of the QIA – a total of $387m (£347m) since January. The dividends are the result of an 8% stake in the company.

While Glencore is headquartered in Switzerland, rather than the UK, most UK pensions will have a stake in the FTSE 100-listed firm, which trades metals used in key technologies such as electric batteries. Glencore became one of the largest commodity companies in the world thanks to a £50bn merger with mining company Xstrata, sealed thanks to late-night talks involving Tony Blair and Qatari billionaire politician Hamad bin Jassim Al Thani.

Other dividend payouts came from stakes in Dettol disinfectant and Nurofen maker Reckitt Benckiser, which paid £382,000 to QIA, and private equity group and GKN-owner Melrose Industries, at £14,000.

The state-owned Qatar Airways also holds a 25.23% stake in British Airways owner IAG, though the group – which is still recovering from the Covid pandemic – has not yet paid a dividend this year.

The QIA, Glencore, Barclays, Severn Trent, and the London Stock Exchange declined to comment. Melrose Industries did not respond to requests for comment.

Sainsbury’s said in a statement that it did not choose its shareholders, and that the majority were UK pension funds and private investors including Sainsbury’s staff.

Reckitt Benckiser said the company recently strengthened policies meant to prevent modern slavery and had a zero-tolerance policy on human rights abuses. “We have a track record of working throughout our supply chain to strengthen human rights and labour standards, excluding suppliers where our standards are not achieved, and working with suppliers, peers and civil society to enable change at scale.”

Shell did not directly comment on the dividend payouts but shared a statement regarding its approach to separate investments in Qatar. “A commitment to worker welfare and respect for people is fundamental to how companies in the Shell group operate globally, including in Qatar.”

Those dividends from listed firms are on top of valuable stakes in private British companies including Harrods, Heathrow, The Shard and Starling Bank.

In December engine maker Rolls-Royce announced the QIA was spending £85m to take a 10% stake in a UK government-backed project to develop small nuclear power plants, known as Rolls-Royce SMR.

QInvest, another investment vehicle of the Qatari royal family, also maintains a 43% stake in stockbroker and investment bank Panmure Gordon, which posted its first profit in three years in 2021.

Meanwhile, Farnborough-headquartered arms company BAE Systems announced in March that it had signed an agreement to develop warship support for the Qatar Emiri’s Naval Force. And amid the UK’s energy crisis, Qatar’s participation in the South Hook LNG terminal has come into focus. State-owned Qatar Energy has a 67.5% share in the Pembrokeshire-based terminal.

Qatar is one of the UK’s largest sources of liquefied natural gas (LNG), a role that led Boris Johnson to discuss increased supply from the Gulf state in late 2021, as global gas prices soared.


Contributor

Kalyeena Makortoff

The GuardianTramp

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