BlackRock investment fund criticised over directors

By Ollie Williams

(BBC News) The head of a consumer watchdog has accused the head of BlackRock, the world’s largest investment manager, of going “wholly and unquestioningly” “wholly and unquestioningly” to its bosses and meddling on behalf of their boss and clients. Stephen Schwartzberg, chief executive of BlackRock, told investors BlackRock is “going to remain incredibly responsive to our shareholders”. His comments have been seen as a rebuke of his boss, BlackRock founder, CEO and chairman Laurence Fink. Martin Wheatley, director general of the Financial Conduct Authority, had previously said in a letter to Mr Fink that there needed to be greater engagement with the company’s board. Mr Schwartzberg’s response, which focuses on where BlackRock should focus its investment strategy, shows him to be in agreement. In his letter, BlackRock says it expects to engage “to advance shareholder interests, and to assist Fink in his broader work to promote and drive economic growth.” This “governance framework”, Mr Schwartzberg wrote, “excludes potential conflicts of interest”. But Mr Wheatley said on Tuesday that BlackRock went “wholly and unquestioningly” to Mr Fink to ask for directions on its policy direction and there was a “mismatch” with shareholder expectations. “They have failed to provide a context and context is what the FCA needs,” he said. “They went to Laurence Fink with ideas that were very clearly not at all in line with what his constituents wanted.” But Mr Fink said it was not a clear conflict of interest between his job of promoting economic growth and BlackRock’s job of driving up its share price. BlackRock argues that its net creation of new jobs on behalf of shareholders outweighs the risks it runs by investing in anything but safe places like gold.

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From their offices in New York and London, the things that drove me and Joel Osteen … like growth and freedom and joy and what prosperity looks like. Laurence Fink

It also says it wants to invest in companies for the long term, even when that means missing out on the short term. The company adds that that for many private investors it is their role to advocate for the long term sustainability of the planet. It adds that the path towards this sustainable and long term approach to investing has been the result of evolution, not revolution. Furthermore, Mr Fink says: “I wouldn’t trade the 19 years I’ve worked for this opportunity to build a product, a platform that other people would be smart to follow.” But Mr Wheatley has yet to provide details of BlackRock’s proposed remit for the future. He is also yet to explain why BlackRock has not signed up to the shareholders’ board resolution that could see all companies have independent and non-executive directors who must be nominated by their shareholders, rather than the existing owner of the company. Mr Fink has previously said BlackRock is not inclined to follow the lead of others on the board of miners. Although Mr Wheatley is not a mining executive, some analysts have suggested that the company could block his shareholder’s resolution.

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