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TWN Info Service on Health Issues (Jan17/04)
30 January 2017
Third World Network

WHO: Civil society calls for deferment of “official relations” status to Gates Foundation

Geneva, 30 January (TWN) – Thirty civil society organisations (CSOs) from across the world working on global health issues have made a strong call for the deferment of a decision on the Bill and Melinda Gates Foundation’s application for official relations with the World health Organization (WHO).

The CSOs wrote an open letter to the WHO Executive Board members at the 140th meeting of the Board that is taking place in Geneva from 24 January to 1 February.

[The Executive Board is expected to take decision on the official relations based on the recommendation of the Program, Budget and Administrative Committee (PBAC) that had met in Geneva on 18 - 20 January. The PBAC has recommended five organizations including Gates Foundation for official relations status. Such a status makes eligible an organisation to attend and make statements during the governing body meetings such as the Executive Board and World Health Assembly.  The Assembly in 2016 adopted the Overarching Framework of Engagement with Non-State Actors (FENSA), which governs the official relations with WHO.  Under FENSA, NGOs, international business associations and philanthropic foundations are eligible for official status.]

The CSO demand for deferment is based on the conflict of interest emerging from Gates Foundation’s official relations with the WHO. The letter urges the Executive Board “to defer the decision to accept the Gates Foundation and any other new and legacy applicants for Official Relations status for which there has been no conflict of interest safeguard review on the record for consideration by Member States of the Executive Board”.

According to Paragraph 25 of FENSA, the WHO aims to avoid allowing the conflicting interests of a non-State actor to exert, or be reasonably perceived to exert, undue influence over the Organization’s decision-making process or to prevail over its interests.

According to the CSO letter there is conflict of interest stream of revenue of the Gates Foundation. The Foundation has revenue from investments made in the forms of stocks, mutual funds, corporate bonds etc. However, investments are managed by a different legal entity known as the Bill and Melinda Gates Foundation Trust (Trust).  The letter states: “According to the United States Government’s Securities and Exchange Commission, the Bill and Melinda Gates Foundation Trust endowment– the source of revenue for the Foundation – is heavily invested in many of the food, alcohol, and physical inactivity-related consumer products that cause or treat the current crisis of preventable heart disease, stroke, cancer, and diabetes.”

The letter lists the following important direct investments of theTrust:

·      Coca-Cola regional company that operates in the Americas south of the United States (US$ 466 million),

·      Walmart (US$ 837 million), the largest food retailer in the US and a leading retailer of pharmaceutical drugs and alcoholic beverages,

·      Walgreen-Boots Alliance (US$ 280 million), a large multinational pharmaceutical drug retailer,

·      Two of the world’s largest TV companies (screen-time): Group Televisa (US$ 433 million) and Liberty Global PLC (US$ 221 million).

According to letter “ approximately one-quarter of the Gates Foundation Trust assets are invested in Berkshire Hathaway Inc., a holding company that owns a US$ 17 billion share in the US-based Coca-Cola company and US$ 29 billion interest in Kraft Heinz Inc., another of the world’s ten largest food companies”.

The letter further states: “These investments make the Gates Foundation a beneficiary of sales of several categories of products that are the subject of WHO standards and advice to governments related to nutrition and physical activity”.

Moreover, the 2015 tax returns of the Trust shows it holds shares and corporate bonds in pharmaceutical companies such as Pfizer (US$ 719,462 base market value), Novartis AG REG (US$ 6,920,761), Gilead Sciences (US$ 2,920,011 base market value) , Glaxo Smithkline ( US$ 1,589,576 base market value), BASF (US$  4,909,767), Abott Laboratories (US$ 507,483) , Roche (US$ 7,760,738), Novo Norisdick A/S B (US$ 6,208,992) , Merck (US$ 782,994) . Tax returns also reveal that the Trust has investments in major insurance companies.  (http://www.gatesfoundation.org/Who-We-Are/General-Information/Financials). 

The Nasdaq website reveals that out of 125 institutional shareholders of Coca Cola Femsa S.A.B de C.V., which collectively hold 24.19% of shares, the Trust holds a large number of shares (6,214,719) as the top institutional investor. As of 30 January the total number of shares held by institutional investors is 12,029,444 (http://www.nasdaq.com/symbol/kof/ownership-summary).

The Foundation receives its resources from the investment made by the Trust. According to disclosures made in the WHO register, “The Bill & Melinda Gates Foundation (BMGF) has the legal right to demand any amount up to the full net assets of the Bill & Melinda Gates Foundation Trust (BMGFT) to achieve its charitable goals.  As a result, the financial statements of BMGF reflect a beneficial interest in the net assets of BMGFT.” In 2015 out of US$ 765 million annual income US$ 6.7 million was for BMGF and US$ 758.8 for BMGFT (http://apps.who.int/register-nonstate-actors/nsa.aspx?id=328).

The investment policy of the Foundation endowment states that “(Bill and Melinda) have defined areas in which the endowment will not invest, such as companies whose profit model is centrally tied to corporate activity that they find egregious. This is why the endowment does not invest in tobacco or Sudan-related stocks” (http://www.gatesfoundation.org/Who-We-Are/General-Information/Financials/Investment-Policy).

Regarding the relationship between the two entities the website of the Foundation states: “The Foundation Trust holds the endowment, including the annual instalments of Warren Buffett’s gift, and funds the Foundation. Bill and Melinda are the trustees for the Foundation Trust, and the endowment continues to be managed, as it has been for more than 10 years, by a team of outside investment managers”.  The Gates are also co-chair and trustee of the Foundation. Thus there is no arms length relation between the Trust and the Foundation.  Further, “Bill and Melinda do guide the managers of the foundation's endowment in voting proxies consistent with the principles of good governance and good management.”

Paragraph 10 of the WHO FENSA defines private sector entities as commercial enterprises, that is to say businesses that are intended to make a profit for their owners. The term also refers to entities that represent, or are governed or controlled by, private sector entities. This group includes (but is not limited to) business associations representing commercial enterprises, entities not “at arm’s length” from their commercial sponsors, and partially or fully State-owned commercial enterprises acting like private sector entities. 

The Gates Foundation in earning their revenue through share and bond holdings in various private sector entities thus raises a major concern of conflict of interest.  Accordingly the official relations and the joint work plan (with the WHO Secretariat) bear the danger of influencing WHO’s work in favour of the industries concerned. According to an observer, the Foundation falls well within the definition of private sector and therefore is not eligible for official relations. 

[Under FENSA only NGOs, International Business Associations and Philanthropic Foundations are eligible to enter into official relations. The Gates Foundation, which falls within the definition of private sector, is therefore not eligible for official relations.]

Further, Paragraph 13 of FENSA states that:  “WHO will determine through its due diligence if a non-State actor is subject to the influence of private sector entities to the extent that the non-State actor has to be considered itself a private sector entity. Such influence can be exerted through financing, participation in decision-making or otherwise. Provided that the decision-making processes and bodies of a non-State actor remain independent of undue influence from the private sector, WHO can decide to consider the entity as a nongovernmental organization, a philanthropic foundation or an academic institution, but may apply relevant provisions of the WHO’s policy and operational procedures on engagement with private sector entities, such as not accepting financial and in-kind contributions for use in the normative work”.

The WHO Secretariat has not carried out any such exercise before recommending the Gates Foundation for official relations. According to Document EB 140/41 tabled for the Executive Body to consider, this exercise will be carried out in the coming days.

The Secretariat is to carry out due diligence and risk assessment about the entity prior to a decision on engagement, including official relations, and make the summary available to the Member States.

The Secretariat is to publish the full version of the collaborative work plan agreed between the WHO Secretariat and entity that applies for the official relations. However, the Secretariat did not publish this work plan prior to the PBAC meeting and this prevented Member States from informed decision-making. The Secretariat has apologised for not providing work plans prior to the meeting when the issue was raised (see: WHO Member States raise information deficit for decisions on official relations).

The PBAC communication to the Executive Board clearly states: “The Secretariat apologized for the late submission of the document and recalled that the Framework on Engagement with Non-State Actors mandated the Programme, Budget and Administration Committee (PBAC) to make recommendations to the Executive Board regarding: admission of non-State actors into official relations; review of renewals of non-State actors in official relations; proposals for the deferral of reviews; and proposals for the suspension or discontinuation of official relations status”. Further it states: “The complete plans for collaborative activities with WHO for 2017?2019 of the five applicants for admission into official relations would be uploaded onto the WHO website before the Seventieth World Health Assembly (22-27 May 2017)”.

The CSOs’ open letter states: “It is, of course, deeply troubling from a governance standpoint that the Executive Board is being asked to approve applicants for Official Relations and verify compliance with conflicts of interest safeguards without being provided with any relevant evidence – verified or otherwise – on the public record”.

The Foundation does not disclose the full information in the WHO’s register for non-State actors. The Foundation discloses that it has engagements with the food and beverages industry, health care industry and pharmaceutical industry. However, it does not declare the nature of the engagement, especially the share and bond holding in these industries through the Trust. The ownership in the private sector raises serious concerns of conflict of interest. The Foundation’s proposed work plan incudes Malaria, Tuberculosis, neglected Tropical Diseases, Access to Medicines, Nutrition, Health System, etc. Tax return of the Trust clearly shows that the revenue of the Foundation is coming from investments in those industries that have commercial interests in those areas of the work plan.

Signatories of the letter include: African Centre for Global Health & Social Transformation (ACHEST), Alcohol Justice, Algerian Network of Small-Scale Fishing Organisation, Baby Milk Action, BUKO Pharma-Kampagne, Centre for Health Science and Law, FIAN International, Foundation for Alcohol Research and Education, Health Innovation in Practice (HIP), International Assn. for Hospice and Palliative Care, International Baby Food Action Network, International Code Documentation Centre, International Community Supported Agriculture Network, International Field Representative International Indian Treaty Council, INFACT Canada and Infant Baby Food Action Network IBFAN, Initiative for Health & Equity in Society, IOGT International, Medico International, Medicus Mundi Int’l Network Health for All, Nigerian Women Agro Allied Farmers Association, People’s Health Movement, El Poder del Consumidor, Public Health Resource Network, Third World Network, Transnational Institute (TNI), University of Liverpool, Dept. of Public Health & Policy, Inst. of Psychology, Health & Society, WEMOS and World Public Health Nutrition Association.

(With inputs from Bill Jeffery of the Centre for Health Science and Lawand Dr. Amit Sengupta of the Peoples’ Health Movement.)

 


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