Church accused of short-selling

Ekklesia weighed into the debate on the ethics of financial investments and stock market speculation in response to comments made by senior clerics in the wake of the recent banking crisis.

Archbishop of York Dr John Sentamu branded the traders who cashed in on falling share prices in troubled bank HBOS as "bank robbers" and "asset strippers", while Archbishop of Canterbury Dr Rowan Williams called for fresh scrutiny and regulation of the financial world.

But the religion and society think-tank Ekklesia claimed that in 2006, the Church Commissioners, which manages the Church of England's investments, set up a currency hedging programme that hedged against a fall in the value of sterling, effectively short-selling the British pound to guard against rises in other currencies. The think-tank also criticised the Church for its shareholdings in oil and mining companies.

Jonathan Bartley, co-director of Ekklesia, said: "The archbishops should be extremely careful when attacking city 'bank robbers' for short-selling and speculation. The Church has benefited significantly from the speculation that has underpinned rising oil and commodity prices such as gold and copper.

"By its own admission it has also hedged against a fall in the value of sterling, and set up a currency hedging programme in 2006, effectively short-selling sterling in the currency markets."

Mr Bartley suggested that the Church of England should invest its money in institutions such as co-operatives, friendly societies and housing associations, and to work for the good of society in return for a slightly lower profit margin.

A spokesman for the Church of England denied it was involved in any short-selling and said the currency hedging programme was aimed at protecting its investments rather than speculating on them.

He said: "The Commissioners do not short equities, nor have they delegated any shorting powers to their external equities fund managers. They do not have any exposure to hedge funds that short stocks, either. The currency hedging programme, set up in 2007, is designed to protect the sterling value of the Commissioners' foreign currency denominated assets.

"The Commissioners invest in a wide range of equities, including those of mining, oil and financial companies, as part of a broadly diversified asset base and in compliance with the ethical investment policy as recommended by the Church of England's Ethical Investment Advisory Group."