Church of England fears £9m loss from sale of Wonga stake
Sadly it seems to be £9m for the Church of England, which sounds a lot, or, to put this another way, 0.15% of the part of its portfolio that is managed by the Church Commissioners, which doesn’t.
This story makes me very uncomfortable on behalf of the Church. To go back over the embarrassing details, last Summer the Archbishop of Cantebury, the Most Rev Justin Welby, said that the C of E planned to force Wonga, the payday lender which makes money by charging vulnerable people obscene rates of interest, out of business by expanding credit unions to compete against it. People cheered the Church for backing its words with deeds – nobody likes the Wonga business model (5,853% APR). It profits by exploiting the financial illiteracy of the people who can least afford its extortionate rates of interest. But, almost the next day, it emerged that the C of E had an investment in Wonga via its pension fund, which had put money into AccelPartners, the US Venture Capital firm that led Wonga’s 2009 capital-raising.
Welby backtracked at this point, claiming that “Wonga is actually a very professionally managed company. Error Damelin, the chief executive is a very clever man, [who] runs it extremely well.” Nevertheless, he said that he would request that the investment be reviewed by the Ethical Investment Advisory Group (EIAG) and the bolstering of the credit unions would continue.
However, one year on, the Church retains its stake in Wonga and the payday loan business is still growing merrily. The Guardian article tells us that the cost of a block disposal of the stake would be just too high. What is the point of having an Ethical Investment Advisory Group, if they allow you to retain an investment in a company that, by any definition, makes its profits by usury? How can the Church criticise government for its supposedly inadequate welfare policies while it profits directly from the financial exploitation of the very people the government is seeking to help? Surely this is just hypocrisy at its most rank? If the Church wants to be taken seriously in the realm of moral leadership and guidance, then it surely must be above profiting from the likes of Wonga.
I know well the argument that a moral case can be made for and against every investment, and that the Church needs to engage with the modern world. I also know that my portfolio contains more than a few morally dubious enterprises, but, to state the obvious, I am very far from a moral leader! But the Church of England and Wonga? Please, Justin Welby, sell this wretched stake and consider the £9m loss a price well worth paying for the lesson learned.
References:
- Church of England fears £9m loss from sale of Wonga stake
- Welby defends Wonga after Church link emerges