The rainbow flag flew over the Bourne Corn Exchange as South Kesteven Council embraced LGBT history month.
A year after such a gesture was voted down, Lincolnshire’s local authority said it was delighted to “celebrate and recognize the […] lesbian, gay, bisexual and transgender rights’, raising the flag outside its headquarters in 2019.
Across Britain, many other councils regularly follow suit, showing solidarity with their LGBT residents through their support of events such as pride marches.
But a Guardian investigation reveals that at least 28 councils – including South Kesteven – have quietly deposited more than £1bn of taxpayers’ money into accounts at Qatar National Bank (QNB), the state lender in a country where fans Rainbow flags at next month’s World Cup may be confiscated ‘for their own protection’.
The investments pose an ethical dilemma for Western institutions dealing with the tiny, gas-rich Gulf emirate – whether to prize economic returns over authorities.
Some councils have pulled money from QNB because of ethical concerns about Qatar, which has said it will welcome LGBT fans but where homosexuality is illegal, women are second-class citizens and migrant workers have died by the thousands.
But others continued with the investments, which human rights campaigner Peter Tatchell described as “shocking”.
Investment firms including Halifax and Hargreaves Lansdown, which tout their diversity, inclusion and employment rights credentials, have also poured cash into accounts with the lender. Halifax does not appear to disclose this publicly.
The investments come in the form of funds deposited with QNB, which is 50 percent owned by the Qatar Investment Authority, the gas-rich emirate’s $450 billion sovereign wealth fund.
Amid growing criticism of Qatar’s human rights record, the World Cup offers an opportunity for the emirate’s ruling elite to secure its place at the top of global culture, politics and business.
Qatar National Bank played a key role in creating the foundations for sporting extravagance.
During the event, QNB will be the sole provider of in-stadium cash machines. More importantly, QNB helped fund the tournament’s estimated $220 billion. According to its annual reports, the bank funded the Education City stadium, which will host nine matches, as well as infrastructure works to ensure everything runs smoothly.
Few people in the UK would suspect that by paying their council tax they may have indirectly helped QNB fund these investments.
However, freedom of information requests to every local authority in the UK show that at least 27 have invested more than £1bn in total in QNB since 2017.
They do this as part of ‘treasury management’ – essentially saving council tax money to be spent on critical public services.
Their deposits at QNB, which has just one central London branch, reflect the search for yield that more than a decade of ultra-low interest rates has brought to investors from local authorities to high street banks.
QNB pays a healthy interest rate – almost 4% in some cases, according to council disclosures – a useful return for councils struggling with central funding cuts.
Most told the Guardian this was in line with their investment strategy. But not everyone in local government seems to agree that depositing cash with QNB is appropriate.
Representatives for Trafford and Blaby, which have both invested in QNB in the past, told the Guardian they had stopped doing so, citing their ethical investment policies.
Ryedale said she had no alternative at the time she deposited cash with QNB, but admitted the investment was a “mistake” and said she would not do so in the future on ethical grounds.
In Reading, Green party councilor Josh Williams objected to the council’s investment in a country with a “dismal” human rights record, warning that Reading citizens might conclude that the council was “happy to invest million pounds in a country. that would imprison gay men.”
Reading’s last investment was in July 2022. It says QNB’s sustainability policy means it meets the council’s investment criteria but has suspended further investment.
Councils that still had millions invested in QNB as of October 2022 include South Kesteven, Argyll and Bute, Swindon and Portsmouth.
“It is shocking to learn that local authorities are depositing council taxpayers’ money in a state-controlled bank in a homophobic country like Qatar,” Tatchell said.
“Through these deposits, local authorities are supporting a bank that finances the World Cup and supports a regime accused of human rights abuses against LGBT people, women and migrant workers.”
Anyone investing in shares may also have unwittingly contributed to the volume of cash deposited with QNB.
The Financial Conduct Authority’s (Cass) client asset source book regime requires brokers to deposit client money with a group of major banks, to ensure the funds could be recovered if the brokerage went bust.
Banks receiving the deposits typically include well-known UK lenders, but some publicly traded brands, including companies that publicly support LGBTQ+ rights, use QNB.
Earlier this year, Halifax won plaudits when it gave staff the option to display pronouns on their name badges and told customers who objected to the move they would have to close their accounts. The bank also upholds its commitment to gender equality.
However, the Guardian understands that the lender’s equity trading arm, which manages £1.5bn of money on behalf of its clients, has more than £300m with QNB.
Gay sexual activity is prohibited under Qatar’s 2004 penal code, which criminalizes acts of “sodomy” and “sexual intercourse” between individuals of the same sex. Women must obtain permission from a male “guardian” in order to make key life decisions, such as reproductive health care or travel abroad, according to a 2021 report by Human Rights Watch.
In contrast, Hargreaves Lansdown sponsors Bristol Pride and has won awards at the event thanks to its credentials as an LGBT employer.
However, the firm, which also prides itself on being a salaried employer, deposits up to 8% of customer cash – implying a maximum of £1.5bn – with QNB.
Fellow stockbroker AJ Bell also ranks QNB among the banks he uses, with a maximum of 35% of clients’ money being helped there, meaning up to £34m.
Not all brokers publish the panel of banks they use to store customer cash, meaning many others may have deposited funds with QNB.
QNB did not respond to requests for comment. Hargreaves Lansdown and Halifax declined to comment.
An AJ Bell spokesman said: “We assess and monitor a number of factors when assessing which banks to use to hold cash”, adding that this “includes a bank’s independent ESG or ethical assessment”.