Paper shunned over 'porn'

LEGAL & GENERAL, the in-surer with pounds 93bn of funds under management, shocked United News & Media last week when its newly launched ethical fund shunned the media group on the grounds that its Daily Star title publishes pornography.

"We're not making a judgement about United News & Media," declared Peter Knapton, L&G's managing director for securities. "We're just saying that from an ethical standpoint the company isn't an appropriate investment because of the Daily Star."

The down-market tabloid that features pictures of semi-naked women and saucy stories about naughty goings-on has been targeted by a political action group called the Campaign Against Pornography and Censorship (CAPC).

L&G's new ethical fund uses CAPC and other political action groups as a "filter" for identifying investments that are inappropriate for customers attracted to ethical investing, according to Mr Knapton.

L&G's new fund has pounds 15m under management. Aside from companies allegedly dealing in pornography, it also avoids investments in tobacco, arms and gambling companies. It favours investments in environmentally friendly companies. "These sorts of funds are more popular now," Mr Knapton said.

He was at pains to point out that the insurance company had excellent relations with United News & Media overall. "We have a big index fund that invests in United," he said.

But he said that United was the only media group ruled out by the insurer's ethical fund. He said that L&G considered News International, owners of The Sun and the News of the World to be a non-UK company, and the fund was restricted to UK companies.

"The only other media company where there might be a question mark is WH Smith," Mr Knapton said. CAPC "is against the publishing, printing, and wholesaling of pornography", he noted.

A spokesman for United declined to comment. But L&G is a big investor in the company, and it is understood that the media group believes it has excellent relations with the insurer.

"For Heaven's sake," said a United insider dismissing the idea that the Daily Star publishes porn. "It's tabloid journalism. What do you expect?"