The Church of England has emphatically denied a report by a pro-Palestinian campaign group that it has divested in a company that does business with Israel. The fringe group, the Palestine Solidarity Campaign (PSC), claimed this week that the Church of England had verified the group's position that last year it removed a Â£2.2 million investment from Caterpillar because "their equipment is being used to destroy the homes of Palestinians by the Israeli government." "The Church's removal of Â£2.2 million is a significant blow to those who say that ethical and morally responsible investments can't be used as a peaceful weapon against the Israeli government," said PSC general-secretary Betty Hunter. "I applaud this decision and hope that other organizations that remain invested in Israel will take a look at the moral lead shown to us by the Church and disinvest now." However the Church of England has emphatically denied this was the case. Speaking to The Jerusalem Post on Wednesday, a Church spokesman said the Church's Ethical Investment Advisory Group had looked at the issue twice, in 2005 and 2006, and had voted both times against divesting. In October 2008, the Church Commissioners made the decision to dispose of all their holdings in Caterpillar for financial reasons. The Church's spokesman said the decision had also been connected to the current economic crisis. "The Church Commissioners disposed of their holdings in Caterpillar last October on investment grounds," the spokesman said. "Thus none of the Church of England's three national investing bodies - the Commissioners, the Church of England Pensions Board and the Central Board of Finance - now holds Caterpillar shares. All the Church's investment portfolios are actively managed, with holdings being bought and sold all the time. From our point of view, therefore, this was a normal commercial transaction." According to the Church, "This [issue] came to light following an approach last Friday from Riazat Butt, [the religious affairs correspondent] at The Guardian. A lobbying group had written a letter for publication and her news desk wanted her to check the writers' complaint that the Church had not disinvested following the February 2006 Synod motion." "Following a series of e-mails and telephone conversations, Riazat told her news desk that the facts were wrong and hence asked them not to print the letter. She also went back to the group to tell them that the Church no longer had such investments in Caterpillar." "There were errors in the letter. Regarding Caterpillar, the information was out of date, and I felt that the PSC was looking to criticise the Church of England for its decision either way," Riazat Butt told the Post. "The Church said in 2005 that any decision to disinvest would be along investment grounds, not ethical ones," she added. This had immediately been misconstrued, the Church said, and the PSC had sent out a communication that incorrectly claimed the Church had divested in Caterpillar for political reasons. "We have stressed throughout that the decision was taken on economic grounds rather than ethical ones and pointed to the statements of our Ethical Investment Advisory Group. Neither the Palestine Solidarity Campaign nor any other campaigning group contacted us to check the factual accuracy of their own statements before putting them out," the Church said. In December, the Scottish Palestine Solidarity Campaign, a radical offshoot of the PSC, fabricated a story that a number of Scottish companies and institutions had terminated contracts with an Israeli mineral water supplier. The allegations proved unfounded.