Darfur Divestment Debate Continues…

Editors Desk

Eye on The Markets

by Bloomberg | IHT | SRI USA | Financial Times | 5.05.07

Lack of direct Darfur connection convinces shareholders to keep stake in PetroChina

Concerned shareholders asked Warren Buffett to include an item in the agenda for Berkshire Hathaway’s annual general meeting of shareholders to discuss divestment of the company’s stake in PetroChina. The request reflected concern over a recent report by the Sudan Divestment Task Force alleging that PetroChina had an “intimate, opaque and symbiotic relationship” with its parent, China National Petroleum Corporation (CNPC). The report also noted that Sudan, which imports most of its arms from China, also exports 50 to 80 percent of its oil to China, primarily through CNPC. Although CNPC is the largest oil company operating in Sudan, PetroChina has no operations at all there.However, 90 percent of the shares in PetroChina are owned by CNPC – only 1.3 percent are owned by Berkshire Hathaway. In response to the shareholders’ request to discuss the topic, Buffet acknowledged that conditions in Darfur were “deplorable” and empathised with those who wanted change. He added that the Chinese subsidiary was not the same as, or responsible for, the actions of its parent company. Buffett also remarked that if CNPC did quit the country, Sudan’s government would be more likely to benefit by gaining a larger stake in the country’s oil profits. Buffet welcomed the dialogue and set aside time at the AGM to discuss the issue. On 5 May, the shareholders discussed the issued extensively before voting 830,598 to 15,740 to keep the company’s US$3.3 billion stake in PetroChina. Critics say that the vote reflects the opinion of large shareholders, including Buffett, who owns a third of Berkshire shares.

Meanwhile FierceFinance asks: Why did Fidelity sell its PetroChina ADRs?

A movement to force big mutual funds and institutions to divest from companies that activists feel are not worthy of U.S. investment dollars has had limited success as of late. But Fidelity Investments has disclosed that it has sold more than 90 percent of its PetroChina ADRs. PetroChina is controversial because of its parent’s oil operations in Sudan. Fidelity, the mutual fund giant, did not disclose why it sold. But it has been noted, and some feel it might embolden activists to step up pressure on other shareholders, according to the Financial Times. Berkshire Hathaway is the largest foreign investor in PetroChina. Fidelity still owns a lot of PetroChina shares listed in Hong Kong. It’s unclear whether it will sell those as well.