So far the outside world hasn’t had a lot of pull in halting the genocide in the Darfur region of Sudan. Neither gentle diplomacy nor outright threats have helped the victims of the government-backed Janjaweed militias, which have laid waste to much of Darfur, terrorizing the population and burning villages, thereby leading to the creation of massive refugee camps.
While the United Nations is accused of dithering, an unassuming group of money managers has just gone on the offensive. Bethesda, Maryland based Calvert Group has joined forces with the Sudan Divestment Task Force, a project of Washington-based nonprofit Genocide Intervention Network. Together they are calling for divestment from companies that help support and fund the Sudanese government.
Darfur is “the most significant humanitarian crisis in the world today, and we’re just horrified by the situation,” says Bennett Freeman, Calvert’s senior vice president of social research and policy. To date, the crisis is estimated to have taken 400,000 lives while driving at least 2.5 million people from their homes.
As a socially conscious investor, Calvert had been screening out companies with sizable presences in Sudan, citing human rights issues, even before the Darfur crisis began. But the firm will now be lending its analytical and research heft to the task force, which got started in November 2005, in compiling its target list of roughly 60 companies that are helping to prop up the Sudanese regime.
This method is a refinement of the kind of blanket investment ban that was used against South African apartheid. Freeman sees the hit list’s narrowness as a key to its success. Not targeted, for instance, are comparatively benign businesses like “Coca-Cola, or Toyota just because it has a dealership in Khartoum,” he says. Instead, activists are focused on what they consider the most egregious offenders -- those that mean the most to the government of Sudan.
The group has had some notable successes: German infrastructure giant Siemens, Swiss power company ABB and French oil and gas concern Total have all agreed to weed out Sudanese government contracts. But the worst offenders remain, notably China National Petroleum Corp., whose subsidiary PetroChina attracts substantial investment from the West. CNPC has the biggest holding in Sudan’s largest national oil consortium. India’s Oil and Natural Gas Corp. and Malaysia’s Petronas also have stakes in Sudan.
Socially conscious investors, like Trillium Asset Management and Walden Asset Management, have already instituted Sudan divestment policies. Others, like Barclays Global Investors, Northern Trust and State Street, are now offering Sudan-free investment options.
But the forces for divestment have yet to win over several mainstream money managers. Among the top shareholders in PetroChina, according to the task force, are Allianz Global Investors, Warren Buffett’s Berkshire Hathaway, Fidelity, JPMorgan Chase and Templeton Asset Management. Collectively, these five own more than $3 billion worth of the Chinese company’s shares.
The task force is also actively encouraging change within the corporations in Sudan. “We want to differentiate between good and bad actors and offer the carrot of engagement first,” says task force director Adam Sterling. “Then if they fail to respond, there’s the stick of divestment. That has been a very effective tool.”
WHAT WE SAID ABOUT HEDGE FUNDS
March 1967 “Although no public report has been made of it, the SEC has been quietly scratching its head and trying to figure out what to do about hedge funds.” Sounds like a line taken straight from today’s financial press. In fact, it’s a line taken straight from the pages of Institutional Investor’s inaugural issue -- in March 1967. Hedge funds were still in their infancy; perhaps 100 funds managed $2 billion, compared with some 9,000 today with an estimated $1.4 trillion. But the Securities and Exchange Commission was curious, and concerned, about their activities, as II reported: “The SEC suspects that the funds may be sold to the kind of investor who is supposed to be protected by the securities laws. New York lawyers generally use as a rule of thumb that if an offering is made to more than twenty-five people, it is a public offering . . . the law recognizes that so long as the offering is made to ‘sophisticated investors’ and professionals, it need not be registered. Thus, the most well known hedge fund, A.W. Jones, which has an estimated 120 partners, is not registered with the SEC.” Forty years and several billion-dollar-hedge-fund blowups later, II is still on the story, while regulators from the U.S. to Germany debate what approach, if any, to take in overseeing this industry.
