University of California Divests from Sudan

The excerpt below was reprinted from the Sudan Tribune

Mar 16, 2006 (LOS ANGELES) — University of California regents voted Thursday to drop the system’s association with nine companies doing business in genocide-ravaged Sudan, its first socially based divestment since 1986.

Bridget Smith, 24, right, a UCLA alumnus, sheds tears of joy as University of California students celebrate the UC regents vote to divest from Sudan on Thursday, March 16, 2006 (AP).

At their meeting on the UCLA campus, UC regents voted unanimously to remove Sudan-related stocks from their portfolio, bringing rousing cheers from the audience.

The action requires the university to divest within 18 months, giving state legislators time to agree to defend UC against related lawsuits.

The decision was a victory for activists who built a grassroots campaign that started with a handful of UCLA students and grew to hundreds of students, faculty members and lawmakers from around the state.

In divesting, the University of California joined a number of other US institutions of higher learning that have divested in various forms, including: Harvard University, Yale University, Stanford University, Brown University, Amherst College, Dartmouth College.

"That’s a bold statement," said Regent Adam Rosenthal, a UC Davis law student who helped lead the effort. "This is a great day for the university."

The university last divested itself of stocks for political reasons in 1986, when regents dropped South African investments to protest that country’s apartheid policies. UC also decided in 2001 to choose a portfolio free of tobacco-related stocks.

Before Thursday’s vote, students, professors and genocide survivors urged regents to take a vote of conscience. UCLA sophomore Cham Nan Chao tearfully told the board about relatives who were killed by the Cambodian government. "I couldn’t do anything about that then, but I can do something about this now," she said. "It only takes one person to change the world, and I’m asking you to be those people."

In order to address concerns that the divestment could harm civilians unintentionally, regents agreed to keep UC’s investments in several other companies that have projects in Sudan, but also said they would encourage those companies to ensure they don’t enrich the oppressive Sudanese rebels.

Some of the divested companies sell military equipment to the oppressors, UC leaders said.

Specifically, the nine companies named by the University of California are: Bharat Heavy Electricals Ltd. (500103.BY), an India-based power generation company; PetroChina Co. (PTR) and Sinopec Corp, two Chinese oil companies; Nam Fatt Corp. (4901.KU), a Malaysian construction firm; Videocon Industries Ltd. (511389.BY), an Indian consumer electronics firm; PECD Berhard, a Malaysian construction company; Tatneft (TNT), a Russian energy company; Oil and Natural Gas Co., an Indian firm, and Sudan Telecom Co. Ltd. (SDTL.BH).

"The University of California has taken a principled stand against the tragedy in Sudan by severing its financial connections from those nine companies who aid the genocide," said Gerald L. Parsky, chairman of the board of regents in a statement.

A great many other colleges and universities are actively considering divestment, and a number of decisions are expected this spring.

Further, a number of state legislatures have passed binding divestment legislation, obliging divestment from all companies doing "business as usual" with the genocidaires in Khartoum: these include Illinois, New Jersey, and Oregon. State legislation is pending in a dozen other states (the Maine Senate, for example, passed divestment legislation today, March 16, 2006).

The university also said it will send "letters of concern" about the role of business revenue in contributing to the violence to four additional companies: Finmeccanica SPA (FNC.MI), Harbin Power Equipment Co. Ltd. (1133.HK), Lundin Petroleum AB (LUPE.SK), and Schlumberger Ltd. (SLB).

The exact dollar amount involved will not be known until the divestment occurs. It will include all UC shares, including those combined in index funds. Divestment would be completed within an 18-month period, beginning after legislation to protect the university from legal concerns has been enacted.

Officials declined to say how much money is invested in the nine companies, but said they did not expect the university to be harmed financially by the divestment. In contrast, officials have said the tobacco decision has cost the university $109 million.

Recent divestment announcements, most of which have limited divestment to a handful of companies, may be just the tip of the iceberg, according to statistics and divestment advocates who say many more pension funds are considering exiting from a much broader list of names.

U.S. companies are prohibited from doing business in Sudan by a trade rule that bars business in six countries deemed state sponsors of terrorism. But some U.S. companies still do business there legally through subsidiaries, and many U.S. pension or institutional funds invest in a broader number of foreign-based companies that do business in Sudan.

According to Boston-based KLD Research, which compiles and sells lists of companies involved in other activities of interest to socially responsible investors, 130 publicly traded companies, nine of which are U.S.-based, do business in Sudan.

Marathon Oil Corp. (MRO) is one of the U.S. firms on the list. According to KLD, the company has continued to renew its oil interests in Sudan, though it hasn’t operated or conducted business activities in the country since 1985.

Marathon spokesman Paul Weeditz said an agreement, signed in December 2004, only allowed the company to protect its long-held interests in the country, and said there were no plans to relinquish those.

Randy O’Neil, managing director of global sales for KLD Research, declined to name the companies on the list, which he said the firm has sold to more than 125 clients. O’Neil said Sudan has been one of the most popular issues his group has researched, adding that the list has grown by about 10 companies since its first edition in November 2005 and is updated twice monthly.

Funds agreeing to divest have approached the issue differently so far, depending on the findings of their research and the size of their holdings. For example, Yale University said Feb. 16 it would sell stock in an unnamed oil company that was one of seven oil companies it determined were providing "the lion’s share of the revenue to the Sudanese government." The seven companies were Bentini SpA, an Italian construction company that builds pumping stations; Higleig Petroleum Services and Investment Co. Ltd., a Sudanese company; Hi-Tech Petroleum, a Sudanese company; Nam Fatt Corp.; Oil and Natural Gas Corp., PetroChina Co; and Sinopec. The university doesn’t publish a complete list of its investments.

Amherst College passed a resolution Jan. 14 to ban investment in 19 companies, stating it didn’t have an investment in them at the time. The 19 companies included some European firms such as Alcatel SA (ALA), Royal Dutch Shell PLC (RDSA), Schlumberger Ltd. (SLB), Siemens AG (SI), and LM Ericsson (ERICY) and Weir Group PLC (WEIR.LN)

An estimated 180,000 Africans have been killed in Sudan’s Darfur region since 2003, by Arab militia groups known as Janjaweed. Human rights groups, the U.S. Congress and U.N. officials have accused Sudan’s government of backing the Janjaweed, but the government has denied involvement. The killings have been recognized as a genocide by the U.S. and other nations. The theory behind the divestment campaign is that in the face of fleeing U.S. shareholders, companies will pull out of business in the region, as they did in the university-spearheaded campaign to divest from companies complicit in South African apartheid in the 1980s.

The United States and international humanitarian groups have accused the Sudanese government of using its oil wealth to wage genocide against the people in the western Darfur region.