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(This information is provided by the shareholder presenting the resolution and is not authorized by Berkshire Hathaway)
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1.
Who is presenting this resolution?
My name is Judith Porter
and I live in suburban Philadelphia, PA. I am the holder of 10 shares
of class B common stock.
2.
Why am I proposing this resolution?
My grandparents were
part of the Jewish population of Riga, Latvia that was killed by the Nazis
in December 1941. Genocide is a horrendous act and, I believe that
we must speak out against genocide whenever and wherever it occurs.
We must be the voice for those who have no voice. The actions of
the government of the Sudan against its own citizens in Darfur has universally
been acknowledged as genocide and we must act to stop the killing.
(for more background on this topic click on: SaveDarfur
or Amnesty International
)
3.
What has the United States Government said about Sudan?
The President of the
United States declared "that the policies and actions of the Government
of Sudan, including continued support for international terrorism, ongoing
efforts to destabilize neighboring governments, and the prevalence of human
rights violations, including slavery and the denial of religious freedom,
constituted an unusual and extraordinary threat to the national security
and foreign policy of the United States."
4.
What has the United Nations said about Sudan?
On March 29, 2005, the
United Nations Security Council issued Resolution
1591 and most recently
Resolution 1672 on April 25, 2006, condemning the continued violations
of human rights and international humanitarian law in Sudan's Darfur region
and, in particular, the continuation of violence against civilians and
sexual violence against women and girls.
5.
What actions have the United States Government taken concerning
Sudan?
On November 3, 1997 President
William J. Clinton issued Executive Order 13067 which imposed a trade embargo
prohibiting most American businesses from operating in the Sudan. Executive
Order 13067
On April 27, 2006, President
George W. Bush issued a new Executive Order expanding Executive Order No.
13067. White
House News Release
6.
What does all of this have to do with Berkshire Hathaway?
While it is true that
American companies can not do business in the Sudan, Americans can invest
in Asian and European companies that do business in the Sudan. While
such investments do not violate the "letter of the law," they certainly
do violate "the spirit of the law" and are counter to the stated policy
of the United States.
For example, PetroChina Ltd. , is a subsidiary of China National Petroleum Corporation (CNPC), the dominant international player in Sudan's oil sector. The above resolution would prohibit Berkshire Hathaway Inc. from holding securities such as PetroChina Ltd. which is a subsidiary of a corporation whose economic activities have been declared by the President to constitute "an unusual and extraordinary threat to the national security and foreign policy of the United States."
7.
How do companies like CNPC support the actions of the government of the
Sudan?
(The
following is taken from the Yale
University report on Investing in the Sudan )
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Amnesty International has reported that:
| Sudan's oil wealth has played a major part in enabling an otherwise poor country to fund the expensive bombers, helicopters and arms supplies which have allowed the Sudanese government to launch aerial attacks on towns and villages and fund militias to fight its proxy war [in Darfur]. By earning increasing oil revenues, the Sudanese government continues to be in a position to deploy considerable resources to military activities - be it in the form of paying salaries, or acquiring equipment, such as helicopter gunships, armaments, and associated hardware. The government has used increases in oil revenues to fund a military capacity that has in turn been used to conduct war in Darfur, including carrying out violations of international human rights and humanitarian law. |
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8.
But Berkshire Hathaway doesn't own CNPC; it owns PetroChina. Aren't
these different? Berkshire has written:
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begin with, we have seen no records, including the various materials we
have received from prodivestment groups, that indicate PetroChina has operations
in Sudan."
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Harvard
University, in its decision
to divest its holding of PetroChina discussed at length the relationship
between CNPC and PetroChina. Its conclusion is contained in the document
referenced above from which we quote.
| In April 1999, CNPC
announced its plans to sell $10 billion shares on the New York Stock Exchange.
Human rights groups and others objected to the initial public offering,
contending that the deal would be tantamount to U.S. support for genocide
in [southern] Sudan. In response, CNPC restructured the transaction. It
created a new subsidiary, PetroChina, which would operate only inside China,
to be owned 90% by CNPC and 10% by private investors. On April 6, 2000,
$2.9 billion dollars of shares in PetroChina were sold on the New York
Stock Exchange to private investors. At that time, CNPC's investment bankers
from Goldman Sachs asserted to investors that none of the money raised
in the IPO would be used to fund CNPC's projects in Sudan. [Post article;
China's Involvement in Sudan: Arms and Oil, Human Rights Watch, November
2003 (Human Rights Watch Report).]
Despite CNPC's assurances,
several potential investors viewed with considerable skepticism CNPC's
firewall strategy. Opponents of the IPO pointed out that when PetroChina
was created, it incurred $15 billion in debt from CNPC, some of which was
incurred in connection with the Greater Nile Petroleum Operating Company
project. [Human Rights Watch Report.] Fund managers were skeptical that
PetroChina could make independent business decisions because CNPC owned
90% of its shares. As a result of these concerns, several major institutions,
including such pension funds as TIAA-CREF and Calpers, elected at the time
of the IPO not to invest.
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In short, PetroChina was
created to be a capital surrogate for CNPC. Jiang Jiemin is both President
of CNPC and President of PetroChina and there are few corporate governance
policies in place to ensure any degree of PetroChina independence from
CNPC. While it is true that at the present moment its operating activities
are limited to China, 90% the dividends from these operations flow to CNPC.
Salon.com
has commented on Berkshire's statement about the relationship between CNPC
and PetroChina as follows:
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For a more detailed response to Berkshire's statements see Sudandivestment.org
Berkshire's
response to my proposal also includes the following statements:
| Rather, the only feasible divestment plan for CNPC would be to sell its 40% interest in the venture, almost certainly at a bargain price and almost certainly to the Sudanese government. After such a transaction, the Sudanese government would be better off financially, with its oil revenue substantially increased. Since oil is a fungible product, Sudanese output would be sold in world markets just as oil from Iraq was sold under Saddam Hussein, and just as oil is now sold by Iran. Proponents of the Chinese government's divesting should ask the most important question in economics, "And then what?" |
We
should first point out that our proposal asks for Berkshire Hathaway to
support the efforts of the US government by not investing in a subsidiary
of a company doing business in the Sudan. It doesn't ask for China
to pull out of the Sudan; however, if China did divest, the situation might
not be as Berkshire predicts. To begin with the Sudan has neither
the funds nor the expertise to manage the project on its own so it is likely
that the revenue would fall dramatically. More importantly, if China
were to divest it would lose the incentive to block efforts of the United
Nations to stop the genocide in Darfur. During the discussion of divestment
at the University of Pennsylvania, Penn President Amy Gutmann made the
following remarks:
| "Divestment is an extreme measure that should be made rarely and carefully and only under the most unusual circumstances," "In this case, the genocide occurring in Darfur with the support of the Sudanese government represents a moral evil that we cannot ignore. Given the role of the oil sector in supporting the Sudan economy, it is important to convey the right message to these corporations about the impact of their actions." |
In
January 2004, BP-Amoco divested its 2% stake in PetroChina, many state
pension funds and major Universities such as Harvard, Yale and Stanford
have also already divested. Mr. Buffett has stated that "I can be
a direct descendant of William Jennings Bryan, but I will not be changing
the Chinese government's policy," He may well be right; however, Berkshire
Hathaway and Mr. Buffett are viewed as exemplars of ethical behavior.
If Berkshire joins the growing list of Universities and State governments
that have already divested PetroChina stock others will follow. What
no single individual or corporation can accomplish alone, can be accomplished
by many individuals and corporations working together. We learned
the power of divestment during the campaign against South African apartheid.
We need to all work together to stop the genocide in Darfur. What
is certain is that if we do nothing, the killing will continue.
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