By Adam Sterling

Published: May 4 2007 03:00 | Last updated: May 4 2007 03:00

From Mr Adam Sterling.

Sir, Cody Willard ("Old advice will help, not hinder, Darfur", Ft.com April 27) poorly characterises the Sudan divestment movement and misinterprets the connection between PetroChina and Sudan.

Unlike divestment from South Africa, the Sudan campaign targets only a few dozen problematic companies out of more than 500 multinationals operating in Sudan, encourages sustainable investment in the country, and requires engagement with all companies before divestment is even considered. Many of the companies eventually targeted for divestment minimally aid Sudan's development, have been inadequately responsive to shareholder engagement, and have a long history of forced displacement of local populations, environmental destruction, co-operation with the Sudanese military, rampant graft and abusive labour practices. Joseph Stiglitz, the economist and Nobel prizewinner, recently stated that this targeted divestment will not hurt civilians in Sudan, since it largely focuses on the Sudanese oil industry, where more than 70 per cent of revenues are used for military purposes. Even with a heavy focus on Sudan's oil industry, the targeted Sudan divestment model does exempt oil players that have shown a high degree of responsibility in the face of genocide.

Mr Willard also questions the connection between PetroChina, its parent company China National Petroleum Company (CNPC), and Sudan. CNPC is the largest and, by near consensus, the most irresponsible oil company in Sudan. Unlike traditional parent-subsidiary relationships, there exists an intimate, opaque and symbiotic relationship between PetroChina and CNPC. Management at CNPC and PetroChina almost completely overlap and frequent asset transfers between the two entities, which often take place at subsidised rates, have made CNPC completely reliant on PetroChina for its financial health. The Sudan Divestment Task Force has

produced a report tracing these connections, available at www.sudandivestment.org/docs/petrochina_cnpc_sudan.pdf

Mr Willard also states that a forced liquidation of assets in Sudan will allow the government of Sudan to become a buyer. This is simply untrue. Sudan does not at present have the capital or the expertise to buy and manage foreign interests in the country's oil consortiums, even at bargain prices - the country's national debt well exceeds its gross domestic product. Supposing Sudan could scrape together the capital to purchase these assets, its present revenue-sharing relationship with companies such as CNPC would generate more income for the government than if Sudan's

inefficient and resource-poor national oil company managed the assets

on its own. The purchase of these assets would be a bad business move for Sudan.

Absolute consensus among the foreign policy experts we interact with is that pressure on PetroChina will alter CNPC and China's approach towards Sudan for the better, something we have seen hints of already. The narrowly constructed and surgically focused targeted divestment model allows investors to make financially prudent decisions while avoiding investments in companies that help to facilitate genocide.

Adam Sterling,

Director, Sudan Divestment Task Force,

Genocide Intervention Network

Copyright The Financial Times Limited 2007