Fidelity Investments and Warren Buffett's Berkshire Hathaway are the targets of a new campaign pushing them to divest stakes in PetroChina (0857) because of the Chinese oil company's alleged ties in Sudan where the United States says genocide is occurring in the Darfur region.

Thursday, May 03, 2007

Fidelity Investments and Warren Buffett's Berkshire Hathaway are the targets of a new campaign pushing them to divest stakes in PetroChina (0857) because of the Chinese oil company's alleged ties in Sudan where the United States says genocide is occurring in the Darfur region.

Actress Mia Farrow and several groups focused on the Darfur region are pushing for divestment in advertising this week on CNN television and in publications that include USA Today, The Washington Post, Time and Newsweek.

Ads will also appear on billboards in Omaha, Nebraska, and in that city's World-Herald newspaper, ahead of Berkshire's annual meeting Saturday.

The groups include the Save Darfur Coalition, the Sudan Divestment Task Force, and Fidelity Out of Sudan.

One Berkshire shareholder is offering a resolution to force divesting from PetroChina. 

Berkshire opposes the resolution, but has called conditions in Sudan "deplorable" and said it admired the shareholder's motives.

"His withdrawal of his [millions] would not only be representatively powerful, but symbolically powerful," Farrow said. "For him to do anything otherwise would be unconscionable." She said she closed a retirement account with Fidelity after learning of its PetroChina stake.

As of December 31, Berkshire owned a 1.3 percent stake in PetroChina valued at US$3.31 billion (HK$25.81 billion), according to its annual report. Berkshire is PetroChina's largest foreign shareholder.

Fidelity, one of the world's largest mutual fund companies, at year end owned 4.5 million American depositary receipts in PetroChina worth US$633 million, according to Thomson ShareWatch data. Fidelity spokeswoman Anne Crowley said her company is complying with all laws governing investments in Sudan.

"Any suggestion that Fidelity supports or is funding the tragedy in Sudan is patently false," she said.

Some pension funds and universities have divested from PetroChina because of the alleged link with Sudan, which the United States has accused of letting genocide occur in western Darfur. Sudan's government has denied that charge.

The United Nations has estimated that since 2003, some 200,000 people have died and more than two million people have been displaced in Darfur.

PetroChina parent China National Petroleum Corp has a 41 percent stake in Petrodar Operating, whose main office is in Khartoum.

The proposal by Berkshire shareholder Judith Porter of Ardmore, Pennsylvania, would bar Berkshire from investing in foreign companies whose activities would be prohibited for US companies by presidential order.

Berkshire has said it has seen no records that PetroChina operates in Sudan, and that divesting would not improve Sudanese behavior.

Buffett controls 33 percent of Berkshire's voting power. To encourage open debate, he offered tickets to some protesters to the annual meeting, which is normally a celebration open only to shareholders and known as "Woodstock for Capitalists."

California Public Employees' Retirement System, or Calpers, the 13th- largest holder of Berkshire Hathaway stock, sided against the investor who wants Buffett to sell its interest in PetroChina.

"Telling a company how to invest would go beyond a governance issue," Calpers spokeswoman Pat Macht said. "We believe it would do long-term harm to the company, so we're voting against it."

Calpers, the largest US pension fund, a year ago put PetroChina on a list of nine companies it would not invest in because of ties to Sudan. Still, Calpers does not want to weigh in on the investment decisions of companies it holds, Macht said.

As of December 3, Sacramento- based Calpers owned 7,458 Class A shares in Berkshire. A notice on its Web site Wednesday said the company now owns 7,631 Berkshire shares, for a stake valued at more than US$826 million (HK$6.46 billion).

Berkshire bought PetroChina for less than HK$1.70 a share in April 2003 and was its biggest overseas investor as of yearend. The stake has gained US$2.83 billion in value since Berkshire bought it.

REUTERS, BLOOMBERG