WASHINGTON, Aug 12 (Reuters) – The campaign to persuade U.S. companies and investors to halt the flow of dollars to war-torn Sudan through China and other countries is making significant progress, activists say.
U.S. sanctions on Sudan, where conflict in the Darfur region has been branded “genocide” by President George W. Bush, already limit most transactions, though humanitarian aid and agricultural assistance have been allowed.
But U.S. institutional investors, mutual funds, and Warren Buffett’s Berkshire Hathaway have billions of dollars invested in companies that operate in — or have ties to — Sudan, particularly the oil business.
Activists have lobbied for investors to dump shares and bonds in PetroChina Co. Ltd., whose parent company China National Petroleum Corp. is helping Sudan tap its oil reserves, as well as India’s Oil and Natural Gas Corp. Ltd. and Malaysia’s Petronas.
“The burgeoning Sudan divestment movement has already facilitated a response from companies operating in Sudan, institutional investors and mutual fund managers,” said Adam Sterling, director of the Sudan Divestment Task Force.
He cited 19 U.S. states, nine cities including Los Angeles, and 54 universities that are beginning to divest from Sudan. Sterling also noted major companies, such as Britain’s Rolls-Royce, have withdrawn.
Some $3.5 billion of foreign direct investment flowed into Sudan last year, a jump of 53 percent over 2005.
However, after the first quarter of 2006 when almost $1.6 billion entered, investment dropped to below $700 million in each of the next three quarters, according to International Monetary Fund figures.
International experts estimate some 200,000 people have been killed in Darfur and another 2.5 million have been driven from their homes since violence erupted in 2003, prompting Bush to label it “genocide,” a term other countries have avoided.
KHARTOUM REJECTS ACCUSATIONS
Khartoum has rejected the accusations, but recently agreed to a 26,000-strong U.N.-African Union peacekeeping force.
Sudan’s ambassador to the United States John Ukec Lueth argued in May that sanctions barring U.S. companies hurt the country’s poor and were arbitrary, citing the continued ability of Coca-Cola to do business there.
Under pressure from activists, some institutional investors and mutual funds have already cut their stakes in PetroChina, including those run by Fidelity National Financial Inc., according to securities filings.
China needs energy resources and has resisted forcing Sudan to accept peacekeepers. But as Beijing prepares to host the 2008 Olympics and pressure from Western powers mounted, it pressed Khartoum to accept the force.
While Berkshire shareholders rejected a proposal to divest its $3.3 billion PetroChina stake, the company sparked speculation that it could be bowing to pressure when it sold 17 million shares in July. It still holds a 10.96 percent stake.
Berkshire’s Buffett has argued that selling PetroChina shares would not affect the parent company’s business in Sudan.
One expert said that such cuts were “piecemeal” and instead investors were starting to explore ways to ensure that their money went into funds that were considered “terror free” and did not invest in countries like Sudan and Iran.
“I think people who want to divest (from) Sudan do not want to limit it to companies that meet guidelines A through J, in terms of their specific operations in Sudan,” said Adam Pener, chief operating officer of Conflict Securities Advisory Group.
His firm provides research on which U.S. and foreign companies have business activities in countries such as Iran, North Korea, Sudan, and Syria.
U.S. states have billions of dollars to invest, typically from pension funds, and are increasingly paying attention to political dynamics in their decisions.
Some U.S. companies have licenses to serve Sudan, including Coca-Cola which provides its beverage base to a private company, DAL Foods Industries Ltd. The companies with licenses have not drawn fire from activists, who say the Sudanese government receives little revenue from such industries.
“We didn’t find that was an industry benefiting the Sudanese government,” Sterling said, adding that the beverage industry employed a large number of Sudanese.