Billionaire Warren Buffett's Berkshire Hathaway Inc. rejected calls to sell shares of PetroChina Co., whose parent operates in Sudan, a nation accused by the U.S. Congress of genocide.
Shedding the stock, which has gained 24 percent over the past year, wouldn't ``have a beneficial effect on Sudanese behavior,'' Berkshire said in a statement. The actions of the Chinese government or parent company China National Petroleum Corp. can't be attributed to PetroChina, the company said.
``Subsidiaries have no ability to control the policies of their parent,'' according to the unsigned statement, posted on Berkshire's Web site. ``Berkshire agrees that conditions in that country are deplorable and sympathizes with people who want to remedy them.''
Campaigners such as the Sudan Divestment Task Force, based in Washington, are trying to sway universities, investment companies and state pension plans to pull their money out of companies that do business that directly benefits the Sudanese government. Militias backed by the government have killed more than 200,000 people, according to United Nations estimates.
Buffett, who in June said he would give 85 percent of his wealth to charity, has made at least $2.3 billion for Berkshire by investing in PetroChina, which is China's biggest state- controlled oil company. China National Petroleum led development of the first oil field in Sudan and owns a stake in crude oil reserves and a pipeline.
California
Berkshire said its statement responded to ``communications from the media, shareholders and others'' about its PetroChina investment.
The Sudan divestment group said on its Web site that it has targeted Berkshire Hathaway and Teachers Insurance & Annuity Association, among others, with campaigns to force them to shed Sudan-related investments. FMR Corp.'s Fidelity Investments is being pressured by activists based in Massachusetts, according to the Fidelity Out of Sudan Web site.
California Governor Arnold Schwarzenegger in September signed a bill that bans the state's two public pension funds from investing in companies that do business with the Sudanese government. The California Public Employees' Retirement System, the largest U.S. public pension fund, and the California State Teachers' Retirement System, the second-biggest, together control $350 billion in assets.
New Jersey and Illinois have taken similar steps. Fund managers including Northern Trust Corp. and State Street Global Advisors have created Sudan-screened funds to help Illinois meet its goals, according to a Sudan Divestment Task Force report. The report says 33 universities, including Harvard and Yale, restrict Sudan-related investments.
Berkshire's Stake
Beijing-based PetroChina is now the world's third-largest oil and gas company by market value, behind Irving, Texas-based Exxon Mobil Corp. and Moscow-based OAO Gazprom.
Berkshire, PetroChina's biggest overseas investor with a 1.1 percent stake, bought the stock for less than HK$1.70 in April 2003. Since then, the shares gained more than fivefold. Omaha, Nebraska-based Berkshire stock has increased 49 percent.
PetroChina shares fell 0.1 percent to HK$9.47 in Hong Kong. Berkshire shares fell 0.5 percent today to $106,800.
Buffett, 76, over four decades transformed Berkshire from a failing textile manufacturer into a $165 billion holding company by buying out-of-favor stocks and companies whose business and management he deemed superior. He became the world's second- richest man, behind Microsoft Corp. Chairman Bill Gates.
Petrodar
``I have to agree with Warren Buffett,'' said Gordon Kwan, Hong Kong-based China oil and gas research director at CLSA Ltd., referring to the distinction Berkshire drew between PetroChina and its parent company.
China National Petroleum owns 41 percent of Khartoum-based Petrodar Operating Co., while Malaysia's state-owned Petroliam Nasional Bhd. owns 40 percent, according to Petrodar's Web site. The venture opened a 1,400-kilometer (870-mile) pipeline last April to carry 200,000 barrels of oil a day from fields in the Melut Basin to Port Sudan on the Red Sea.
In addition to arguing that PetroChina is not responsible for the actions of its parent company, the Berkshire statement questions the value of getting China National Petroleum to pull out of Sudan. The stake the Chinese hold would be sold ``almost certainly at a bargain price and almost certainly to the Sudanese government.'' That would increase the government's oil revenue.
Even if Berkshire opposed an action by PetroChina, the investment firm doesn't believe it should ``automatically divest shares of an investee because it disagrees with a specific activity of that investee,'' the statement said.
`No Records'
Mao Zefeng, PetroChina's Hong Kong-based spokesman, and Liu Weijiang, head of China National Petroleum's international department in Beijing, weren't available to comment. Most Chinese businesses are shut for the Lunar New Year holiday.
Chinese investment in Sudanese oil production and pipelines, mainly through China National Petroleum, has accelerated the country's crude output to more than 500,000 barrels a day in six years.
China National Petroleum pledged $1 million to Sudan's welfare ministry, China's state-run Xinhua News Agency reported Feb. 1. The company signed an agreement with the African country's energy ministry to spend $900,000 training Sudanese oil professionals, the news agency said. China National Petroleum has given more than $30 million to charity in Sudan since it began operations there in 1995, Xinhua said.
Darfur Conflict
The killing in Darfur has attracted growing opposition among activists in the U.S. and elsewhere. Nicholas Kristof, a New York Times columnist who has publicized the Darfur atrocities, wrote this month that activists are right to try to pressure the Sudan government by targeting Fidelity's and Berkshire's investments.
Guidelines by groups such as the Darfur Divestment Task Force protect the people of Sudan by distinguishing between companies that do business with the government, helping create funds for weapons purchases, and those engaged in activities that benefit the people of the country, according to Kristof.
The conflict in Darfur, a region the size of France, began in February 2003 when rebels demanding a greater share of Sudan's political power and oil wealth began attacking the government.
The government responded by supporting militias known as the Janjaweed to target villagers suspected of backing the rebels, according to rights groups such as New York-based Human Rights Watch.
Repeating Mistakes
Chinese companies in Africa are making the same mistakes that international companies such as BP Plc and Royal Dutch Shell Plc made in the past, said Kevin Rosser, head of oil and gas at Control Risks Group.
``The propensity of Chinese companies to overlook human rights is as much a reflection of their inexperience in operating abroad as it is of any state control or direction,'' Rosser said in a phone interview from London today.
``The more they are exposed to pressure, where PetroChina has to take account of what shareholders say, or the pressure put on big shareholders like Berkshire Hathaway, the more they're likely to conclude that transparent, sustainable business practices in host countries and respect for human rights actually improves the long term viability of the business,'' he said.
Shedding the stock, which has gained 24 percent over the past year, wouldn't ``have a beneficial effect on Sudanese behavior,'' Berkshire said in a statement. The actions of the Chinese government or parent company China National Petroleum Corp. can't be attributed to PetroChina, the company said.
``Subsidiaries have no ability to control the policies of their parent,'' according to the unsigned statement, posted on Berkshire's Web site. ``Berkshire agrees that conditions in that country are deplorable and sympathizes with people who want to remedy them.''
Campaigners such as the Sudan Divestment Task Force, based in Washington, are trying to sway universities, investment companies and state pension plans to pull their money out of companies that do business that directly benefits the Sudanese government. Militias backed by the government have killed more than 200,000 people, according to United Nations estimates.
Buffett, who in June said he would give 85 percent of his wealth to charity, has made at least $2.3 billion for Berkshire by investing in PetroChina, which is China's biggest state- controlled oil company. China National Petroleum led development of the first oil field in Sudan and owns a stake in crude oil reserves and a pipeline.
California
Berkshire said its statement responded to ``communications from the media, shareholders and others'' about its PetroChina investment.
The Sudan divestment group said on its Web site that it has targeted Berkshire Hathaway and Teachers Insurance & Annuity Association, among others, with campaigns to force them to shed Sudan-related investments. FMR Corp.'s Fidelity Investments is being pressured by activists based in Massachusetts, according to the Fidelity Out of Sudan Web site.
California Governor Arnold Schwarzenegger in September signed a bill that bans the state's two public pension funds from investing in companies that do business with the Sudanese government. The California Public Employees' Retirement System, the largest U.S. public pension fund, and the California State Teachers' Retirement System, the second-biggest, together control $350 billion in assets.
New Jersey and Illinois have taken similar steps. Fund managers including Northern Trust Corp. and State Street Global Advisors have created Sudan-screened funds to help Illinois meet its goals, according to a Sudan Divestment Task Force report. The report says 33 universities, including Harvard and Yale, restrict Sudan-related investments.
Berkshire's Stake
Beijing-based PetroChina is now the world's third-largest oil and gas company by market value, behind Irving, Texas-based Exxon Mobil Corp. and Moscow-based OAO Gazprom.
Berkshire, PetroChina's biggest overseas investor with a 1.1 percent stake, bought the stock for less than HK$1.70 in April 2003. Since then, the shares gained more than fivefold. Omaha, Nebraska-based Berkshire stock has increased 49 percent.
PetroChina shares fell 0.1 percent to HK$9.47 in Hong Kong. Berkshire shares fell 0.5 percent today to $106,800.
Buffett, 76, over four decades transformed Berkshire from a failing textile manufacturer into a $165 billion holding company by buying out-of-favor stocks and companies whose business and management he deemed superior. He became the world's second- richest man, behind Microsoft Corp. Chairman Bill Gates.
Petrodar
``I have to agree with Warren Buffett,'' said Gordon Kwan, Hong Kong-based China oil and gas research director at CLSA Ltd., referring to the distinction Berkshire drew between PetroChina and its parent company.
China National Petroleum owns 41 percent of Khartoum-based Petrodar Operating Co., while Malaysia's state-owned Petroliam Nasional Bhd. owns 40 percent, according to Petrodar's Web site. The venture opened a 1,400-kilometer (870-mile) pipeline last April to carry 200,000 barrels of oil a day from fields in the Melut Basin to Port Sudan on the Red Sea.
In addition to arguing that PetroChina is not responsible for the actions of its parent company, the Berkshire statement questions the value of getting China National Petroleum to pull out of Sudan. The stake the Chinese hold would be sold ``almost certainly at a bargain price and almost certainly to the Sudanese government.'' That would increase the government's oil revenue.
Even if Berkshire opposed an action by PetroChina, the investment firm doesn't believe it should ``automatically divest shares of an investee because it disagrees with a specific activity of that investee,'' the statement said.
`No Records'
Mao Zefeng, PetroChina's Hong Kong-based spokesman, and Liu Weijiang, head of China National Petroleum's international department in Beijing, weren't available to comment. Most Chinese businesses are shut for the Lunar New Year holiday.
Chinese investment in Sudanese oil production and pipelines, mainly through China National Petroleum, has accelerated the country's crude output to more than 500,000 barrels a day in six years.
China National Petroleum pledged $1 million to Sudan's welfare ministry, China's state-run Xinhua News Agency reported Feb. 1. The company signed an agreement with the African country's energy ministry to spend $900,000 training Sudanese oil professionals, the news agency said. China National Petroleum has given more than $30 million to charity in Sudan since it began operations there in 1995, Xinhua said.
Darfur Conflict
The killing in Darfur has attracted growing opposition among activists in the U.S. and elsewhere. Nicholas Kristof, a New York Times columnist who has publicized the Darfur atrocities, wrote this month that activists are right to try to pressure the Sudan government by targeting Fidelity's and Berkshire's investments.
Guidelines by groups such as the Darfur Divestment Task Force protect the people of Sudan by distinguishing between companies that do business with the government, helping create funds for weapons purchases, and those engaged in activities that benefit the people of the country, according to Kristof.
The conflict in Darfur, a region the size of France, began in February 2003 when rebels demanding a greater share of Sudan's political power and oil wealth began attacking the government.
The government responded by supporting militias known as the Janjaweed to target villagers suspected of backing the rebels, according to rights groups such as New York-based Human Rights Watch.
Repeating Mistakes
Chinese companies in Africa are making the same mistakes that international companies such as BP Plc and Royal Dutch Shell Plc made in the past, said Kevin Rosser, head of oil and gas at Control Risks Group.
``The propensity of Chinese companies to overlook human rights is as much a reflection of their inexperience in operating abroad as it is of any state control or direction,'' Rosser said in a phone interview from London today.
``The more they are exposed to pressure, where PetroChina has to take account of what shareholders say, or the pressure put on big shareholders like Berkshire Hathaway, the more they're likely to conclude that transparent, sustainable business practices in host countries and respect for human rights actually improves the long term viability of the business,'' he said.
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