Do it for Darfur

LEE HAN SHIH
Dec 12, 2008
*Special to asia!
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Berkshire Hathaway CEO Warren Buffett is being urged to divest his company's PetroChina holdings.

Last June, Warren Buffett was hailed as one of the most generous men in history after he pledged US$30 billion to charity, with five-sixths of it going to the Bill and Melinda Gates Foundation. Now he has been smeared in the press and on the Internet as a supporter of the Darfur genocide in Sudan. And it is all because of China.

Buffett's main investment vehicle Berkshire Hathaway has invested heavily in PetroChina, a listed company whose parent is the China state controlled China National Petroleum Corp (CNPC). Buffett has an unparalleled record in investment. His interest in China had led many others to follow suit, such as the US$30 billion Harvard University Endowment Fund.

Harvard is now out of PetroChina, and so are many other major investors in the US. They were persuaded by the divestment campaigns which called for US companies to stop supporting the Sudanese government in direct and indirect forms.

CNPC is heavily involved in Sudan—China bought half of Sudan’s oil exports last year and it is spending huge sums helping the Sudanese government to build infrastructure to extract more oil out of the ground. This makes CNPC, and by extension PetroChina, prime targets for divestment.

Today the only famous American investor who remains in PetroChina is Buffett, a man known for his level headedness and generosity. To divestment campaigners, Buffett's reluctance to sell is damaging to their cause.

"Buffett talks and the world listens. He should set a good example," one said.

Buffett, also known for his willingness to discuss issues in public, has openly stated his position. He argues that PetroChina is not in Sudan and that it has no influence over CNPC. He also pointed out that even if CNPC withdraws from Sudan, it would not help to stop any atrocity. This is because the assets of CNPC in Sudan are the oil in the ground and the infrastructure to extract them. They are fixed to Sudan and cannot be removed. If CNPC simply walks away, the Sudanese government can continue to use the infrastructure to extract oil and sell it for arms.

"Proponents of the Chinese government's divesting should then ask the most important question in economics, 'And then what?' " he wrote.

A reasonable argument, perhaps, but not one accepted by the Sudan Divestment Task Force. In response to Buffett, it said that Buffett should apply pressure on PetroChina to ask CNPC to get out of Sudan.

"The sale of CNPC's Sudan assets would remove China's economic incentive to enable Sudan's ongoing genocide. Even short of forcing divestiture of its Sudan assets, pressure on CNPC is likely to change China's approach towards Sudan diplomacy, especially given how highly China prizes its Sudan oil assets."

Even others with less strident stands have asked Buffett to do something. At a minimum, he could engage in discussion with PetroChina, and ask it to persuade CNPC to persuade the Sudanese government to allow United Nations peacekeeping forces in the country. Some even ask him to speak to the Indian and Malaysian investors in PetroChina to do the same. And if all else fails, "Buffett could sell his shares, noisily, to make a statement."

Buffett, to his credit, has reacted with courtesy. Berkshire is holding its annual general meeting on May 5 in Omaha. Buffett has invited people with issues on Sudan to speak out. The Berkshire AGM has become an annual pilgrimage for investors to pay homage to the "Sage of Omaha".

This year, with Sudan in the news and with a recently leaked UN report that the Sudanese government has been painting their planes in UN colours to bomb its own people, China is likely to dominate the discussion at the AGM.

 

lee han shihLee Han Shih is the founder, publisher and editor of asia! Magazine.

 

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