Why Fidelity and Berkshire Hathaway?

Fidelity and Berkshire Hathaway are two of the largest investors in PetroChina—a “highest offending” company in helping to fund the genocide in Darfur, according to the targeted divestment model developed by the Sudan Divestment Task Force (SDTF).

PetroChina and the genocide in Darfur

PetroChina’s closely related parent company, China National Petroleum Corporation (CNPC), is Sudan’s largest partner in the oil industry—an industry which provides nearly 90 percent of Sudan’s export revenue. More than 70 percent of Sudan’s oil revenue is channeled to the military which arms, trains, and provides military support to the Janjaweed militia that continues to conduct a campaign of murder, destruction, torture, and rape in Darfur. The extensive research conducted by SDTF illustrates the financial reliance of CNPC on its subsidiary PetroChina, and further, PetroChina’s unique position to influence the problematic behavior of CNPC in Sudan. Therefore, Fidelity and Berkshire Hathaway, by virtue of their substantial holdings in PetroChina, are especially well positioned to play an important role in ending the Darfur genocide by applying economic pressure on the Sudanese government.

Fidelity and Berkshire Hathaway: Time for Action

Following the targeted divestment model, concerned citizens sought to engage Fidelity throughout the fall of 2006, primarily with letters, but also with attempts to follow up personally. These attempts included letters sent September 30, October 24, November 4, and December 8, in addition to attempts to engage 51 Fidelity executives, trustees, board members and fund managers. Despite their awareness of the ongoing atrocities, Fidelity issued formal statements denying their responsibility to take action in the face of genocide.  Fidelity’s response to calls for divestment included:

“Fidelity portfolio managers make their investment decisions based on business and financial considerations, and take into account other issues only if they materially impact these considerations or conflict with applicable legal standards.” –Fidelity letter of October 5, 2006

“We believe the resolution of complex social and political issues must be left to the appropriate authorities of the world that have the responsibility, and capability, to address important matters of this type. And we would sincerely hope that they would do so wisely on behalf of all the citizens of the globe.” –Fidelity statement to CNN Money, published January 29, 2007

Through its mutual funds, Fidelity has responsibility for the investments of millions of Americans. The Save Darfur Coalition believes that these Americans, if they knew, would not want their money to be used to fund genocide.

Berkshire Hathaway is a target of the Divest for Darfur campaign because it is the largest holder of publicly traded PetroChina stock. Due to the size of its holdings and Warren Buffet’s leadership role in the financial community, Berkshire could have significant leverage with PetroChina. However, Berkshire has not yet acknowledged this influence; nor has it recognized the close relationship between PetroChina, its parent company CNPC, and the Chinese government, which provides protection for Sudan at the United Nations as it holds a permanent seat and veto power at the U.N. Security Council. Additionally, Berkshire is of the flawed opinion that, if CNPC decides to pull out of their operations in Sudan, the government of Sudan would likely acquire China’s holdings at a bargain price and profit more off of the oil. But research by SDTF shows that “approximately 50 percent of CNPC’s profits come from PetroChina dividends, and most of CNPC’s revenue comes from the provision of services and products to PetroChina.” SDTF also argues that Sudan would not be the most likely buyer if CNPC was to sell its holdings in Sudan, as they could not afford to purchase the assets, do not have the necessary technical experience, and have established successful profit-sharing agreements with foreign companies.

Because of these findings and Mr. Buffet’s financial influence, Berkshire is in a unique position to promptly, publicly, and assertively engage PetroChina and its parent company CNPC to end their support for the government of Sudan and its genocidal activities. If Berkshire chooses not to engage in this process, or if engagement does not alter the behavior of the companies, Berkshire should divest its PetroChina holdings.

To view SDTF’s report detailing the relationship between PetroChina, CNPC, and the genocide in Darfur, please visit this page.

This is the first time in history that a genocide has been declared while atrocities are still ongoing. This makes the Sudan divestment decision unique and allows fiduciaries to maintain an extraordinarily high benchmark for considering divestment in the future.

About Divest for Darfur: The Save Darfur Coalition’s Divest for Darfur campaign encourages and promotes targeted divestment as a strategy to exert financial pressure on the government of Sudan to change its policies and bring peace to the people of Darfur. As much as 70 percent of Sudan’s oil revenue is channeled to Sudan’s military, which is engaged in a campaign that the U.S. State Department, Congress, and President Bush have labeled as genocide. The campaign is managed in close partnership with our affiliated organizations: the Sudan Divestment Task Force, a project of the Genocide Intervention Network, and Fidelity Out Of Sudan. The campaign is also coordinated with American Jewish World Service, the NAACP, STAND, the Jewish Council of Public Affairs, and other coalition members with divestment policies.