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Article

11 Mar 2008

Author:
Jennifer Levitz, Wall Street Journal

Fund Shareholders to Hold Sudan Vote

...[M]any fund shareholders this proxy season will have a chance to weigh in on...whether to push funds to bar investment in companies doing business in Sudan, whose government is widely accused of abetting genocide. Pension funds, religious groups, money managers and other shareholders have filed resolutions aimed at Sudanese investments that will be included in the proxies of at least...12 mutual funds managed by Fidelity Investments. The nonbinding proposals ask companies to develop policies to rule out investments in companies that contribute to genocide, serious human rights violations and crimes against humanity. The main targets are PetroChina Co. and other big Chinese and other foreign energy companies with stakes in Sudan... Oil revenues are "...essential to the funding of the government's military operations," according to the Allard K. Lowenstein International Human Rights Project at Yale Law School... [Other targets are] Sinopec...; Petronas...and India's Oil & Natural Gas Corp. [ONGC]... Among the other firms whose upcoming proxies include resolutions are Citigroup Inc., Wells Fargo & Co., J.P. Morgan Chase & Co., and Morgan Stanley. Merrill Lynch & Co. and T. Rowe Price...agreed to include resolutions, but activists withdrew them after the firms agreed to set up screening policies... Shareholder activists have also filed Sudan-related resolutions with dozens of other fund-managing companies that haven't yet decided whether to put them on their proxies [including]...American Funds Capital World Growth and Income Fund [part of Capital Group], and Franklin Templeton Asian Growth Fund... The resolutions mark the latest push for the Sudan divestment campaign, which in a little over two years has prompted Sudan-related divestment laws in at least 17 states... Advocates don't expect to win a majority vote. Fidelity and the other four companies are recommending shareholders vote against the resolutions, saying they are too prescriptive and would interfere with their responsibility to maximize returns to shareholders... [Many funds] were barraged by letters, petitions, and protests last year and subsequently dumped shares in oil giants with Sudanese projects. At the end of 2006, Boston-based Fidelity had, through its mutual funds, been the largest U.S. holder of American depositary shares in PetroChina with shares worth $634 million, according to SEC filings... By the end of 2007, Fidelity had dumped 99% of the ADR shares, although several of its mutual funds still own PetroChina shares traded on the Hong Kong stock exchange. Berkshire Hathaway Inc., another target of activists, also shed most of its PetroChina shares last year. [also refers to China National Petroleum Co.]