This past Sunday, Barack Obama made an appearance in The New York Times opinion pages. His topic was Sudan, and he opened his piece by expressing hope that this week’s elections there – which could grant the southern part of the country independence – are carried out fairly and peacefully, with “all parties in Sudan [living] up to their obligations.”
By the end, he’d built up to an ultimatum that addresses the possibility that all parties in Sudan will not necessarily do so: “Today, I am repeating my offer to Sudan’s leaders – if you fulfill your obligations and choose peace, there is a path to normal relations with the United States, including the lifting of economic sanctions.”
The “if” sandwiched in the middle of that sentence is obviously meant to be a weighty one. And those economic sanctions – first issued by President Clinton in 1997 and prohibiting all trade, investment and business dealings with Sudan (with a few exemptions, including for humanitarian aid) – are meant to bring with them a thunderous clang as well, especially when they’re waved around this way. But weakening the reverberation of that clang is the fact that there’s still a steady stream of private investments flowing from the U.S. into Sudan, and it’s a flow that’s not contingent upon whether the country’s leaders are behaving peacefully or horrendously un-peacefully. The flow is making its way into Sudan by way of some of the U.S.’s largest financial institutions’ investments in companies like PetroChina – an oil company (part of CNPC Group) that’s internationally recognized as providing the government of Sudan with funding that has supported the genocide in Darfur.
Perhaps the U.S. government’s ability to present a unified front in delivering a strong demand for peace isn’t your primary concern. Maybe the conflicts inherent in all of this – like the fact that U.S. financial institutions are investing Americans’ savings in oil companies that support Sudan’s government, even though those companies’ U.S. competitors are prohibited from doing business there – don’t quite seem to warrant cause for action either.
But consider a conflict of a more basic sort: According to a survey conducted by Investors Against Genocide, 88 percent of Americans say they want their mutual funds to be unlinked to genocide, and 84 percent say they would withdraw their investments from American companies that directly or indirectly support genocide. In other words, Americans are almost categorically opposed to investing in genocide. And yet many of them do, unwittingly. According to Eric Cohen, chairman of Investors Against Genocide, behemoth financial institutions such as Fidelity, Franklin Templeton, and JP Morgan have each had investments in PetroChina worth over one billion dollars over the past few years.
Cohen and IAG have been engaging with these firms and many others for the last four years, asking them to avoid investments in companies known to contribute directly or indirectly to crimes against humanity. They’ve had a few victories: In January 2010, TIAA-CREF (Teachers Insurance and Annuity Association - College Retirement Equities Fund) announced that it had sold all of its holdings in four companies related to the crisis in Darfur, and a month later, American Funds divested completely from PetroChina.
Both other firms have proved more impenetrable. Cohen says the tactic adopted by Fidelity and Vanguard has been to “duck engagement” with IAG, with Fidelity repeatedly pointing out that the firm is not breaking any laws. So Cohen took his cause to Congress.
On November 30, he testified at the hearing of the House Financial Services Subcommittee on International Monetary Policy and Trade, making the case that what’s called for is simply transparency. He recommends that investment funds simply be required to answer a yes-no question in their prospectus and periodic filings – “Does this fund seek to avoid investments in companies that are known to substantially contribute to genocide, crimes against humanity, or serious human rights violations?” – and make that answer readily accessible to investors and prospective investors.
Cohen says he’s confident that once the public is aware of which of its investments are linked to human rights hot spots, divestment will take care of itself.
