Experimental feature

Listen to this article

Experimental feature

Warren Buffett is known for hanging on to profitable stocks long term. This week, however, at the annual general meeting of his Berkshire Hathaway company, the “sage of Omaha” will hear an unusual case from shareholders who want him to sell his huge holdings in a well-performing Chinese oil company – to help stop the genocide in Sudan’s Darfur region.

The AGM, which last year drew 24,000 people to Omaha, will provide an extraordinary platform for a growing divestment movement in the US even if, as generally expected, Mr Buffett stands by his insistence that he will not sell his stake in PetroChina, valued at some $3bn (€2.2bn, £1.5bn) or 11 per cent of outstanding shares.

In a recent note to shareholders Mr Buffett, the world’s second richest man, agreed that conditions in Darfur were “deplorable” and empathised with those who wanted change.

But he added: “We do not believe that Berkshire should automatically divest shares of an investee because it disagrees with a specific activity of that investee.”

Jerry Porter is not deterred. He and his wife Judith, whose Jewish grandparents were killed by the Nazis in Latvia, are tabling a broadly worded resolution at the AGM on Saturday that would have Berkshire divest from foreign companies engaging in businesses that US companies are barred from because of presidential executive orders.

“We think Mr Buffett is an ethical person and he can help end the genocide,” Mr Porter told the FT. “If Warren Buffett was to announce Berkshire Hathaway was divesting from shares in PetroChina it would have a huge effect on other shareholders. Are we talking about China or Sudan? Both. Genocide has continued because of China’s support of Sudan.”

Mr Buffett says he has seen no evidence that PetroChina, which is listed in New York and Hong Kong, has any operations in Sudan. He concedes that China National Petroleum Corp (CNPC), its state-owned parent company which has a majority holding, does work in Sudan, but he asserts that PetroChina has no influence as a subsidiary.

The Sudan Divestment Task Force this month released a report alleging that PetroChina has an “intimate, opaque and symbiotic relationship” with its parent. It also notes that, primarily through CNPC operations, Sudan exports 50-80 per cent of its oil to China, which in turn is Sudan’s largest arms supplier and its protector in the UN Security Council.

The Porters, from Pennsylvania, will present the motion and the floor will be open to debate. The Save Darfur campaign is planning a publicity blitz outside Omaha’s vast Qwest convention centre.

Shareholders appreciate that, whatever his motives, Mr Buffett is giving space for a debate likely to receive national exposure, noting that he could have excluded it from the agenda.

The airing of China’s role in Sudan comes at a crucial moment, notes Bennett Freeman, senior vice-president for social research and policy at Calvert, which runs “socially responsible” funds and helps the divestment movement.

“Buffett is providing a timely and important platform that I hope will be heard in Beijing and Khartoum,” he said. He agreed with US officials who say China appears to be responding to international pressure and had played a role in persuading Sudan to move towards accepting a UN-African Union peacekeeping force, although it has not yet agreed to full deployment.

Adam Sterling, speaking for the divestment campaign, stresses the goal is to have Mr Buffett engage PetroChina in an effort to influence the activities of its parent company and, failing that, then divest.

Various divestment campaigns – mainly targeted at Sudan and Iran – are building momentum in the US. Several states have passed divestment legislation on Sudan, as has Harvard University’s endowment, which sold PetroChina stock.

Last Friday the Florida Senate unanimously passed legislation that would lead to divestment of its $150bn pension fund from foreign companies investing in Sudan and Iran’s energy sector. US companies are already barred from Iran and Sudan by law or executive order.

“Just as Florida acted to help abolish apartheid in South Africa, we must use our economic power to stand up to Sudan and Iran today. There truly is no time to waste,” Senator Ted Deutch, sponsor of the legislation, said, noting that Florida would be the first to take action aimed at Iran.

He told the FT that pressure to follow suit would be applied to funds, such as Berkshire Hathaway, if held by the Florida pension fund.

The campaign has raised the hackles of the US business community, which is responding with lawsuits. The administration of President George W. Bush appears divided over the issue and has largely remained silent.

Bill Reinsch, head of the National Foreign Trade Council, which is suing the state of Illinois and would consider suing Florida, says states are acting unconstitutionally and making bad policy. “It’s chicken soup diplomacy,” he said. “Makes you feel good but doesn’t actually do any good.”

On Iran, he echoes recent testimony of administration officials before Congress who argued that forced divestment would counteract the efforts of Mr Bush to take a multilateral approach with allies against Tehran’s nuclear programme.

Get alerts on Mergers & Acquisitions when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article