US Billionaire Buffett welcomes discussion of PetroChina and Sudan
March 8, 2007 (OMAHA, Neb) — Berkshire Hathaway Inc. shareholders will have a chance to vote on whether the holding company should sell its stake in PetroChina at the annual meeting. Billionaire Warren Buffett decided to include a shareholder proposal about the Chinese oil conglomerate’s ties to Sudan.
Berkshire could have excluded the proposal because officials at the Securities and Exchange Commission agreed it was vague and indefinite, according to documents made public on Thursday.
“We’ve decided to include it anyway,” Buffett said in a phone interview. “It’s a subject some shareholders are interested in.”
The Omaha-based company posted a Web statement last month defending its 2.3 billion shares of PetroChina Co. in response to questions from shareholders and the media. Typically, Berkshire does not comment on its investments beyond what it is legally required to disclose.
Buffett and Berkshire’s vice chairman, Charlie Munger, plan to spend several hours answering questions at the annual meeting on May 5, and Buffett said there will be no time limit on the PetroChina discussion.
“We welcome a full discussion of the issue,” Buffett said.
The proposal, submitted by Judith Porter from Pennsylvania, would prohibit Berkshire from investing in foreign companies that engage in activities U.S corporations cannot engage in because of presidential executive orders. Porter did not immediately return calls for comment.
The United States and international humanitarian groups have accused the Sudanese government of using its oil wealth to wage genocide against the people in the western Darfur region, and some groups have suggested that PetroChina has supported the Sudanese government.
An executive order former President Bill Clinton issued in 1997 that President George W. Bush later expanded limits U.S. investments in Sudan.
Porter’s proposal will face long odds at the annual meeting because Buffett controls 32.68 percent of the voting stock and because Berkshire’s shareholders hold the legendary investor’s opinion in high regard.
Buffett said he plans to defend Berkshire’s position at the meeting. Berkshire has said groups supporting the divestment of interests in Sudan may be confusing PetroChina with its parent company, Chinese National Petroleum Corp., which is owned by the Chinese government.
Berkshire said CNPC does do business in Sudan, but PetroChina shouldn’t be held responsible for the actions of its controlling shareholder. Berkshire also maintained that it sees no proof that PetroChina does business in Sudan.
“We think our position is correct,” Buffett said.
The proposal would apply to all of the 8,936 current and any future presidential executive orders, which could significantly hurt Berkshire’s business, company Chief Financial Officer Marc Hamburg said in a letter to the SEC.
“On its face, neither the proposal nor the supporting statement adequately discloses to shareholders the extent to which the proposal would operate to effectively eliminate Berkshire’s and its subsidiaries’ foreign investment opportunities,” Hamburg said in his letter.
Porter said the genocide in Sudan is her main concern, but she crafted the proposal to apply to all executive orders so it could cover future genocides.
“While it is not illegal for U.S. companies to invest in these foreign companies, I do believe that such investments violate the spirit if not the letter of the executive orders,” Porter wrote in defense of her proposal. “As a shareholder of Berkshire I believe the company should adhere to these higher ethical standards.”
In recent years, Berkshire has increased its investment in foreign companies, including last year’s $4 billion investment in Iscar Metalworking Cos., which is an Israeli company that makes metal cutting tools.
Last week Buffett also revealed Berkshire’s purchase of 229.7 million shares of Tesco PLC, Britain’s largest supermarket chain, and 3.49 million shares of South Korean steelmaker Posco.
Berkshire owns furniture, insurance, jewelry and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as The Coca-Cola Co. and Anheuser-Busch Cos.
(AP)