Harvard to sell its stake in firm tied to Sudan
By Marcella Bombardieri, The Boston Globe
BOSTON, April 5, 2005 — Under mounting pressure from student activists, Harvard University announced yesterday that it will sell an estimated $4.4 million stake in PetroChina, whose parent company is closely tied to the Sudanese government, accused by the United States of waging a genocidal campaign to suppress rebels in Darfur.
Activists say Harvard’s move is the first major victory in a growing national campaign for divestment from Sudan. It is also an important decision for Harvard, which has been so resistant to public pressure on its investments that it never fully divested itself from companies doing business with apartheid South Africa, unlike many other major universities.
”Divestment is not a step that Harvard takes lightly, but I believe there is a compelling case for action in these special circumstances, in light of the terrible situation still unfolding in Darfur and the leading role played by PetroChina’s parent company in the Sudanese oil industry, which is so important to the Sudanese regime,” said a statement released by Harvard’s president, Lawrence H. Summers.
The decision was made by Harvard’s governing corporation, of which Summers is a member.
Public filings with the Securities and Exchange Commission indicate that in December, Harvard Management Co. owned 67,200 shares of PetroChina, worth about $4.4 million, according to the Harvard Crimson, a tiny sum, given that Harvard’s endowment is almost $23 billion.
PetroChina is an oil company owned by the Chinese government. Summers recently told a group of students that Harvard may own additional PetroChina stocks on the Hong Kong Stock Exchange, which it would not be required to report to the SEC, the Crimson reported. Harvard declined yesterday to provide an exact figure for the size of its PetroChina investment.
Darfur has become a popular cause for college students, especially at Harvard. Last fall students started a divestment petition, which has garnered about 1,000 signatures. A group of seniors recently unveiled a campaign to encourage classmates to withhold their contributions to the annual senior class gift until Harvard has divested from Sudan.
About 250 students attended a prodivestment protest yesterday, timed to coincide with the Harvard Corporation meeting. Harvard announced the decision just as the protest was getting underway.
Student activists reacted to the news with guarded enthusiasm, because Harvard’s announcement mentioned only PetroChina and did not say whether the university would divest from other companies doing business in Sudan.
”We are really excited, but I’m also really worried that people will think the fight is over,” said Matthew Mahan, a Harvard senior and one of the founders of the campaign to withhold senior gift contributions. ”Time will tell whether they really care about genocide in Sudan or only about avoiding a lot of bad press.”
In its filings with the Securities and Exchange Commission, Harvard is not obligated to report stocks it owns that are traded on foreign markets, nor does it have to disclose the companies in which it has invested only indirectly, through investment funds.
Mahan and Manav Bhatnagar, a cofounder of the divestment drive, both said they will continue to pressure the administration.
Alan J. Stone, vice president for public affairs, said yesterday that he did not know whether Harvard is invested in other companies doing business in Sudan. He said Harvard Corporation’s decision applies only to PetroChina.
The corporation’s statement said concern on campus about PetroChina and the situation in Darfur prompted Summers to ask the Advisory Committee on Shareholder Responsibility — a group made up of faculty, students and alumni — to study the issue. That group set up a panel, headed by Joseph Badaracco, a professor of business ethics. The panel met with the divestment proponents, conducted research, and presented a report to the corporation.
The panel reported that China National Petroleum Corp., or CNPC, wholly owned by the Chinese government, wanted to sell shares on the New York Stock Exchange in April 1999, but encountered concern by human rights groups and others that the investments would help fund genocide in Sudan, where CNPC is heavily involved in oil operations. CNPC is involved in a joint venture with a firm owned by the Sudanese government, which relies heavily on oil production to fund military and other operations.
So CNPC created PetroChina as a subsidiary that would operate only in China. But the Harvard panel concluded that PetroChina has no real independence from CNPC, and it cited media reports that indicated changes within CNPC could mean that PetroChina would soon become directly involved in activities in Sudan.
Harvard made clear that the decision on PetroChina does not mean the university’s investments should be guided by political considerations, but that it considered the Sudan situation to be so egregious that it was incumbent upon the university to act.
”The university maintains a strong presumption against divesting itself of securities for reasons unrelated to investment purposes and against using divestment as a political tool or a ‘weapon against injustice,’ ” the panel wrote, ”not because there are not many worthy political causes or deeply troubling injustices in the world, but because the university is first and foremost an academic institution.”
Harvard did not fully divest from South Africa despite sit-ins and hunger strikes, but in 1990 the university sold its shares in tobacco manufacturers.
Summers also famously waded into the debate over a drive for divestment from Israel in 2002, when he said divestment supporters were ”advocating and taking actions that are anti-Semitic in their effect, if not their intent.”
Marcella Bombardieri can be reached at [email protected].