While people around the world gather to call for action in Sudan, it is worth remembering that some companies continue to do business there. Coca Cola continues to operate in Sudan, despite sanctions, thanks to the exemption on gum arabic. Furthermore, as Killer Coke has noted:
Warren Buffett who left Coca-Cola's board in 2006, but remains the company's largest shareholder with 8.3% of common shares outstanding worth about $10 billion, is also a major investor in the PetroChina Oil Company which gets oil from Sudan and is targeted by the Sudan divestment community. "Oil has turned it [Sudan] into one of the fastest-growing economies in Africa - if not the world - emboldening the nation's already belligerent government and giving it the wherewithal to resist the Western demands to end the conflict in Darfur.
In fact, Berkshire Hathaway, of which Buffet is CEO, is the largest foreign shareholder of PetroChina owning 1.3% of shares. Buffet continues to resist calls to divest in PetroChina. He claimed that:
"I can be a direct descendant of William Jennings Bryan, but I will not be changing the Chinese government's policy… I doubt I could change the policies of the Douglas County [ Nebraska] Board."
However, CFO Asia (a leading magazine for CFO's in Asia) contradicts this assessment. It claims that:
"If Buffett were to sell for any reason, PetroChina's stock would almost certainly tank - and the company's reputation would sink along with it…PetroChina already had a foretaste of this in August [2003] when its stock price fell 2.1 percent in one day. Buffett disclosed to US regulators that he had sold US$5 million worth of PetroChina's American Depositary Shares in the second quarter of 2003. Flustered investors rushed to the exits. Was Buffett's confidence in PetroChina wavering? The markets were reassured when it was revealed that Buffett's ADS sales were made before he accumulated the 2.3 billion in H-shares he bought in Hong Kong."
There is clear evidence that were Mr Buffet to re-assess his investments in PetroChina, there would be a knock-on effect to China's attitude towards the humanitarian disaster. The Chinese government is already becoming sensitive to international pressure on Sudan and if Buffet was to divest, PetroChina would have to rethink its opertions in the region. However, it would appear that as long as Coca Cola and PetroChina continue to bring in the money, Buffet will continue to overlook the humanitarian disaster in Darfur. After all, business is business.
For more information: PetroChina, CNPC, and Sudan: Perpetuating Genocide - a report by the Sudan Divestment Task Force.
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