UC moves to divest holdings in firms with ties to Sudan leaders
San Francisco Chronicle 3/6/07
Today, the Board of Regents' Committee on Investments is scheduled to meet in Los Angeles and report on its progress toward Sudan divestment -- and supporters of divestment are likely to ask the board some tough questions.
At the urging of students and faculty members, the regents decided in May to sell off the university's stock holdings from the nine companies. The university gave itself 18 months to complete the process of divestment, starting from when the governor signed a law in September to indemnify the regents from its divestment actions.
Advocates are concerned that the university is following a minimal path toward divestment -- agreeing to divest its separate holdings in the companies while ignoring investments that are pooled with other institutions and are not under its direct control.
"For me, the issue is: What percent of total holdings in the problematic companies are they actually divesting from?" Jason Miller, the national policy director for the nonprofit Sudan Divestment Task Force, said Monday. "If they are true to their word, then the dollar amount of what they announced should be the majority of their holdings in these companies. How much of these companies do they hold in commingled accounts?"
The university says that about two-thirds of its equity holdings are in separate accounts, rather than pooled funds. UC officials said this week that as of Sept. 30, 2006, UC held $14.5 million in the nine firms slated for divestment.
However, the UC treasurer wrote to students in March 2005 that the university held $132 million in stock in eight Sudan-related firms, including what appeared to be a $55.1 million investment in a commingled fund in PetroChina Co. Ltd., a firm that the regents later decided to divest. The other seven firms were not among those placed on the divestment list.
UC General Counsel James Holst wrote last year that "there should be no adverse investment consequences" from implementation of the divestment plan because only .07 percent of the university's major equity holdings are in two of the nine targeted companies -- PetroChina, and China Petroleum and Chemical Corp.
His memo, dated March 13, 2006, and marked "privileged and confidential," concludes that divestment can be accomplished without significantly affecting the investment performance of its holdings nor violating its duties to the beneficiaries of the university's equity funds.
In an attached document, UC treasurer Marie Berggren said the financial impact of divesting from the nine firms "will be minimal."
As of Feb. 28, 2006, Berggren wrote, the value of all shares recommended for divestment from the nine companies was $20.9 million, which represents 0.42 percent of the combined value of the university's pension fund and general endowment fund, which were then valued at $50.2 billion.
"It is not clear whether they have already divested from the holdings they had, or whether that will take place during the next several months," Miller said Monday. "If the UC retains the majority of the holdings in the problematic companies, that defeats the spirit of the regents' policy."
The nine firms from which UC plans to divest are mainly based in China, Russia, India and Malaysia. One of the firms, Taftnet OAO of Russia, has a history of trading arms for Sudanese oil. Russia and China are Sudan's primary arms suppliers, which are used to protect its oil fields, pipelines and related facilities. Another firm on UC's list is Sudan Telecom Co. Ltd., which has been accused of turning off cell phone service before villages in some areas are attacked.