PREVIOUS ISSUES : NEWS : Outtakes Last Updated: March 15, 2008 - 3:24 PM   Thorny Funds By Dave Maass Published: October 10, 2007   Email this article   Printer friendly page   A local firm could be profiting off Sudan. Santa Fe-based Thornburg Investment Management is the fifth largest institutional holder of stock in a subsidiary of a Chinese oil company operating in Sudan. Refugees are living in neighboring Chad as a result of upheaval in Sudan. Photo credit: Mark Knobil SFR also has learned that both the oil company and Thornburg are on the radar of a group that lobbies state governments to divest from companies supporting the Sudanese government, due to the human rights violations in that country. According to Thornburg’s second quarter filings with the US Securities and Exchange Commission, the company is profiting significantly off the Beijing-based China Petroleum and Chemical Corporation. Also known as Sinopec Corp., the company is a publicly traded subsidiary of China Petroleum Corporation, or Sinopec Group, a state-owned oil field service provider and member of the Petrodar oil consortium in Sudan. Sinopec Group is listed as one of the “highest offenders” by the Sudan Divestment Task Force, a project of the Washington, DC-based Genocide Intervention Network. As of June 30, Thornburg reported owning 428,375 bundles of Sinopec Corp. stock traded on the New York Stock Exchange and 339,796,864 shares traded on the Hong Kong Exchange. Based on the Oct. 5 closing prices and the change in the exchange rate, SFR has determined that Thornburg’s holdings would be worth more than $482 million, representing a more than $60 million profit since the end of June. This calculation assumes Thornburg has neither increased nor decreased its holding since filing its SEC report. Thornburg also reported that its company’s trust—a collection of its mutual-fund investments—owns 241,229,085 shares traded on the Hong Kong market. As of Oct. 5, the trust’s holdings would be worth $304 million, a $38.4 million profit since June 30. Sinopec’s stock in Hong Kong has doubled and the US stock has increased in value by 70 percent since March. In an e-mail to SFR, Thornburg denies the connection between its investments and Sudan. Thornburg says the Sinopec Corp. subsidiary does not invest in Sudan, while its parent company, Sinopec Group “has a very small percentage of its assets” invested in Sudan. However, the Task Force argues that since Sinopec Group is fully owned by the Chinese government—and is therefore not subject to public investment—investors in its publicly traded subsidiary must use what leverage they have to influence the actions taken by Sinopec. Sinopec Group owns 75 percent of Sinopec Corp. and the two corporations overlap in management and assets. Sudan has contracted companies such as Sinopec to extract and refine oil. Those oil profits are frequently used by Sudan to fund its military and extra-military operations. The Sudanese government has been accused of human rights violations and genocide in the Darfur region of western Sudan. In September 2006, the United Nations estimated that more than 400,000 people have been killed in the conflict and approximately 2 million people have been displaced. Many live in refugee camps in neighboring Chad. Through on-site visits, the European Coalition on Oil in Sudan also has determined that Petrodar, “has been implicated in forced displacement, collusion with the Sudanese military and environmental destruction.”   Human Rights Watch also has identified gas exploration efforts by Sinopec in Burma, where  monks and others have been arrested and killed in recent weeks.    Adam Sterling, director of the Sudan Divestment Task Force, says the organization has repeatedly sent the Sinopec Group letters asking it to enact humanitarian programs and use its influence to pressure Sudan to cease the human rights violations. Sinopec has not responded, Sterling says. Thornburg, Sterling says, should consider divesting from Sinopec.  “I think Thornburg would be the first mainstream asset management firm to take this action, independent of being forced to,” Sterling says. “These companies [operating in Sudan] depend on US capital markets. Major investment firms like Thornburg could set a precedent and send a message about the cost of doing business in Sudan.” Last year, Harvard University divested from Sinopec. In June 2007, the Connecticut pension fund also made moves to divest from the corporation. “Thornburg Investment Management bases its investment decisions on financial and economic factors, keeping in mind our responsibilities as corporate citizens,” David Miller, managing director at Thornburg, writes in an e-mail. “We believe that we can at times be a voice for change as a shareholder. We lose such influence through divestment.” Miller did not say whether the firm would attempt to influence Sinopec. Thornburg also owns stock in Schlumberger, another company providing oil services in Sudan. However, the Task Force has recently removed Schlumberger from its targeted divestment list. Sterling says the company agreed to adopt a “substantial humanitarian program” certified by a third party. When informed of the connection between Thornburg and Sudan, local humanitarian organizations were at first surprised, then reacted strongly. “I think there’s always a tight balance between the company and the shareholders who it represents,” Allen Macomber, a member the Santa Fe Council on International Relations’ executive committee, says. “I think they have to be responsible to the public for their activities and I think they should talk about what their rationale is.” © Copyright 2000-2008 by the Santa Fe Reporter Save This Page to del.icio.us Top of Page