Ethical Performance
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Fidelity sells shares as Sudan campaign bites

July 2007

Pressure from US activists appears to have prompted Fidelity Investments, the world’s largest mutual fund company, to sell a sizeable chunk of its stake in PetroChina, which has significant interests in Sudan.

Fidelity has given no official reason for its action, but the withdrawal has been widely attributed to the growing US campaign to persuade companies to divest from Sudan, where more than 400,000 people have died in a civil war.

PetroChina and its parent China National Petroleum Corp play a big part in the Sudanese oil industry, which the regime’s critics claim is bankrolling the government’s military activity and acts of genocide.

Fidelity’s PetroChina investment had led to the creation of a single-issue pressure group, Fidelity Out of Sudan, which welcomed Fidelity’s decision as ‘a significant step in the right direction’ and described Sudan-related stocks as ‘radioactive’.

Fidelity sold 91 per cent of its stake held in the form of American Depositary Receipts, which allow trading of foreign securities in the US. The remaining nine per cent, which it may soon sell, are believed to be worth $55million (£22.5m). However, the South China morning post has calculated that Fidelity still owns PetroChina shares worth $834m on the Hong Kong stock exchange, and Fidelity Out of Sudan says the company ‘is still a massive shareholder’ in PetroChina by virtue of these holdings. It has urged Fidelity to divest entirely.

A number of US states have introduced or intend to pass laws barring investment in US companies that do business with Sudan (EP9, issue 2), and the US government recently tightened sanctions by barring US companies or individuals from doing business with 31 companies owned or controlled by the Sudanese government.

Fidelity has made no comment on whether it may divest further from PetroChina.

In the UK last month, the Aegis Trust, a pressure group focused on combating genocide, began a campaign to encourage divestment from British companies involved in Sudan or holding shares in PetroChina.

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