UC TO DIVEST FROM SUDAN: Divestment

After a unanimous vote to divest university holdings from nine
companies determined to be aiding Sudan in the killings in Darfur,
the University of California will begin the process of divestment
which could take many months to complete.

With little discussion, the UC Board of Regents voted Thursday
at UCLA to withdraw its investments from nine companies doing
business in Sudan, making the UC the first public university to
divest from that country.

The decision, which took place during the regents’ two-day
meeting, marks the third time in the UC’s history that it has
divested: The Board of Regents voted to divest its holding from
South Africa in 1986 to protest apartheid in the country, and it
decided not to invest in tobacco companies in 2001.

The vote to divest, made on a moral instead of financial basis,
was a response to an ongoing conflict in Sudan, which has caused
thousands of deaths in the Darfur region and many more
displacements. It has been called a genocide by the U.S.
Senate.

Continuing to the next step in divestment is contingent on the
state Legislature agreeing to cover the university for any claims
arising from divestment, so the UC would not be responsible for any
of the possible financial fallout.

Divestment of all of those companys’ shares with
portfolios directly managed by the UC must then be completed within
18 months after the legislation has been enacted.

UC Vice President for Business and Finance Joe Mullinix said the
18-month time limit for divestment reflects the time it could take
to sell all the UC shares invested in those companies without
negatively affecting the university’s portfolios.

But the wait for actual divestment should not pose a problem
because the goal of the divestment campaign is to pressure the
Sudanese government to stop the killings in Darfur, not to
financially penalize the companies, said Adam Sterling, a member of
the UC study group which made recommendations on divestment to the
regents and co-chairman of the UC Sudan Divestment Taskforce.

“The most important thing is to put pressure on these
companies and on Sudan. The companies know that divestment is
pending. … Ultimately, the end goal isn’t divestment; the
end goal is ending genocide,” Sterling said.

And given that many members of the state congress have endorsed
the students’ campaign for divestment, Sterling does not
expect the needed state legislation, which is set to be introduced
by Assemblyman Tim Leslie, R-Roseville, to become a roadblock.

With Thursday’s vote, the UC also became the only
university to approve divestment from indexes made up of a group of
companies, many of which do not do business in Sudan.

Other institutions such as Stanford and Harvard universities,
which have already divested from Sudan, targeted only direct
investments in the offending companies. The UC’s plan for
divestment calls for pulling out investments in both direct
holdings of shares of the nine targeted companies and indexes which
contain any of those companies.

Mullinix said at the regents meeting that divestment is not
expected to significantly impact the overall UC portfolio, though
the university has taken steps to protect itself before going
forward with divestment.

Mullinix said an exact dollar amount will not be known until
divestment occurs but that the amount would be a small part of the
school’s overall pension and endowment funds, which are worth
more than $66 billion.

Regent Chairman Gerald Parsky said the university can be very
proud of the way that it has paid careful attention to its
obligation to maintain the health of its investments.

“We have responded in a very measured and appropriate way
to an issue that needs to be addressed by a leading
institution,” Parsky said.

Assemblyman Paul Koretz, D-West Hollywood, spoke at the regents
meeting and said that there is a greater moral responsibility to
divest from Sudan that outweighs any purely fiscal principle.

“This will make a very dramatic difference. I believe that
it will ultimately save tens of thousands of lives,” Koretz
said.

About a third of the university’s shares in the nine
offending companies are in accounts tied with other investors and
not directly controlled by the university.

The UC plans to write letters to the managers of those accounts
to urge them to consider the university’s decision to
divest.

The university will also continue sending letters of concern to
four companies without directly divesting from them.

The UC is set to divest from Bharat Heavy Electricals Ltd.;
China Petroleum and Chemical Corp. (Sinopec); Nam Fatt Co. Bhd.;
Oil & Natural Gas Co. Ltd., PECD Bhd.; PetroChina Co. Ltd.;
Sudan Telecom Co. Ltd. (Sudatel); Tatneft OAO; and Videocon
Industries Ltd.

It will send letters of concern to Finmeccanica SPA, Harbin
Power Equipment Co. Ltd., Lundin Petroleum AB and Schlumberger
Ltd.