The following is a statement issued today (March 23, 2006) by the Harvard Corporation Committee on Shareholder Responsibility (CCSR) regarding stock in China Petroleum and Chemical Corporation (Sinopec Corporation).
We are announcing today the Harvard Corporation’s decision to direct Harvard Management Company (HMC) to divest itself of stock held by HMC in China Petroleum and Chemical Corporation (Sinopec Corporation).
The Corporation, on our recommendation, has reached this decision in light of the analysis presented last spring by a subcommittee of the University’s Advisory Committee on Shareholder Responsibility (ACSR) for divestment from PetroChina Company Limited (PetroChina), another Chinese oil company with major interests in Sudanese oil production, and in light of developments since that decision regarding Sinopec Corporation’s involvement in Sudanese oil production. The decision to divest from Sinopec reflects these new developments as well as deep concerns about the grievous crisis that persists in the Darfur region of Sudan and about the role of Sinopec Corporation and its closely affiliated parent company, China Petrochemical Corporation (Sinopec Group), in the production of oil in Sudan. Oil is a critical source of revenue and an asset of paramount strategic importance to the Sudanese government, which has been found to be complicit in what the U.S. Congress and U.S. State Department have termed “genocide” in Darfur and what a United Nations commission of inquiry has characterized as “crimes against humanity and war crimes … [that] may be no less serious and heinous than genocide.”
Having monitored recent developments regarding Sinopec Corporation’s involvement in Sudanese oil production, the CCSR has concluded that the considerations that led us to divest from PetroChina in April 2005 counsel in favor of our now divesting from Sinopec Corporation. Those considerations are set forth in the statement available at http://hvd.gs/51764. With particular regard to Sinopec, the CCSR has further noted the following:
- Sinopec Corporation is a publicly listed company in which a dominant (68 percent) interest is held by China Petrochemical Corporation (Sinopec Group). Sinopec Group is wholly owned by the Chinese government, and Sinopec Corporation and Sinopec Group have substantially overlapping management.
- Sinopec Corporation is a partner in Petrodar Operating Company Ltd., a consortium whose partners also include China National Petroleum Corporation (CNPC, the 90 percent owner of PetroChina) and Sudapet (the Sudanese state-owned oil company), among others.
- In August 2005, Petrodar commenced production of oil in blocks 3 and 7 in Southeast Sudan. In December 2005, Petrodar announced that its first shipment of crude oil would be shipped from Sudan in January 2006. Petrodar’s operations represent a major increase in overall Sudanese oil production, with Petrodar’s output expected to reach 250,000 barrels/day by the end of 2006 and to grow to 350,000 barrels/day in 2007.
- In November 2005, Sinopec Group announced plans to partner with CNPC to purchase an oil field in Sudan, and has reportedly indicated an interest in expanding its business in Sudan.
Although Harvard maintains a strong presumption against the divestment of stock for reasons unrelated to investment purposes, the CCSR is persuaded, and the Corporation agrees, that the particular combination of circumstances bearing on Sinopec Corporation’s involvement in oil production activities in Sudan warrants the unusual step of divestment. We accordingly are directing Harvard Management Company to divest its holdings of Sinopec Corporation stock.