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December 14, 2004
Divesting from Genocide: More Conversation with Eric Reeves of the Divest Sudan Campaign
    by William Baue

In part two of this two-part interview, Mr. Reeves discusses the significance of actions by the investment and legislative communities to address the humanitarian crisis in Sudan.

"The conflict in the Sudan's Darfur region that began in 2003, and which continues unabated . . . has precipitated one of the worst humanitarian and human rights crises in the world today. Since early 2003, some 1.8 million people have fled their homes and 70,000 have died. In September, the United States government concluded that genocide has been committed in Darfur and that the Khartoum government and the government-sponsored militias bear the responsibility for it."

So reads a letter written by Mark Anson, chief investment officer of the $177 billion California Public Employees Retirement System (CalPERS). The letter, sent to all companies in CalPERS' portfolios as well as to all its portfolio managers, asks for disclosure on the extent to which companies CalPERS holds engage in any business with the Khartoum government.

In part two of this two-part interview, Divest Sudan co-founder Eric Reeves discusses the significance of actions by the investment and legislative communities to address the tragedy in Sudan.

SF: What is the significance of the CalPERS letter, and what are others in the investment community doing to address Sudan?

ER: Given the size and influence of CalPERS, this is an enormously significant step. We're also seeing in both Massachusetts and New Jersey active efforts on the part of the state legislatures to introduce legislation that will prohibit state pension plans and state institutional shareholding from holding companies operating in Sudan. And I've begun to have conversations with some in the socially responsible investment community, which is still learning about this divestment campaign that began only three months ago.

SF: Congress just passed the Comprehensive Peace in Sudan Act this past week. To what degree will this help solve the problem, and to what degree will it not?

ER: This act is largely hortatory. This administration has to decide that it's going to commit funds in a very rapid, very effective fashion to supporting the African Union force on the ground, which is woefully inadequate to the task of stopping genocide, but to the degree that it's the only game in town, we need to support it much more aggressively, much more robustly, and that's much more important than the Comprehensive Peace in Sudan Act. There are some useful measures in that act, but the real forceful provision was for mandatory public disclosure of all companies operating in Sudan for purposes of risk assessment in this country, and that went by the board.

I think it's extremely important for people to understand that there are risks associated with investment in companies that choose to do business with a genocidal regime that is one of seven officially-proclaimed state sponsors of terrorism. These are risks that should be publicly disclosed just like any other risks, and the Securities and Exchange Commission hasn't required it, and neither does the new Sudan Peace Act, and that's a real mistake. Investors should be able to ascertain whether or not such risks exist for any company with American capital market access--the debt market or the equity market.

All the companies we're targeting are on the New York Stock Exchange. Moreover, Petronas, the state-owned oil company of Malasia, recently tapped into the debt market by issuing bonds that raised, I believe, about a billion dollars of American capital for use however Petronas wishes, including Sudan oil development. I believe that in the surviving legislation oil companies are obliged to disclose their activity, but we know who these oil companies are, so this doesn't push the ball forward. I want companies like Siemens [ticker: SIEG] and Alcatel [CGEP] and the others that trade on the New York Stock Exchange to say exactly what they're doing in support of a regime that is committing genocide, according to a unanimous, bicameral, bipartisan resolution in the Congress, the State Department, the president of the United States, Senator Kerry, the European Union Parliament by a vote of 566 to six, the US Committee for Refugees, the Holocaust Museum, and on and on the list goes--there's no reasonable skepticism about whether this is genocide, so why should firms that are directly supporting a genocidal regime trade with impunity on the New York Stock Exchange?

SF: How would you compare this to the situation in Rwanda in the 1990s?

ER: In Rwanda, we had a totally different situation, though there were certainly warning signals before the spasm of violence that claimed 800,000 lives in 100 days, there was no possibility for a divestment campaign. The only thing that could have made a difference, which human rights activists tried to do, was try to convince the Clinton Administration to intervene. In fact, we do need humanitarian intervention with all necessary military support in Darfur, but that is not forthcoming, so what we're seeing now is all too clear an indicator of what we're going to see in the future.

SF: Is there anything else you want to add?

ER: Wherever I go people ask, what can I do? I think the divestment campaign is useful both because it is a real instrument of pressure on a regime that will respond only to pressure, but I also think the very existence of the divestment campaign works to educate people about the nature of the catastrophe in Darfur, and I think the more people understand about this, the more urgent they will see the divestment campaign to be, so I think there's a kind of synergy between the educational function of a divestment campaign and the urgent need to bring pressure to bear on a genocidal regime.

In part one of this two-part interview, Mr. Reeves explains why shareowner action and direct dialogue with companies operating in Sudan is not an option in the context of genocide.


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