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March 01, 2011
Investors Urge Oil Companies to Suspend Payments to Libya
    by Robert Kropp

Citing human rights risks, the Conflict Risk Network recommends that oil companies in Libya place revenue payments in a Recovery Fund in order to avoid helping the government in its attacks on civilians.

Yesterday, 26 institutional investor members of the Conflict Risk Network (CRN) called on oil companies to stop payments to the Libyan government, which is currently embroiled in a conflict with its citizens that threatens to erupt into civil war.

The institutional investors calling for a halt on payments include Boston Common Asset Management, Calvert, Domini Social Investments, Trillium Asset Management, and Christian Brothers Investment Services (CBIS).

Instead of continuing with business as usual in a time of acute crisis, oil companies with operations in Libya should immediately stop direct payments to the Libyan government, and instead "place revenue payments into a Libya Recovery Fund that would cut financial support from the government while avoiding undue economic harm to civilians," according to a press release. An accompanying fact sheet pointed out that Libya relies on oil for 95% of its export earnings and 80% of its domestic revenue.

Calling the situation in Libya an "extraordinary threat to the national security and foreign policy of the United States," President Obama signed an execu tive order last week, freezing $30 billion in assets owned by Colonel Muammar el-Qaddafi and his family and associates. US-based financial institutions are required to freeze any such assets in their accounts.

Also last week, the UN Security Council voted unanimously to impose sanctions against Libya, stating that violence against civilian demonstrators "may amount to crimes against humanity."

CRN stated that it is conducting outreach with at least 23 oil companies with operations in Libya, including five headquartered in the US: Hess, ConocoPhillips, Exxon Mobil, Marathon, and Occidental Petroleum. Of the US-based companies, only Marathon and Occidental have addressed the situation publicly, and both stated that their operations had not been affected by the unrest.

Dawn Wolfe, Associate Director of Environmental, Social and Governance (ESG) Research at Boston Common Asset Management, stated, "Investors are in a unique position to influence the management of oil companies doing business in Libya. The risks and uncertainties in that operating environment are extreme and the human rights implications vast. Companies and investors cannot stand idly by."

Melany Grout, Director of CRN, stated, "Creating a Libya Recovery Fund is a way forward that would cut support to the government while enabling civilians to benefit from their resources. And while creation of a fund will require leadership from and discussion with the UN Security Council and other relevant offices and institutions, leadership from oil firms will be instrumental."

According to the press release, institutions interested in joining CRN’s engagement efforts should contact Maureen O’Brien, the organization's Head of Engagement.


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