December 23, 2011
Shareowner Activists Pressure Chevron for Transparency Over Payments to Burmese Regime
by Robert Kropp
Amid news of a possible normalization of relations between the US and Burma, sustainable investors
and other activists argue that most of Chevron's payments line the pockets of the military. First
of a two-part series.
The news out of Burma over the past several weeks can seem as confusing as the country's name. US
Secretary of State Hillary Clinton met recently with Thein Sein, a former general who was elected
to the Presidency of the country in March. Clinton praised such "incremental steps" as the release
of a relatively small number of more than 2,000 political prisoners, saying, "The United States is
prepared to walk the path of reform with you if you keep moving in the right direction."
However, as shareowner activist Simon Billenness pointed out, "Looking carefully at the
facts, some political prisoners have been released. But the bulk of them still remain in prison,
including a lot of the younger activists. The government and Parliament remain hugely stacked in
favor of the military and its satellite political parties. The political space is still very
In addition to being a member of the Committee on Socially Responsible Investing
of the Unitarian Universalist Association, Billenness sits on the board of The US Campaign for Burma.
The involvement of
sustainable investors in the human rights situation in Burma dates back several years, and focuses
primarily on the activities of Chevron in that country. Chevron, according to Billenness, is "the
US company with the largest investment in Burma. Chevron is the Burmese regime's biggest lobbying
Chevron has paid "billions of dollars" to the Burmese regime, according to
Larry Dohrs, Vice President of Newground Social
Investment, a Seattle-based money manager for individuals and institutions that Dohrs describes
as "100% SRI." The vast majority of those payments do not benefit the Burmese people at all.
Where do Chevron's payments to Burma go? As Billenness explains it, "The payments that Chevron
makes to the military regime are booked under the regime's exchange rate of six kyat to a dollar,
when in reality in the marketplace it's several hundred to a dollar. What that means is that it
helps the regime launder the money. The regime can channel over 95% of those payments wherever they
Writing in the Wall Street Journal, Sean Turnell of Burma Economic
Watch explained, "Recorded at the official rate, Burma's gas earnings translate into less than
1% of budget receipts. By contrast, if the same gas earnings are recorded at the market exchange
rate, their contribution would more than double total state receipts, and largely eliminate Burma's
"The motivation for this sleight of hand is probably to 'quarantine'
Burma's foreign exchange earnings from the country's public accounts, thereby making them available
to the regime and its cronies," Turnell continued.
"Chevron never talks about the money
going to the generals," Dohrs said. "The only thing they will talk about is the small development
projects they have in the direct pipeline area, which amount to a tenth of one percent of the cost
of the project."
The pipeline project to which Dohrs referred is the Yadana Gas Project, described by
EarthRights International as "one of the world’s most controversial natural gas development
projects." A consortium of oil and gas companies, including Chevron, has operated the project since
"It has been marred by serious and widespread human rights abuses committed by
pipeline security forces on behalf of the companies, including forced labor, land confiscation,
forced relocation, rape, torture, murder," EarthRights International stated. "Many of these abuses
"We have co-filed for a number of years a resolution on country selection
criteria, trying to get a picture from an investor point of view how the company decides whether or
not to invest in this country or that," Dohrs said. "So far the resolution has gotten pretty
substantial support, but up to this point we haven't gotten any movement from the company on the
A co-filer on the country selection resolution this year is Zevin Asset Management, a Boston-based investment firm. Sonia
Kowal, Zevin's Director of Socially Responsible Investing, told SocialFunds.com, "The resolution is
trying to get them to outline how they decide whether to invest in a country or withdraw from a
country. Their country selection processes are opaque and we'd like to know how they decide,
especially when the government of the country has engaged in ongoing systemic human rights
The resolution addressing country selection requests that Chevron report on
its criteria for investment in and withdrawal from specific high-risk countries, including Burma.
"The current situation hasn't changed the concerns we have about how Chevron is
facilitating money laundering by the regime," Billenness said. Referring to an anticipated rule
from the Securities and Exchange Commission (SEC) requiring companies in extractive industries to
disclose payments to governments, Billenness said, "Chevron has been fighting tooth and nail
against revenue transparency, particularly on a project basis. The company has said it is
contractually obligated not to disclose their payments to the regime. EarthRights International
actually got a copy of the contract, and there's no provision of that kind. Then Chevron said there
is a second contract, which itself is confidential."
Newground Social Investment and Zevin
Asset Management are co-filers on additional resolutions addressing the corporate governance
failures of Chevron. One requests that the company's board give holders of 10% of outstanding
common stock the power to call a special shareowners meeting.
Another resolution directs
the board to adopt a policy to ensure the separation of the positions of Chairman of the Board and
Chief Executive Officer. Quoting the Chairmen's Forum, the proposal
stated that an "independent chair curbs conflicts of interest, promotes oversight of risk, manages
the relationship between the board and CEO, serves as a conduit for regular communication with
shareowners, and is a logical next step in the development of an independent board."
resolutions addressing corporate governance also refer to Chevron's disastrous environmental record
in Ecuador, where a court awarded damages totaling $18 billion to plaintiffs suing Chevron for
actions including the dumping of billions of gallons of waste byproduct from oil drilling in the
rainforest, and burning hundreds of millions of cubic feet of gas and waste oil into the
Next: Shareowner advocates take on Chevron over liability for environmental
damages in Ecuador.