During the week of April 13, the Vanguard Group’s mutual funds shareholders received their first proxies since 2002. The proxies contain a proposal which asks shareholders to “institute procedures to prevent holding investments in companies that, in the judgment of the Board, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.”
The proposal was coordinated by the non-profit group, Investors Against Genocide. Voting was open until the shareholder meeting on July 2. Eric Cohen, chairperson of Investors Against Genocide, characterizes the proposal as “particularly unusual, because Vanguard customers have not had an opportunity to vote in nearly seven years, and also because the genocide-free investing proposal is the first shareholder proposal to make it onto the proxy ballot at Vanguard.”
Vanguard is opposed to the proposal because it claims to have adopted a new policy which “applies to all 157 funds and is substantially identical to the shareholder proposal submitted for 30 funds.” However, during Vanguard’s most recent quarter it increased holdings of PetroChina and other oil industry partners of the Sudanese government. As of January 31, 2009 Vanguard had $140 million invested in PetroChina. Other mutual fund firms are also large shareholders in PetroChina, including Franklin Templeton, American Funds, and Fidelity.
A similar proposal is expected to be on the ballot in early August for the Investment Company of America (American Funds), a $53 billion fund with over four million shareholders.
Oil revenues fund genocidal policies in Darfur
According to Investors Against Genocide, the Sudanese government has used up to 70 percent of its oil revenue to fund attacks against the Darfur region in the south of the country. The major oil companies operating in Sudan are all partners of the government owned company, Sudapet. Federal law prevents most American companies from operating in Sudan, but not investing in companies that operate in the country. In 2007, former president George Bush signed into law the Sudan Accountability and Divestment Act, which provides support for fiduciaries to divest from Sudan.
A number of reports about Sudan make it clear that oil revenue does indeed fund the genocide. The Sudanese government is able to fund the “the expensive bombers, helicopters, and arms supplies” through oil revenues which allow them to attack towns and villages in Southern Sudan, according to Amnesty International’s report on Sudan.
A Human Rights Watch report states that the “large-scale exploitation of oil by foreign companies operating in the theatre of war in southern Sudan has increased human rights abuses there and has exacerbated the long-running conflict in Sudan.”
A report by the Allard K. Lowenstein International Human Rights Clinic at Yale Law School links “business relations with foreign companies” and the Sudanese “genocidal policy in Darfur.” The report goes on to state that “divestment is a potentially powerful tool against a government that has engaged in genocide.”