University Divests From PetroChina

For six years, Smith College Professor Eric Reeves has fought non-stop to draw the world’s attention towards atrocities committed by Sudan’s rulers. Even while undergoing chemotherapy for leukemia at Boston’s Dana-Farber Cancer Institute, Reeves fielded calls from reporters on his cell phone, with intravenous tubes sticking into his veins.

Reeves’ one-man campaign against the Khartoum regime began in 1999, as a civil war ravaged the southern region of the African country.

As a Renaissance literature expert, Reeves might be an improbable figure to lead a broad-based human rights advocacy movement. And in recent months, Reeves has found even more unlikely allies in his quest: the three members of Harvard’s Corporation Committee on Shareholder Responsibility (CCSR).

New York attorney Conrad K. Harper ’62, glass company executive James R. Houghton ’58, and economist Robert D. Reischauer ’63 have the ultimate authority over the University’s divestiture decisions.

And on April 4, they made Harvard the first major institutional shareholder to alter its stock portfolio as a protest against the ongoing genocide in Darfur.

The University—which at one point held at least a $7.2 million stake in the oil company PetroChina—sold all of its shares in the Beijing-based firm, which is intimately linked to the Khartoum regime.

But two months later, Harvard’s divestment has had no discernible effect on PetroChina’s share price, says Morgan Stanley’s chief Asia/Pacific economist, Andy Xie.

“I didn’t even know Harvard had divested from PetroChina,” says Adrian Loh, a Singapore-based regional energy analyst for Merrill Lynch. “That’s new news to me.”

In the immediate wake of Harvard’s announcement, human rights activists may have overestimated the impact of the University’s divestment.

John Prendergast, the former African affairs director at the National Security Council, wrote in an e-mail in early April that Harvard’s move “will create a domino effect throughout the U.S.”

But the dominoes have yet to fall.

As of press time, no university endowment or state pension fund had publicly divested from a Sudan-related stock.

And Harvard still holds multimillion-dollar stakes in two oil firms that continue to conduct business with Khartoum.

“Clearly, the divestment movement has not taken off in the way we hoped it might,” says Matthew W. Mahan ’05, a co-founder of Senior Gift Plus, whose members had pledged to withhold their graduation donations from the Harvard College Fund until the University cut its ties with PetroChina.

“But the only appropriate response is to push harder,” Mahan says.

‘A RARE STEP’

Harvard’s stake in PetroChina first came under scrutiny last October, after The Crimson reported that the University had accumulated nearly $4 million worth of the stock.

PetroChina is a subsidiary of the China National Petroleum Corp., a state-owned behemoth that has poured billions of dollars into a joint oil production venture with Khartoum.

Within days of the Crimson report, hundreds of students and faculty members had signed an online petition at HarvardDivest.com urging University President Lawrence H. Summers “to publicly state that Harvard will not invest in any corporation that conducts business with the Sudanese government for as long as Sudan is in violation of international norms of human rights.”

Throughout the winter, Summers declined to comment to reporters on the future of Harvard’s PetroChina holdings. But according to Kennedy School lecturer Samantha Power, author of a Pulitzer Prize-winning study of genocide, Summers emerged as a strong advocate for divestment behind the scenes.

And in April, the CCSR concurred. In a carefully-worded statement, the committee members said that “this particular combination of circumstances…warrants the rare step of divestment.”

But the CCSR did not weigh in on Harvard’s investments in other companies with ties to Khartoum. The University’s most recent filings with federal regulators indicated that Harvard owned more than $3 million of stock in China Petroleum and Chemical Corp., or “Sinopec,” which is constructing a pipeline connecting oil fields to the coastal town of Port Sudan. The filings also showed that Harvard owned more than $2 million in Tatneft, a Russian company that signed a 2001 deal to explore oil fields in central Sudan.

Divestment advocates will not declare victory until these stocks are purged from Harvard’s portfolio.

The CCSR “has already admitted the close nexus between oil revenue and the ongoing Sudanese genocide,” Manav K. Bhatnagar ’06, co-founder of HarvardDivest.com, said last month. “In light of that, it is egregious that they continue to maintain their holdings in foreign oil companies in Sudan.”

ALL QUIET ON THE WESTERN FRONT?

Human rights activists hope that divestment campaigns can draw international attention towards Darfur, says Colin Thomas-Jensen of the International Crisis Group (ICG).

The deadly civil war in southern Sudan languished out of the limelight for more than two decades. But Harvard’s move to divest from PetroChina grabbed headlines both locally and in far-flung papers—from Singapore’s Straits Times to the Paris-based International Herald Tribune.

Last month, Power and Prendergast, who is now a special adviser to the president of the ICG, sent a letter urging the presidents of the 100 wealthiest U.S. universities to cleanse their endowment portfolios of Sudan-related stocks.

This month, Stanford’s Board of Trustees will consider a student-faculty panel’s recommendation that the University sell its shares in PetroChina, Sinopec, Tatneft, and a fourth firm, the Swiss-based power company ABB Ltd.

“The combination of Stanford and Harvard would provide a West-Coast East-Coast one-two punch that would start to generate real pressure on other universities to follow suit,” Prendergast told the Stanford Daily.

And back on campus, Harvard’s divestment has energized a flurry of Sudan-related activity.

Most recently, under pressure from students, University Dining Services launched the “Swipe-for-Darfur” program, which allows undergraduates to use their Crimson Cash dollars to support African Union peacekeepers in Sudan.

“Two of the only tangible things that have been done for Darfur writ large have happened at this University,” Power said in May, referring to divestment and Swipe-for-Darfur.

Divestment activists have begun to look beyond college campuses and towards “the logical next step—state pension funds,” according to Thomas-Jensen.

Last month, lawmakers in Springfield overwhelmingly passed legislation sponsored by State Senator Jacqueline Y. Collins that would require Illinois to sell more than $1 billion worth of stock in several dozen companies with alleged links to Khartoum.

Collins, who holds two masters degrees from Harvard, says she expects that Illinois Gov. Rod R. Blagojevich will sign the bill by mid-July.

But elsewhere, divestment legislation has stalled. A bill similar to Collins’ overwhelmingly passed the New Jersey Assembly in February, but is now stuck in the State Senate.

OUT OF THE WOODS

In the first indication that divestment campaigns are having an impact on the Sudanese regime’s business partners, ABB Ltd.—which holds a contract to improve Sudan’s electric grid—announced in April that it is “considering whether doing business [there] is the right thing.”

“That was a huge statement,” Reeves says. “In Khartoum, it went off like a bomb....The first company to leave will put enormous pressure on all the others.”

Meanwhile, Reeves is receiving encouraging signs on another front.

Last month, the Smith College professor finished his first cycle of chemotherapy, and he reports that his recovery is proceeding steadily.

For years, Reeves had been a “voice crying in the wilderness,” Collins says.

But with divestment advocates emerging at Harvard and beyond, Reeves’ lone voice is growing into a chorus.

—Staff writer Daniel J. Hemel can be reached at hemel@fas.harvard.edu.