The Permanent Fund Corporation does not have to wait for legislators to pass HB 287/SB 227 in order to divest from targeted companies, and they shouldn't. We think the Fund's managers should as soon as possible sell the Fund's direct holdings in the 6 companies that we are currently invested in that are identified by the Sudan Divestment Task Force as "Highest Offenders" because of their complicity in the Darfur Genocide. These 6 companies are CHINA PETROLEUM (SINOPEC), ALSTOM, PETROFAC LTD, WARTSILA, LUNDIN PETROLEUM AB, and CNPC HONG KONG LIMITED.
For readers who agree, please write to Mike Burns, Executive Director of the Permanent Fund Corporation, and request that the Permanent Fund Corporation pursue divestment on its own accord (like public fund manager's have in other states). The Permanent Fund Corporation shouldn't feel compelled to wait for law to dictate the right action when the Fund can (and should) do it on its own.
Mike Burns, Executive Director
Permanent Fund Corporation
P.O. Box 115500
Juneau, AK 99811-5500
Wednesday, February 27, 2008
Wednesday, February 20, 2008
The Cost of Divestment
Targeted divestment is not a losing venture. Many people think if we divest, we will lose money. Truth is, we could actually make money. Utilizing data from Bloomberg, on average, highest offenders underperformed their peer group by 51.63 percent over one year, 38.69 percent over three years, and 4.73 percent over five years. Also, the highest offenders, on average, underperformed the top three performers in their peer group by 75.92 percent over one year, 62.15 percent over three years, and 38.28 percent over five years.
When targeted divestment was developed, the goal was (and still is) to preserve investment returns AND fight against the Darfur Genocide. These two things (making money and fighting genocide) are not mutually exclusive. They can be done together.
HB 287/SB227 gives ample time for fund managers to find a suitable market for divestment (between 6 and 15 months). Our state investments in targeted companies account for only about $20 million of the roughly $40 billion held in our Permanent Fund. We are talking of less than 0.01 percent of the Permanent Fund. A divestment of less than 0.01 percent is definitely not likely to have a negative impact on the Fund's returns given the abundance of other available investment options and the generous amount of time given to divest.
When targeted divestment was developed, the goal was (and still is) to preserve investment returns AND fight against the Darfur Genocide. These two things (making money and fighting genocide) are not mutually exclusive. They can be done together.
HB 287/SB227 gives ample time for fund managers to find a suitable market for divestment (between 6 and 15 months). Our state investments in targeted companies account for only about $20 million of the roughly $40 billion held in our Permanent Fund. We are talking of less than 0.01 percent of the Permanent Fund. A divestment of less than 0.01 percent is definitely not likely to have a negative impact on the Fund's returns given the abundance of other available investment options and the generous amount of time given to divest.
Sunday, February 17, 2008
Hear the House State Affairs Committee Deliberation on HB 287 - You Be the Judge
Click here to be directed to the Gavel to Gavel Alaska webpage. If you enter February 9 and push the NEW DATE tab on the left of the webpage, you will be able to access the audio file of the Feb 9th House State Affairs Committee proceedings. Discussion of HB287 begins about 55 minutes into the meeting and lasts about 1.5 hours. The politics are very interesting!
You will hear testimony from many Alaskans (from Juneau, Fairbanks, and Anchorage)in support of the legislation, testimonies from members of the Sudan Divestment Task Force, including Max Croes, who helped draft the legislation, and testimonies from Mike Burns with the Alaska Permanent Fund Board and Brian Andrews with the Alaska Retirement Management Board.
The real stars of this hearing, though, are the legislators. Take note of the questions; who they are directed to and who they are not directed to and the unstated purpose behind the questions. Also, be sure to review the last few blog entries for the truth behind the testimonies presented by Mr. Burns and Mr. Andrews, as well as the stated concerns of the legislators.
Rep. Lynn was out due to his wife's illness, so he was not able to present the legislation. We are glad he and his wife are both doing well now. Rep. Les Gara is the "prime" who, in Rep. Lynn's absence, conducts this task with intelligence and passion. Thank you, Representatie Gara.
You will hear testimony from many Alaskans (from Juneau, Fairbanks, and Anchorage)in support of the legislation, testimonies from members of the Sudan Divestment Task Force, including Max Croes, who helped draft the legislation, and testimonies from Mike Burns with the Alaska Permanent Fund Board and Brian Andrews with the Alaska Retirement Management Board.
The real stars of this hearing, though, are the legislators. Take note of the questions; who they are directed to and who they are not directed to and the unstated purpose behind the questions. Also, be sure to review the last few blog entries for the truth behind the testimonies presented by Mr. Burns and Mr. Andrews, as well as the stated concerns of the legislators.
Rep. Lynn was out due to his wife's illness, so he was not able to present the legislation. We are glad he and his wife are both doing well now. Rep. Les Gara is the "prime" who, in Rep. Lynn's absence, conducts this task with intelligence and passion. Thank you, Representatie Gara.
Saturday, February 16, 2008
Truth 2 Revisited
Representative Coghill in the Feb. 9th hearing on HB 287, stated that he believed that divestment is not the "right tool" to address the Darfur genocide. He shared his concern for the people of Darfur, but stated that he believes that Alaska's divestment would have no real impact on how companies do business. The facts show that the targeted divestment campaign has real teeth to it. We hope as more facts are considered by Representative Coghill and our other legislators, they will come to realize what an effective tool divestment really is.
As discussed in our Feb. 10th blog entry, the targeted divestment movement has contributed to the altered business practices of multiple companies operating in Sudan. For example, Schlumberger, which does the wire-line logging for the oil field operators in Sudan, recently undertook substantial humanitarian efforts in Darfur because of pressure from investors. Specifically, they have begun building hospitals and schools in Darfur for the local population.
La Mancha Resources, the only mining company in Sudan, has adopted a policy to develop infrastructure in Sudan. The company has developed humanitarian facilities in Sudan that reach out to populations in the country that have been marginalized by the Government of Sudan. La Mancha also now offers employment opportunities to local Sudanese and has implemented training programs for these Sudanese so that they can move up in the company.
Roberta Cohen, Senior Advisor with The Brookings Institution, had this to say in observance of the power of targeted divestment: "Rolls Royce’s withdrawal from Sudan this past year reportedly surprised the government and affected the import of needed machine parts. The Sudanese government has publicly urged an end to divestment actions, underscoring the potential sting of their impact."
The divestment campaign poses a very real threat to the Government of Sudan. Sudan has an incredible amount of external debt -- estimated at $26 billion (World Bank). Sudan owes the International Development Association (IDA) $422 million in arrears payments, and has arrears of $1.7 billion owed to the International Monetary Fund. This incredible debt has crippled Sudan's ability to secure loans. For example, the IDA refuses to consider loans to the country until the country settles its arrears. The Government of Sudan is therefore almost completely reliant on foreign direct investment to operate. Unfortunately, the government chooses to put most of the foreign direct investment (70 percent)toward the military expenditures that fund the ongoing genocide in Darfur.
Targeted divestment aims to pressure companies providing most of the foreign direct investment (the oil industry provides 90 percent) to use the leverage they have with the Government of Sudan to end the genocide. The Government of Sudan needs foreign direct investment and the companies providing foreign direct investment need shareholders. The targeted divestment campaign recognizes that the shareholders are the power base, and calls on this power base to exert its very real and very powerful influence. To deny that targeted divestment is an effective tool, is to deny the facts.
As discussed in our Feb. 10th blog entry, the targeted divestment movement has contributed to the altered business practices of multiple companies operating in Sudan. For example, Schlumberger, which does the wire-line logging for the oil field operators in Sudan, recently undertook substantial humanitarian efforts in Darfur because of pressure from investors. Specifically, they have begun building hospitals and schools in Darfur for the local population.
La Mancha Resources, the only mining company in Sudan, has adopted a policy to develop infrastructure in Sudan. The company has developed humanitarian facilities in Sudan that reach out to populations in the country that have been marginalized by the Government of Sudan. La Mancha also now offers employment opportunities to local Sudanese and has implemented training programs for these Sudanese so that they can move up in the company.
Roberta Cohen, Senior Advisor with The Brookings Institution, had this to say in observance of the power of targeted divestment: "Rolls Royce’s withdrawal from Sudan this past year reportedly surprised the government and affected the import of needed machine parts. The Sudanese government has publicly urged an end to divestment actions, underscoring the potential sting of their impact."
The divestment campaign poses a very real threat to the Government of Sudan. Sudan has an incredible amount of external debt -- estimated at $26 billion (World Bank). Sudan owes the International Development Association (IDA) $422 million in arrears payments, and has arrears of $1.7 billion owed to the International Monetary Fund. This incredible debt has crippled Sudan's ability to secure loans. For example, the IDA refuses to consider loans to the country until the country settles its arrears. The Government of Sudan is therefore almost completely reliant on foreign direct investment to operate. Unfortunately, the government chooses to put most of the foreign direct investment (70 percent)toward the military expenditures that fund the ongoing genocide in Darfur.
Targeted divestment aims to pressure companies providing most of the foreign direct investment (the oil industry provides 90 percent) to use the leverage they have with the Government of Sudan to end the genocide. The Government of Sudan needs foreign direct investment and the companies providing foreign direct investment need shareholders. The targeted divestment campaign recognizes that the shareholders are the power base, and calls on this power base to exert its very real and very powerful influence. To deny that targeted divestment is an effective tool, is to deny the facts.
Wednesday, February 13, 2008
The Truth Continues
Truth 4: A Slope Doesn't Have to Be Slippery. In the deliberations on HB 287, one concern in particular was voiced repeatedly by some committee members in argument against the legislation: the slippery slope. Representative Johnson used the analogy of "the camel's nose under the tent." Apparently, if you let the camel nose poke under the tent, before you know it, you'll be sharing your sleeping bag with a smelly ungulate. Is that really inevitable? We at Save Darfur Anchorage argue that it's not.
The slippery slope is only as slippery as it is allowed to be by the people in charge. The people in charge, in this case, are our state legislators. They have in the past, are now in the present, and will in the future hear legislation calling for an evaluation of how our state invests, and they, our legislators, will be the ones who determine where that slippery slope begins and ends.
A slippery slope has no life force of its own. It is not some sort of autonomous being lying in wait for someone to step upon its red gooey blobness so that it can devour him and grow in power and destructive force. It is nothing more than what the people in charge (yes, our legislators) determine it to be. Our legislators should not fear something that they have control over.
We believed when we approached Representative Lynn with the idea for state divestment that our legislators would see the import of this legislation to address the genocide of today. We did not expect so much fear of the future. So many people throughout history have allowed their self-serving fears to prevent them from taking action against genocide, and the cost has been countless lives.
Our hope is that our legislators will move beyond the fear of the future and what it might bring, so that Alaska can do something powerful about the genocide that is happening today.
The slippery slope is only as slippery as it is allowed to be by the people in charge. The people in charge, in this case, are our state legislators. They have in the past, are now in the present, and will in the future hear legislation calling for an evaluation of how our state invests, and they, our legislators, will be the ones who determine where that slippery slope begins and ends.
A slippery slope has no life force of its own. It is not some sort of autonomous being lying in wait for someone to step upon its red gooey blobness so that it can devour him and grow in power and destructive force. It is nothing more than what the people in charge (yes, our legislators) determine it to be. Our legislators should not fear something that they have control over.
We believed when we approached Representative Lynn with the idea for state divestment that our legislators would see the import of this legislation to address the genocide of today. We did not expect so much fear of the future. So many people throughout history have allowed their self-serving fears to prevent them from taking action against genocide, and the cost has been countless lives.
Our hope is that our legislators will move beyond the fear of the future and what it might bring, so that Alaska can do something powerful about the genocide that is happening today.
Tuesday, February 12, 2008
More Truth about our Divestment Legislation
Truth 3: House Bill 287/Senate Bill 227 proposes divestment legislation that is constitutional, NOT unconstitutional.
In his testimony before the House State Affairs Committee and against HB 287, Brian Andrews, with the Alaska Retirement Board brought up the divestment bill that was passed in Illinois and then thrown out for being unconstitutional. He, like Mr. Burns from the Permanent Fund, was talking about an orange, when the fruit under question is the apple.
The Illinois legislation WAS unconstitutional (and, yes, it was blanket divestment, not targeted). It attempted, among other things, to impose sanctions on banks and to regulate investments made by the state's municipalities. HB 287/SB 227 proposes none of the actions that were responsible for getting the Illinois legislation revoked. Illinois's intention was good, but its execution was deeply flawed.
Alaska's legislation has none of those flaws, largely due to Representative Lynn's office working with the Sudan Divestment Task Force (SDTF) from the very beginning to draft the legislation. The SDTF is a non-profit organization whose model for targeted divestment legislation has been used by 15 of the 22 states that have divested. The SDTF knows its stuff, and has been the leading force in the divestment campaign. For Alaska, we went with the best!
Mr. Andrews might not have been aware of another factor regarding constitutionality: the Sudan Accountability and Divestment Act (SADA). On December 31, 2007, President Bush signed the SADA. The SADA authorizes and encourages states and other public entities using the targeted model to divest from Sudan. It also provides legal authorization and encouragement for states to adopt policies of targeted Sudan divestment. The bill, which passed both houses of Congress unanimously, also makes it easier for mutual funds and private pension fund managers to sell their investments and prohibits targeted companies from being eligible to receive contracts with the federal government.
Deliberation on legislation that offers a tool for combating genocide should involve the analysis of truths, not misinformation. May the truth prevail!
In his testimony before the House State Affairs Committee and against HB 287, Brian Andrews, with the Alaska Retirement Board brought up the divestment bill that was passed in Illinois and then thrown out for being unconstitutional. He, like Mr. Burns from the Permanent Fund, was talking about an orange, when the fruit under question is the apple.
The Illinois legislation WAS unconstitutional (and, yes, it was blanket divestment, not targeted). It attempted, among other things, to impose sanctions on banks and to regulate investments made by the state's municipalities. HB 287/SB 227 proposes none of the actions that were responsible for getting the Illinois legislation revoked. Illinois's intention was good, but its execution was deeply flawed.
Alaska's legislation has none of those flaws, largely due to Representative Lynn's office working with the Sudan Divestment Task Force (SDTF) from the very beginning to draft the legislation. The SDTF is a non-profit organization whose model for targeted divestment legislation has been used by 15 of the 22 states that have divested. The SDTF knows its stuff, and has been the leading force in the divestment campaign. For Alaska, we went with the best!
Mr. Andrews might not have been aware of another factor regarding constitutionality: the Sudan Accountability and Divestment Act (SADA). On December 31, 2007, President Bush signed the SADA. The SADA authorizes and encourages states and other public entities using the targeted model to divest from Sudan. It also provides legal authorization and encouragement for states to adopt policies of targeted Sudan divestment. The bill, which passed both houses of Congress unanimously, also makes it easier for mutual funds and private pension fund managers to sell their investments and prohibits targeted companies from being eligible to receive contracts with the federal government.
Deliberation on legislation that offers a tool for combating genocide should involve the analysis of truths, not misinformation. May the truth prevail!
Sunday, February 10, 2008
Misinformation Threatens Divestment Legislation
Four of the seven members of the House State Affairs Committee heard testimony on HB 287 on Saturday Feb 9th. The committee decided to hold the vote on the bill for a later date. It is, however, in big danger of being killed, based on the committee members' comments during the deliberation. A big factor in this is the testimonies presented by the Permanent Fund Board and the Alaska Retirement Board. The misinformation presented during these two testimonies threatens to kill the legislation. Because these two testimonies were the last two of the day and there were no opportunities provided to pro-legislation people to correct the misinformation during the hearing, these next few blogs are dedicated to doing just that.
Truth 1: Targeted divestment is NOT blanket divestment.
In his testimony, Mike Burns, representing the Permanent Fund Board, cited an article that stated that divestment did not impact the outcome of the anti-apartheid movement in South Africa, and therefore, the Sudan divestment effort is likely to be just as ineffective. Mr. Burns was comparing, perhaps unknowingly, apples to oranges. The South Africa divestment movement encouraged what is called blanket divestment. Blanket divestment targets all companies equally. Divesting from South Africa meant divesting from companies that financed arms deals and from companies that provided medical supplies. All companies doing business in South Africa were impacted, and therefore, the South African people were as impacted at least as much as the government, and often to a greater degree.
Our state divestment bill (HB 287/SB 227) proposes targeted, not blanket, divestment. Targeted divestment calls for divestment from about 24 companies that either contract directly with the Government of Sudan or work on projects run and financed by the Government of Sudan. These companies are either directly or indirectly enabling the Darfur genocide and providing minimal services, goods, or support to the regular people of Sudan.
Yes, blanket and targeted are both divestment approaches, just as apples and oranges are both fruit. But they are very different - - just ask anyone who's ever had a warm piece of orange pie.
Truth 2: Targeted divestment works.
Mr.Burns also stated that divestment would not effect the companies targeted and would not have any real impact on the genocide. Mr. Burns is not a foreign policy expert, or an expert on genocide, so he may have been speaking a bit beyond his area of expertise. He may also not have been aware of the following facts:
Companies operating in Sudan have proven highly responsive to the current Sudan divestment movement. Canadian oil company, Talisman, withdrew from Sudan in 2002. "Shareholders have told me they were tired of continually having to monitor and analyze events relating to Sudan," Talisman CEO Jim Buckee said in a press release. He conceded that the criticism directed at the company's activities had had an effect, stating: "Talisman's shares have continued to be discounted based on perceived political risk in-country and in North America to a degree that was unacceptable for 12 per cent of our production." Other oil companies followed Talisman's lead and, soon thereafter, the Khartoum regime entered into negotiations that finally ended the country's 21-year civil war.
In 2007, the Canadian firm CHC Helicopter Corporation, the world's largest provider of helicopter services to the global offshore oil and gas industry and previously a Highest Offender on the Sudan Divestment Task Force list of companies, ceased all business operations in Sudan for the indefinite future after substantial levels of inquiry from a range of concerned investors. CHC Helicopter had been executing a contract with Greater Nile Petroleum Company, the largest oil consortium in Sudan.
Also in 2007, the British firm Rolls Royce PLC, previously a Highest Offender due to the sale of oil equipment to a problematic consortium abutting Darfur, announced it will begin withdrawing from current contracts in Sudan and cease pursuing new contracts. Schlumberger Ltd.,which provides oil-field services to the major oil consortiums in Sudan, committed to reinforcing its existing outreach programs by implementing substantial humanitarian programs to reach marginalized populations in the country. This includes several humanitarian projects carried out in coordination with non-profit entities in one of the country's many Internally Displaced Persons (IDP) camps. "Substantial" humanitarian action is rigorously defined in the Sudan Divestment Task Force's "targeted divestment" model, and Schlumberger has committed to this high standard in a detailed written letter to the Task Force.
As for the government of Sudan? The Sudan Divestment Task Force sums it up well: "Perceiving the divestment movement as a clear threat, the Khartoum government has taken considerable steps to publicly oppose divestment, placing a $1 million advertisement in The New York Times extolling the virtues of investing in Sudan, and issuing both a press release and an op-ed condemning the divestment movement. In direct correspondence with the Task Force members, the Sudanese Ambassador to the United States reiterated his country's strong opposition to divestment. As Sudan researcher Eric Reeves notes, 'The fact that the regime is responding so distinctly to the movement means they certainly understand the implications.'"
Truth 1: Targeted divestment is NOT blanket divestment.
In his testimony, Mike Burns, representing the Permanent Fund Board, cited an article that stated that divestment did not impact the outcome of the anti-apartheid movement in South Africa, and therefore, the Sudan divestment effort is likely to be just as ineffective. Mr. Burns was comparing, perhaps unknowingly, apples to oranges. The South Africa divestment movement encouraged what is called blanket divestment. Blanket divestment targets all companies equally. Divesting from South Africa meant divesting from companies that financed arms deals and from companies that provided medical supplies. All companies doing business in South Africa were impacted, and therefore, the South African people were as impacted at least as much as the government, and often to a greater degree.
Our state divestment bill (HB 287/SB 227) proposes targeted, not blanket, divestment. Targeted divestment calls for divestment from about 24 companies that either contract directly with the Government of Sudan or work on projects run and financed by the Government of Sudan. These companies are either directly or indirectly enabling the Darfur genocide and providing minimal services, goods, or support to the regular people of Sudan.
Yes, blanket and targeted are both divestment approaches, just as apples and oranges are both fruit. But they are very different - - just ask anyone who's ever had a warm piece of orange pie.
Truth 2: Targeted divestment works.
Mr.Burns also stated that divestment would not effect the companies targeted and would not have any real impact on the genocide. Mr. Burns is not a foreign policy expert, or an expert on genocide, so he may have been speaking a bit beyond his area of expertise. He may also not have been aware of the following facts:
Companies operating in Sudan have proven highly responsive to the current Sudan divestment movement. Canadian oil company, Talisman, withdrew from Sudan in 2002. "Shareholders have told me they were tired of continually having to monitor and analyze events relating to Sudan," Talisman CEO Jim Buckee said in a press release. He conceded that the criticism directed at the company's activities had had an effect, stating: "Talisman's shares have continued to be discounted based on perceived political risk in-country and in North America to a degree that was unacceptable for 12 per cent of our production." Other oil companies followed Talisman's lead and, soon thereafter, the Khartoum regime entered into negotiations that finally ended the country's 21-year civil war.
In 2007, the Canadian firm CHC Helicopter Corporation, the world's largest provider of helicopter services to the global offshore oil and gas industry and previously a Highest Offender on the Sudan Divestment Task Force list of companies, ceased all business operations in Sudan for the indefinite future after substantial levels of inquiry from a range of concerned investors. CHC Helicopter had been executing a contract with Greater Nile Petroleum Company, the largest oil consortium in Sudan.
Also in 2007, the British firm Rolls Royce PLC, previously a Highest Offender due to the sale of oil equipment to a problematic consortium abutting Darfur, announced it will begin withdrawing from current contracts in Sudan and cease pursuing new contracts. Schlumberger Ltd.,which provides oil-field services to the major oil consortiums in Sudan, committed to reinforcing its existing outreach programs by implementing substantial humanitarian programs to reach marginalized populations in the country. This includes several humanitarian projects carried out in coordination with non-profit entities in one of the country's many Internally Displaced Persons (IDP) camps. "Substantial" humanitarian action is rigorously defined in the Sudan Divestment Task Force's "targeted divestment" model, and Schlumberger has committed to this high standard in a detailed written letter to the Task Force.
As for the government of Sudan? The Sudan Divestment Task Force sums it up well: "Perceiving the divestment movement as a clear threat, the Khartoum government has taken considerable steps to publicly oppose divestment, placing a $1 million advertisement in The New York Times extolling the virtues of investing in Sudan, and issuing both a press release and an op-ed condemning the divestment movement. In direct correspondence with the Task Force members, the Sudanese Ambassador to the United States reiterated his country's strong opposition to divestment. As Sudan researcher Eric Reeves notes, 'The fact that the regime is responding so distinctly to the movement means they certainly understand the implications.'"
Friday, February 1, 2008
House State Affairs Committee Review of HB 287 Postponed to Feb. 9th
This postponement gives us another week to contact House State Affairs Committee members and ask them to support HB 287. Please find time this week to contact each member listed below, so that they will have no doubt that Alaskans do not want to profit from genocide!
House State Affairs Committee Members:
Chair - Rep. Bob Lynn (465-4931)
Rep. Lynn is sponsoring the legislation, so be sure to commend him for his great work and let him know we support his efforts!
Vice-Chair Rep. Bob Roses (465-4939)
Member Rep. John Coghill (465-3719)
Member Rep. Kyle Johansen (465-3424)
Member Rep. Craig Johnson (465-4993)
Member Rep. Andrea Doll (465-3744)
Member Rep. Max Gruenberg (465-4940)
House State Affairs Committee Members:
Chair - Rep. Bob Lynn (465-4931)
Rep. Lynn is sponsoring the legislation, so be sure to commend him for his great work and let him know we support his efforts!
Vice-Chair Rep. Bob Roses (465-4939)
Member Rep. John Coghill (465-3719)
Member Rep. Kyle Johansen (465-3424)
Member Rep. Craig Johnson (465-4993)
Member Rep. Andrea Doll (465-3744)
Member Rep. Max Gruenberg (465-4940)
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