Under Pressure, Harvard Sells Sinopec Shares

Divesiture comes one year after Harvard relinquished stake in PetroChina

Harvard announced yesterday that it would sell its shares in the oil firm Sinopec, a Beijing-based company with close ties to the Sudanese government.

The move comes amid increasing violence in the Darfur region of Sudan, where militias linked to the country’s government have slaughtered thousands of civilians in what the U.S. Congress and State Department have called a genocide. And it comes after more than 1,200 students, faculty, staff and alumni signed an online petition urging the University to sell its Sinopec stake.

“This is the right thing to do in light of the ongoing events in Darfur,” University President Lawrence H. Summers said in a statement yesterday.

The divestiture from Sinopec comes almost exactly one year after Harvard relinquished its stake in another Beijing-based firm, PetroChina, that also played an extensive role in Sudan’s oil export industry. “Oil is a critical source of revenue and an asset of paramount strategic importance to the Sudanese government,” the Harvard Corporation said in a statement at the time.

But Harvard still has not announced a divestiture from the Russian oil firm Tatneft, despite the fact that other schools—including Amherst, Stanford, and the University of California—have cut ties to Tatneft to protest the company’s links to the Khartoum regime.

In its most recent filing with federal regulators on Feb. 9, Harvard revealed that it owned 134,050 shares in Sinopec, also known as the China Petroleum and Chemical Corporation. Those shares were worth a total of $8.3 million on the New York Stock Exchange at noon yesterday. Since Sept. 30, 2001, when Harvard first reported to the federal Securities and Exchange Commission (SEC) that it had purchased a stake in Sinopec, the price of shares in the Beijing-based firm has quadrupled.

In its most recent SEC filing, Harvard also reported that it owned 48,100 shares of Tatneft—a stake that is now worth $5.1 million.

Tatneft’s current involvement in Sudan is “unclear,” but the company “has not denied reports of involvement in Sudan after divestment by other universities,” according to a Yale Law School report published in December.

Tatneft’s chairman is the prime minister of the Republic of Tatarstan, a member of the Russian Federation, though at least a fifth of the company is owned by foreign investors, according to the firm’s most recent annual report.

Tatneft submitted a statement to the SEC last July 14 stating that “we participate or intend to participate in projects in...Sudan, where both we and Russia have strong historical ties, subject to compliance with applicable international sanctions regimes.”

The Harvard Corporation, the University’s highest governing board, directed the school’s endowment managers yesterday to sell the Sinopec shares after the Corporation’s Committee on Shareholder Responsibility—which comprises Robert D. Reischauer ’63, an economist, and James R. Houghton ’58, the chairman of the glass and fiber-optic company Corning—recommended divestment. In a statement yesterday, the Committee on Shareholder Responsibility said that Sinopec is a partner in a venture that will significantly increase oil production in southeastern Sudan in the coming months.

‘YALE 7, HARVARD 2’

Student leaders of the pro-divestment movement cheered yesterday's announcement but also called for the University to adopt a more consistent policy on shareholder responsibility.

“It’s wonderful that they divested,” Kennedy School student Chad J. Hazlett, an organizer of the petition targeting Sinopec, said. But, he added, “there should be discussion of a broader policy of divestment so we don’t find ourselves in this position again.”

Manav K. Bhatnagar ’06, co-founder of the website HarvardDivest.com that hosted the initial petition targeting PetroChina and the more recent anti-Sinopec effort, called yesterday's announcement “a welcome step.” But in an e-mail, he wrote that “Harvard’s divestment still remains the most limited in scope compared to divestment decisions of other universities.”

“Peer institutions like Yale have not only divested from a broader range of companies, but more importantly, have set down concrete criteria to guide investments,” Bhatnagar wrote. “Harvard’s current system of reviewing investments is ad-hoc and inadequate,” he added. “This explains the fact that while Sinopec and PetroChina met the same criteria, there was a one-year gap in Harvard’s divestment.”

Last month Yale divested from seven firms with Sudan ties, including PetroChina, Sinopec, and five other stocks that are not listed in Harvard’s SEC filings. “Not that anyone is keeping score or anything, but Yale 7, Harvard 2,” Sabine J. Ronc ’07, co-founder of the Harvard Darfur Action Group, wrote in an e-mail yesterday. “We know we can do better,” Ronc added.

Sinopec officials could not be reached at the company’s New York office yesterday.

—Staff writer Cyrus M. Mossavar-Rahmani can be reached at crahmani@fas.harvard.edu.