Last week, a company that funnels millions of dollars to the genocidal government of Sudan became the world’s first company worth more than $1 trillion. PetroChina is now the largest corporation, measured by market capitalization, in the world.
But PetroChina’s rise couldn’t have happened without the support of UBS, the prestigious Swiss bank. By acting as underwriter for PetroChina’s listing on the Shanghai stock exchange, UBS guaranteed that PetroChina’s initial public offering (IPO) would be a success. That fact should give great pause to UBS employees and students at Harvard and across the country who are considering employment at UBS.
Though a UBS spokesman tried to justify the company’s decision, telling news agency Swissinfo that “UBS does not do business with companies in Sudan or those that generate substantial revenues in Sudan,” only a tortuous reading of business relationships bears this claim out. While technically separate entities, PetroChina is a public subsidiary of China National Petroleum Corporation (CNPC), which owns 87 percent of PetroChina and controls its corporate governance policies. Indeed, the report that mandated Harvard’s divestment from PetroChina in April 2005—released by the Harvard Corporation Committee on Shareholder Responsibility—found that PetroChina and CNPC enjoy such close ties that “the investment and development subcommittee of the board of PetroChina is comprised solely of two Vice Presidents of CNPC.”
The spokesman’s further apologia that the proceeds of PetroChina’s listing "will only be used in [China]," is just plain unverifiable. Money is fungible, and CNPC has invested millions of dollars in Sudanese oil projects. This oil money bankrolls the Khartoum regime; PetroChina has the power to influence what is going on in Darfur by tightening the regime’s pursestrings.
Despite the obvious link between PetroChina and CNPC, UBS’s apologists contend that had UBS not served as underwriter, one of a number of other firms might have stepped in. But this clearly would not have been the case. As the result of a restriction imposed by China’s communist government, UBS is one of only two western firms that can serve as lead underwriter for companies in mainland Chinese markets, the other being Goldman Sachs.
UBS’s privileged position gave it unique leverage over PetroChina, and a responsibility to exercise sound ethical judgment. Had UBS declined to underwrite PetroChina, PetroChina’s success on the Shanghai stock exchange would have hardly been guaranteed. Without the support of a western firm, PetroChina would have had to rely upon a Chinese investment bank, which would not have been able to provide the same level of financial expertise or resources.
By providing PetroChina with such vital services, UBS squandered a tremendous opportunity to use its leverage to engage PetroChina on its connection to Sudan. Prior to PetroChina’s IPO, an international petition, along with three Nobel laureates, and nongovernmental organizations in 15 countries, called on UBS to make its underwriting of PetroChina contingent upon a change in PetroChina’s behavior in Sudan. Since UBS refused to do so, the focus of the awareness campaign has shifted toward swaying students who are considering UBS as an employer.
Businesses like UBS have a duty to uphold certain ethical standards that do not waver no matter the profit on the line. These standards include avoiding business with companies that prop up dictatorial regimes and finance blatant human rights violations. When a business fails to uphold such standards, it falls upon its potential employees and clients to hold it accountable.
On Wednesday evening, UBS will host an open recruiting event for Harvard students at the Faculty Club. We encourage students who attend this event to get as much information as possible regarding UBS’s complicity in PetroChina’s ties to Sudan. UBS representatives should be questioned rigorously on its role in securing the Sudanese government’s greatest benefactor such a lucrative deal. Students should think twice about working for a company that underwrites genocide.