Warren Buffett's Berkshire Hathaway is defending its investment in PetroChina and suggested that pension funds and universities that are selling off their stakes in the Chinese oil conglomerate are mistaken about its involvement in Sudan.
The Omaha-based holding company broke its own policy of not commenting on its investments and posted a Web statement about its 2.3 billion shares of PetroChina Co (中國石油天然氣) in response to questions from shareholders and the media.
The US and international humanitarian groups have accused the Sudanese government of using its oil wealth to wage war against the people in the western Darfur region and some groups have suggested that PetroChina has supported the Sudanese government.
In Berkshire's unsigned statement, the company said it agreed that conditions in Sudan were deplorable and the company sympathized with people who want to improve those conditions.
"We believe, however, that they are wrong in both their analyses of PetroChina's connection to these conditions and their belief that our divesting our PetroChina holdings would in any way have a beneficial effect on Sudanese behavior," the company said.
Pension funds in North Carolina and Vermont have decided to sell investments in PetroChina and other companies that state officials believe support Sudan.
Several universities, including the University of California, Yale, Stanford and Harvard, have sold investments in companies doing business in Sudan. And Illinois passed a law requiring that the state divest about US$1 billion in pension investments in companies doing business in Sudan.
But Buffett's company said it has received no records that show PetroChina has operations in Sudan. Berkshire owns about 1.3 percent of PetroChina.
Berkshire said groups supporting the divestment of interests in Sudan may be confusing PetroChina with its parent company, Chinese National Petroleum Corp (CNPC, 中石油集團), which is owned by the Chinese government.
Berkshire said CNPC does do business in Sudan, but PetroChina should not be held responsible for the actions of its controlling shareholder.
Andy Kilpatrick, the stockbroker who wrote Of Permanent Value: The Story of Warren Buffett, said he thinks Buffett may have issued this statement to make his position clear before Berkshire Hathaway's annual meeting in May.
"I think he's probably heading off some move at the annual meeting," Kilpatrick said.
He said Buffett may have simply received enough questions about PetroChina that he decided issuing a statement was the best way to respond.
Berkshire said people who want China to withdraw its investment in Sudan should be careful because if CNPC were to leave Sudan, CNPC would likely have to sell its pipeline and oil interests to Khartoum.
"After such a transaction, the Sudanese government would be better off financially, with its oil revenue substantially increased," Berkshire said.
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