Press Coverage

ONGC Videsh Ltd, or OVL, the global arm of state-owned exploration giant Oil and Natural Gas Corp. Ltd, which is facing international wrath for investing in Africa's civil war-ravaged Sudan, confirmed it had quietly exited its only hydrocarbon asset in the US, because it had anticipated a backlash in the West.

Specifically, the company had feared that the US could invoke the Alien Tort Claims Act, which allows "foreign victims of serious human rights abuse abroad to sue the perpetrators" in US courts.

As Mint reported on 29 June, OVL's operations in Sudan have come under intense criticism from international groups, such as the Amnesty International, Genocide Intervention Network, or GIN, and Investors Against Genocide. GIN's Sudan Divestment Task Force report has identified ONGC as one of the top four "highest offenders" indirectly contributing to the ongoing conflict in Sudan.

ONGC had previously taken a 10% stake in an offshore gas exploration project located near the Louisiana coast in the US through its Houston-based subsidiary, Sakhalin India, from US-based McAlester Fuel Co. in 2002.

But it exited its participating interest in the exploration and production asset in January 2003, a month before it acquired a 25% stake in Greater Nile Petroleum Operating Co. in Sudan from Canada's Talisman Inc. for $720 million (about Rs3,450 crore then).

The other partners in the consortium are China National Petroleum Corp., or CNPC, (40%), Petronas Carigali Overseas Sdn BHD (30%) and Sudan National Oil Co. (5%).

Expanding ONGC's Sudan operations in May 2004, OVL had acquired a 24.125% stake in Block 5A and a 23.5% stake in Block 5B operated by the White Nile Petroleum Operating Co. Ltd from Austria's OMV Aktiengesellschaft for $134 million. OVL has invested around $1 billion in its hydrocarbon blocks in Sudan.

"We exited our stake in the US fearing the Alien Tort Claims Act. It was a very calculated move as one needs to be very careful. I am not saying that we will not take any stakes in the US but, the risks will have to be evaluated, given the current situation," said a senior OVL executive who asked not to be named.

India consumes around 112 million tonnes (mt) of petroleum products a year. It is also the world's fifth largest oil importer and around 78% of its energy needs are met through imports. With the international price of crude at around $140 per barrel, developing economies such as India and China are engaged in a race to acquire equity stakes in the hydrocarbon blocks overseas.

OVL registered a production of 8.802mt of oil and oil equivalent gas and earned a net profit of Rs2,397 crore on a turnover of Rs16,954 crore in 2007-08. It is present in 38 oil and gas projects in 18 countries across the world and has proven reserves of 1.166 billion barrels.

A senior ONGC executive, who didn't want to be identified, claimed, without providing any specific evidence, that the US is trying to scuttle India's chances of achieving energy security in Africa and elsewhere. He also claimed that the actions of Cindy McCain, the wife of Republican presidential candidate John McCain, who is a strong advocate of financial sanctions against Sudan for human rights abuses in Darfur and sold her mutual funds that had invested in OVL, should be viewed as supporting his claim.

"Criticism such as these will not affect ONGC either on the financials or its image," says a Mumbai-based oil and gas sector analyst who cited commercial reasons for not wanting to be identified. "One needs to understand that energy resources are found in difficult regions and one needs to be pragmatic enough to understand that energy security is the key."

"We abide by United Nation's sanctions and not by those of the US. Our assets are not even in Darfur, which is the conflict zone," the ONGC executive said.

The Greater Nile Oil Project in Sudan is located in the Muglad Basin, around 700km south-west of the capital, Khartoum.

The Sudan conflict, which started in 2003, is believed to have killed nearly 300,000 people and displaced at least two million Sudanese from their homes.

According to the shareholding data available with the Bombay Stock Exchange, as on 31 March, foreign institutional investors, or FIIs, held nearly 8% stake in ONGC.

At current market price, the entire FII holding is valued at around $560 million. American Funds is the single largest FII investor in ONGC, holding 46,016,142 shares or a 2.14% stake.

Hyderabad: International activists are turning the heat on India's Oil and Natural Gas Corp. Ltd (ONGC) over its operations in the civil war-ravaged African nation Sudan following similar campaigns against Chinese and Malaysian oil firms.

Amnesty International, Genocide Intervention Network (GIN) and Investors Against Genocide have launched targeted campaigns after GIN's Sudan Divestment Task Force report identified ONGC as among the top four "highest offenders" indirectly contributing to the ongoing conflict in Sudan. While estimates vary, the conflict, which started in 2003, is believed to have killed nearly 300,000 people and displaced at least two million Sudanese from their homes. ONGC has invested nearly $1 billion (Rs4,288 crore) in Sudanese oilfields and is one of the top three players in the oil sector in that country. Activists claim that ONGC is stonewalling efforts by both activists as well as investors to engage the company on its operations in Sudan.

"We have regularly written to and called ONGC but, have not yet been able to secure a meeting or phone call to discuss their operations in Sudan. To our knowledge, investors have not yet been able to effectively engage with ONGC either," said GIN International coordinator Scott Wisor.

Asked about the human rights issues involved in the company's Sudan operations, ONGC spokesperson M. Selva Pandian said the company acknowledged the "ethical question" involved and the "big dilemma" that it poses.

"However, we are a 74% state-owned company and a purely commercial entity. It is not really in our hands, we follow the directions given by the Indian government," the spokesperson added. Joining ONGC on the shortlist in the report, released on 31 May, are China National Petroleum Corp., Malaysia's Petroliam Nasional Berhad (Petronas) and China Petroleum and Chemical Corp. (Sinopec).

As per International Trade Center (ITC) data, Sudan's oil export, which constitutes nearly 90% of total exports, stood at $4.8 billion in 2006 and are expected to touch $7 billion in 2007. Amnesty claims that close to 70% of this oil revenue is used by the Sudanese government for military expenditure. The campaign by the human rights activists is channelled through mutual fund houses and institutional investors who will have a better chance of influencing companies they have invested in.

"Ultimately, the goal is to get big oil companies, like Petronas or ONGC, to engage the Sudanese government to end the violence in Sudan," wrote Amy O'Meara, Amnesty International USA human rights and business director, in an email response to Mint's questions. "We are talking to major investors in the US who have holdings in ONGC as well as the other major oil companies operating in Sudan, in the hopes that they will raise these concerns with the company."

Violent conflict started in Sudan in February 2003. A month later, ONGC started operating in Sudan through the wholly owned subsidiary ONGC Videsh Ltd (OVL) by acquiring a 25% stake in Greater Nile Petroleum Operating Co. from Canada's Talisman Inc. for $720 million, as per the data available on the company website. Expanding its operations in May 2004, OVL acquired a 24.125% stake in Block 5A and a 23.5% stake in Block 5B operated by the White Nile Petroleum Operating Co. Ltd from Austria's OMV Aktiengesellschaft for $134 million.

According to shareholding data available with the Bombay Stock Exchange, as on 31 March, foreign institutional investors, or FIIs, held nearly 8% stake in ONGC. At current market price, the entire FII holding is valued at around $560 million. American Funds is the single largest FII investor in ONGC, holding 46,016,142 shares or a 2.14% stake.

Campaigners have made headway with some large fund houses such as American Funds (handles $900 billion globally), Fidelity International Ltd ($279 billion), Berkshire Hathaway and T Rowe Price ($376 billion). Berkshire, Fidelity and T Rowe Price have reduced their holdings in Chinese oil companies linked to Sudan since the Sudan Divestment Campaign started two years ago.

"We are not trying to get anybody to sell their stake in ONGC, and we are not demanding that they stop operating in Sudan. Rather, we want the company to understand the impact that oil revenues are having in Sudan, how they are being used by the Sudanese government to fund military campaigns in Darfur," O'Meara said. In an effort to maintain sustained pressure on ONGC at its home front, Amnesty International and GIN are looking to partner with Indian organizations who can lead the campaign in India. Wisor who travelled to India last month as part of this effort, says that there is a severe lack of awareness in India about ONGC's operations in Sudan and the firm's potential to make a difference in the civil war-ravaged African nation.

Indeed, even R.K. Pachauri -a member of the ONGC board of directors and chairman of the Intergovernmental Panel on Climate Change, which won the 2007 Nobel Peace Prize-told Mint in a telephone interview that he was not aware of the issue. He declined additional comment on the issue saying that any comment he made would be "uninformed". "We are shocked to learn how ONGC is indirectly linked to the gross human rights violations going on in Sudan," admitted director of Delhi-based Human Rights Law Network, Colin Gonsalves.

Human Rights Law Network is one of the organizations with which GIN is exploring the possibility of a partnership.

Have you heard?
GI-Net staffer Adam Sterling, who appeared in "Darfur Now", which also featured Don Cheadle and George Clooney, is nominated for the Do Something award at the Aug. 4 Teen Choice Awards. You can vote online; if Sterling wins, GI-Net gets $100,000.

An American firm has just introduced the first-ever screening tool to let investors build portfolios free of companies that support and profit from the genocide in Sudan. Foliofn Investments, a service company that assists investors, financial advisors, and financial institutions, came up with the innovation it launched in May of this year to help customers automatically screen out companies on the Genocide Intervention Network's "highest offenders" list of firms that operate or trade in Sudan and thereby, according to the network, share complicity in marginalizing portions of the country's local population. The Genocide-Free Stock Screening Tool was an innovation of Foliofn's vice president of marketing and communications, Mary Gotschall. She says she helped the company come up with the idea after unexpectedly being inspired by an advertisement on American television.

"I just happened to see an ad on cable TV. I don't know if you saw it. It was running last December. It was a pro bono ad and basically, you had this couple being advised by a financial adviser and the financial adviser said, 'Listen, you're making a killing on genocide,' and the woman's mouth dropped and then it cut to the screen that said 'Are you profiting from genocide? Find out. Visit Sudan Divestment Task Force.' And that's what prompted me to come up with this idea of 'Hey, we could do a screen, a genocide screen'," she said.

The ad Gotschall was watching, which instigated her innovation, was In fact, promoting another 21st century funding tool inspiration developed by the Sudan Divestment Task Force (SDTF) and the Genocide Intervention Network (GI-NET) to screen and identify mutual funds that invest in companies with Sudanese commercial ties. Individuals who access the mutual fund tool from the task force's internet web site (http://www.sudandivestment.org/screener.asp) on their personal computers simply type in the name of their fund, press the "Search" button, and are instantly able to determine that fund's record of taking part or refraining from profiting from involvement with the Khartoum government and agents that wage war against local Sudanese populations.

In contrast with mutual funds, which are diversified collections of stocks managed by a financial adviser, folios, which can be managed either by an individual owner or an investment advisor, are not registered with the US government. Gotschall says Folio's investment platform lends itself to this same type of screening capability as the Task Force's mutual fund screening tool.

"I think the response has been very positive thus far, and it is something we are going to be monitoring on an ongoing basis. I just think that socially responsible investing is a very important area within the investment industry and that our platform at Foliofn really lends itself to enabling people to invest according to their values," said Gotschall.

Folio, or portfolio investing is a new finance alternative that lets investors create portfolios of up to 100 securities each electronically on their computers. Although like mutual funds, they can span a widely diversified range of sectors, industries, themes, indexes, and geographic locales, folios are personalized collections of securities, customized for the individual who owns them, and they carry their own unique costs, tax burdens and measurements of performance.

"Our firm is not a registered investment adviser as such. Therefore, we are not in the position of advising people about managing their money. But we do have a folio adviser business, and we reach out to institutional investors, money managers, and the like, and they can use our screen for their clients," notes Gotschall.

The Genocide Intervention Network's three "Highest Offenders" currently trade on major US stock exchanges and are detected by the Vienna, Virginia firm's Genocide-Free Stock Screening Tool. The network identifies the wrongdoers as China Petroleum & Chemical Corporation or Sinopec (SNP), PetroChina (PTR), and Sinopec Shanghai Petrochemical Co. (SHI). This data is subject to change as the Genocide Intervention Network continues to monitor Sudan offenders over time. Foliofn vice president Mary Gotschall says she is proud of being able to find a way for others to make sure their investments are genocide-free.

"It just occurred to me folio investing was a great tool, not only for the Sudan Divestment Task Force, but down the road, other groups that might have agendas. We might have helped them advance, if you will. And also, the Sudan Divestment Task Force, I know they want to enlarge their genocide screen, not only to Sudan, but worldwide, ultimately. And so we at Foliofn are really hoping to expand our genocide screen to the whole world to match their needs," she said.

Bay State activists at the forefront of the struggle to keep the Sudan genocide in the public eye are ramping up for a summer of rallies and fund-raisers.

"The violence is at its all-time highest. Camps are still being attacked. Civilians are still being attacked by the government," said Jirair Ratevosian, co-chair of Massachusetts Dream for Darfur and director of event planning at Massachusetts Coalition to Save Darfur. "So everyone has to do everything they can."

An estimated 400,000 have been killed in the crisis, according to the United Nations, and 2.5 million are crammed into squalid refugee camps.

Activists have long urged divestment by states and companies supporting the Sudanese government. This summer, attention is focused on Olympics host China, which sells arms to the Sudanese government and is a major investor in Sudanese oil. Activists hope to use sponsors to urge China to exert pressure on the Sudanese government.

"The window of opportunity for pressure on China is limited. We've got less than two months," Ratevosian said, urging the public to "pressure corporate sponsors to be on the right side of history and not stand idly by. They've got unique leverage."

Activists are urging people to write such Olympics sponsors as GE, Coca-Cola, Volkswagen and Framingham-based Staples to pressure China to advocate for peace.

On Friday, the Mass Coalition held a demonstration outside a Volkswagen dealership in Allston to raise awareness.

Among other actions planned:

The Dine for Darfur Program next month. "It's a fund-raiser in which restaurants would donate parts of their proceeds to the Genocide Intervention Network on any given night," said Emily Cunningham, 17, of Cardinal Spellman High School in Brockton, who last year founded her high school chapter of STAND, a student anti-genocide coalition.

The third annual Darfur Benefit Concert is planned for July 13 from 2 to 8 p.m. at Bernie King Pavilion Bandstand at Nantasket Beach in Hull. "We're asking for a suggested donation of $10 per person, but it's also just as much about awareness," said Cunningham. Proceeds go to UNICEF's work in Darfur.

The Tents of Hope project, in which local communities erect and decorate tents to raise awareness of the Darfur genocide.

"The people of Darfur don't really have a voice of their own," said Benjamin T. Swartout, 19, Amnesty International student leader at Lafayette College in Easton. "So we have to shout for them. If we shout loud enough, someday we'll be able to say that when when people weren't listening, we made them."

Massachusetts long has led the nation in raising awareness and advocating for state and federal Darfur-related policy change, activists say.

"I'm very proud of the contribution that Massachusetts has made to this adovcacy movement," said the Rev. Dr. Gloria E. White-Hammond, a Bay State native and chair of the Coalition to Save Darfur, the umbrella organization that oversees nationwide Sudan activism.

"If I'm the chair of the coalition, then Massachusetts is the chair of the coalition," said White-Hammond, co-pastor of Bethel AME Church in Boston and a pediatrician at South End Community Health Center. "Wherever I go, I take Massachusetts with me."

A divestment campaign led by activists at Brandeis University called on mutual-fund companies, including Fidelity in Boston, to disinvest from businesses with holdings in Sudan. Relentless campaigning on the issue hit home in 2006, with state and federal legislators passing a series of bills requiring that mutual funds and the state pension fund be pulled from companies doing business in Sudan.

"I wish the federal government did not have to be coaxed along. I was very passionate and I was proud to have Massachusetts be one of the first states, if not the first state, to voice the (Sudan) divestment issue," said Rep. William "Smitty" Pignatelli (D-Lenox), a supporter of the measure.

Harvard was the first university nationwide to divest, said White-Hammond. "That has really been exemplary in the way it has been organized." Some 60 colleges and universities have followed suit.

Panther Alier, 32, a Dinka refugee from southern Sudan living in Newton, is among local activists.
"Everything started from Massachusetts," Alier said. "It has been a great legacy for me to be part of this. This developed in the state that has become my home. The activism in this state is really something I'm proud of."

These Web sites and hotlines offer further information on Darfur: www.savedarfur.org; www.standnow.org; www.mskeeper.org; www.1800genocide.com; 1-800-Genocide; www.genocideintervention.net; www.savedarfurma.googlepages.com