On the Lege
Texas and Sudan: In or Out?
While Perry was deal-making, another Fidelity-related activity was in the works. The Massachusetts Coalition to Save Darfur launched its Fidelity out of Sudan campaign (www.fidelityoutofsudan.com) four weeks ago, and quickly captured the attention of national business magazines and major dailies. Boston-based campaign organizers Eric Cohen and Susan Morgan, both former Fidelity investors, said in an interview that they decided to go public with their concerns about the company's holdings after spending three months writing cautiously diplomatic letters to more than 50 company executives. They had hoped to get their foot in the door for a meeting at Fidelity's flagship office in downtown Boston. At the very least, they wanted Fidelity officials to use their investment pull as a negotiating tool with the Chinese oil companies. Instead, Fidelity responded with a form letter, worded pretty much the same as its statements to the press.
Texas is one of 20 states considering legislation that follows the "targeted divestment" model created by the Sudan Divestment Task Force (www.sudandivestment.org), which advises governments, universities, and asset managers on how to sever investment ties with companies in Sudan without breaking the bank and jeopardizing pension funds. Based on this model, mutual fund companies such as Fidelity would be spared the divestment axe under the Texas legislation, thereby safeguarding the state's $120-billion-plus pension funds.
The Fidelity divestment campaign Web site includes a petition with a signature goal of 400,000 the estimated number of civilians killed in Darfur. "It's hard to influence Chinese government and Chinese businesses, but Fidelity is such a large, powerful investor, they could use some of their muscle to influence those companies operating in Sudan," said Cohen, a retired high tech executive. "That would be an earthquake in the financial market."
At the same time, Cohen said optimistically, "Now that Texas is a major business partner with Fidelity, the governor could use this opportunity to talk with Fidelity about being a good social citizen."
Said Perry spokesman Ted Royer: "The governor encourages Fidelity and all other private companies to divest themselves of any holdings they have in companies doing business in Sudan." Royer also said Perry would consider "any needed reforms in how the Enterprise Fund is administered so we can align it with other state investments, specifically in terms of how we divest other state funds of investments in Sudan."
Divestment activists applaud Texas and other states for taking a moral and financial stand against genocide and other atrocities in Darfur. But the Fidelity campaign seeks to appeal to the masses rather than government entities mindful of their fiduciary responsibilities to maintain healthy pension funds. "Even in cases where mutual funds are not part of the legislation, this is a way to build awareness so that individuals can make their own choices," Morgan said.
Authors of the three-bill Texas initiative (Senate Bill 247, House Bill 667, and HB 419) include Rodney Ellis in the Senate and Corbin Van Arsdale and Ruth Jones McClendon in the House. More than two dozen legislators have signed on as co-sponsors, and Railroad Commissioner Michael Williams is an outspoken advocate of the measure.
With this much bipartisan support, what could possibly go wrong? Well, there is the pesky Fidelity angle, for one. Many lawmakers don't even want to talk about Fidelity's dip into the Enterprise Fund because they know that if they mess with Perry's economic development engine, they're messing with their own legislation.
"I'm just learning about the whole issue with Fidelity, and I'm looking into it," said Fort Worth Democratic Rep. Lon Burnam, a co-sponsor credited with galvanizing support for the divestment legislation. Burnam is usually an outspoken critic of the Enterprise Fund, but not this time. "I have visited with Commissioner Williams about this and he has similar concerns, which are we don't want to lose the baby and wade into this whole other arena," he said. "But we also understand that this is classic politics better to get half a loaf than none."
Rep. Garnet Coleman, D-Houston, said he supports the legislation, but the Fidelity divestment campaign has brought to light new concerns about how the state doles out incentive packages to companies. "If it's wrong for the state through its pension plans to invest in Sudan because of human rights practices, then it's wrong for us to support companies that continue to invest in companies doing business in Sudan," Coleman said. "Otherwise it's a case of, do what I say, not what I do."
Top holders in oil companies bankrolling Darfur genocide:
Check Your Pension Fund
Top institutional holders:
Allianz Global Investors of America LP
Schafer Cullen Capital Mgt. Inc.
Berkshire Hathaway (Warren Buffet)
Merrill Lynch & Co. Inc.
China Petroleum & Chemical Corp (SNP)
Wellington Mgt. Co. LLP
Thornburg Investment Mgt. Trust
Renaissance Technologies Corp.
Harding Loevner Mgt.
Top mutual fund holders:
Fidelity Contrafund Inc.
Variable Insurance Products
NFJ Dividend Interest & Premium
Fidelity Advisor New Insights Fund
Calamos Strategic Fund
Vanguard Specialized Energy Fund
Fidelity Contrafund Inc.
Harding Loevner Funds
Icon Energy Fund
Variable Insurance Products FD
Source: Yahoo Finance
On Feb. 7, Gov. Rick Perry awarded Fidelity an $8.5 million grant from the state-financed Texas Enterprise Fund to expand existing operations at the company's Tarrant Co. campus. Fidelity will invest more than $200 million in the expansion, creating more than 1,500 new jobs, according to the governor's announcement.
Taxpayers contribute too
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