June 13, 2009 by The Mormon Worker
Fidelity Investments is one of the largest financial firms in the world, and employs hundreds of people in Salt Lake and Utah counties. Currently proxy voting is underway for 13 different Fidelity mutual funds. This year’s proxy vote is rather controversial, because of resolution #3 on the proxy ballot. Shareholders will be voting to decide whether to “institute procedures to prevent holding investments in companies that, in the judgment of the board, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.”
The resolution was put forward by activist investors concerned about companies that do business with the government of Sudan, which, according to the Bush Administration, is committing Genocide against portions of its black African population in the Darfur region in western Sudan. The campaign to divest from companies doing business in Sudan is meant to pressure the Sudanese government to stop its campaign of Genocide, much like boycotts of companies doing business in South Africa sought to pressure the Apartheid government to change its race policies.
In recent years, several Fidelity mutual funds have held significant numbers of shares of PetroChina (PTR), which pays royalties to the Sudanese Government in exchange for the right to exploit Sudan’s oil resources. These royalties provide funding for Sudan’s military. In 2007, as pressure mounted on Fidelity and other firms to sell their PetroChina holdings, the Boston Globe reported that Fidelity insisted on maintaining the ability to invest in companies that contribute to Genocide in order to maximize profits for its shareholders. Fidelity spokeswoman Anne Crowley stated that:
“Our funds have a fiduciary responsibility to act in the financial interests of their investors, in keeping with the investment policies for each fund. This is not Fidelity investing its own money, this is Fidelity investing the money of millions of people.”
A resolution to ban Fidelity mutual funds from investing in companies contributing to Genocide was put forward in 2008, but was defeated after Fidelity’s opposition to the measure. The same resolution will be voted on this year amid continued pressure from rights groups.
Sadly, Fidelity Investments has again asked shareholders to oppose the resolution. However, the rationale Fidelity is now offering has changed. Rather than arguing that making profits for its investors trumps human rights concerns, Fidelity now argues that it can have a positive influence on the Sudanese government by staying invested in companies doing business in Sudan.
The mutual fund giant released a statement on its website explaining that, “we have concluded that when it is appropriate to remain actively invested in a company, we will do so, thus retaining the ability to oppose company practices that we do not condone. This, in the long term, may have the greatest chance of ending those practices. There is the possibility that driving publicly traded companies out of Sudan may actually make the situation worse, exposing the region to state–owned companies or companies that are not traded on the world’s exchanges and, therefore, not subject to any shareholder influence whatsoever.”
However, Fidelity has not shown that it has taken any steps to leverage the influence it may have in order to improve the human rights situation in the Sudan. For this reason rights groups find Fidelity’s new rationale for investing in companies that contribute to Genocide insincere, and contend that Fidelity continues to prioritize profits over the lives of the men, women, and children being killed, displaced and raped by the Sudanese government and its proxy militias. Despite what conservatives keep saying after Obama’s election, it looks like capitalism is alive and well in American after all.