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| April 7, 2000 | atimes.com | ||
|  | China Activists claim credit for PetroChina's weak IPO By Jim Lobe WASHINGTON - A coalition of human rights, environment, labor and right-wing groups is claiming victory in discouraging investors from putting their money into a subsidiary of a Chinese state oil company with operations in Sudan and Tibet. Instead of the $7 billion which PetroChina Co had hoped to raise in its initial public offering in New York and Hong Kong this week, the company, a subsidiary of state-owned China National Petroleum Company (CNPC), is likely to net only $3 billion or less. Potential investors were deterred mostly by an intense campaign launched less than three months ago by a very broad coalition of groups which claim that CNPC operations in Sudan and Tibet are responsible for serious human rights abuses and environmental damage. They were joined by right-wing groups in the US, including a number of organizations identified with the Christian Right, a protectionist business group called the US Business and Industrial Council, and the Center for Security Policy (CSP), among others. ''This sets a major precedent, because now there is a public discourse about how US capital markets are used by foreign companies to finance activities that undercut values such as freedom, social justice, and environmental rights that are held by many smaller investors,'' said Michelle Chan-Fishel, of Friends of the Earth's Green Investment program. ''This is the first example of such a broad coalition of interest groups working to stop an IPO on several different levels, including institutional investors, underwriters of the stock, the Security and Exchange Commission, members of Congress, and even the New York Stock Exchange itself,'' she added. Among other tactics, the campaign included trailing a national tour organized by Goldman Sachs & Company, which handled the IPO for PetroChina, making ''shadow'' presentations in nearby hotels to explain why investors should not buy into the company. At a press conference on Wednesday, some of the same groups said they were launching a boycott and divestment campaign against BP Amoco plc, which last week announced it would put $1 billion into PetroChina. ''Tomorrow we will start calling on investors in PetroChina to become divestors,'' said John Ackerly, president of the International Campaign for Tibet (ICT), while Sophia Conroy, national coordinator of Students for a Free Tibet, said her group had called for a boycott of all BP Amoco products to protest the oil giant's decision to buy PetroChina's shares. PetroChina, which was created by the CNPC on the advice of Goldman Sachs precisely to make the offering less controversial, is the first IPO by a Chinese state-owned company ever presented on the New York Stock Exchange. Many observers have looked to it as a test of investor interest in what are expected to be dozens of similar offerings as China's state sector is forced to seek foreign private capital. Indeed, two other Chinese companies - Sinopec and Boashan Iron and Steel - were planning their own IPOs for a total of as much as $8 billion for the coming weeks. But these have been put off indefinitely, apparently as a result of disappointment over the meager results obtained by PetroChina. The PetroChina offering comes at a critical moment for anti-Beijing forces, which were already mobilized over President Bill Clinton's efforts to persuade Congress to give China permanent ''normal trade relations'' (NTR) status. Permanent NTR status, which is likely to be voted on during the last week of May, will facilitate China's admission into the World Trade Organization and seal a bilateral trade deal that would make it much easier for US companies to gain access to China's huge consumer market and cheap labor force. There is substantial overlap between the wildly diverse coalitions opposed to both the PetroChina IPO and NTR for Beijing. ''Traditional political lines are being blurred in the face of the liberterianism of globalization,'' noted Kevin Kearns, president of the US Business and Industrial Council, a group of 1,500 business executives, many of whose companies are threatened by foreign competition. Indeed, the council's main backer, textile king Roger Milliken, has been politically most closely associated with Patrick Buchanan. The most potent group opposing both PetroChina and NTR, however, is the AFL-CIO, the largest US labor union confederation. Ron Blackwell, the group's director of corporate affairs, said on Wednesday that what he called PetroChina's ''miserable failure'' to attract investors would serve as a warning to developing-country companies hoping to tap capital markets in the US that their human rights, worker rights, and environmental records will be closely scrutinized. Labor unions control tens of billions of dollars in pension and retirement funds that are often invested in the stock market. For offerings to be successful, these kinds of institutional investors must be willing to buy up shares. For PetroChina, however, such funds as the California Public Employees Retirement System and the Teachers Insurance & Annuity Association-College Retirement Fund, called ''trend-setters'' by the Wall Street Journal, stood aside. As a result, the only major buyers to date, in addition to BP Amoco, are four Hong Kong-based companies which have agreed to buy $350 million a piece. ''These 'strategic Hong Kong investors','' said Roger Robinson, chairman of the CSP's William J Casey Institute, ''are under Beijing's influence.'' Opposition to the PetroChina IPO also attracted a number of groups long concerned about Sudan, which has been racked by civil war between the predominantly Arab and Muslim government and the predominantly African and Christian or animist south for almost 20 years. That is because the CNPC is a partner along with the Sudanese government, the Malaysian state oil company, and a Canadian company, Talisman, in developing the country's oil resources, which lie mainly in the southern part of the country. Human rights groups charge that efforts to exploit the oil are contributing directly to the continuation of the civil war, which is estimated to have taken as many as two million lives since 1983. ''There is an inextricable link between the oil pipeline project and Khartoum's genocide and bombing campaign,'' said Nina Shea, director of the Center for Religious Freedom at New York-based Freedom House, a conservative human rights group. ''It is the prospect of new, unimpeded oil revenues that convinces the otherwise-bankrupt Khartoum regime that it can acquire the military means to win the civil war outright,'' she added, calling for a boycott of BP Amoco for its decision to participate in the PetroChina IPO. The groups concerned about Sudan last year waged a divestment campaign against Talisman with some effect. Although an effort to get Talisman, which holds a 25 percent share in the venture, expelled from the New York Stock Exchange fell short, a number of large pension funds, as well as several universities and investment groups, sold all their shares in the company. At one point, its stock fell by more than 30 percent, or more than $1 billion, in value. ''Capital markets will be the cutting-edge human-rights tool of the 21st century,'' said Shea, who noted that the number of foreign companies now registered with the US Security and Exchange Commission (SEC), which oversees capital markets here, has tripled in the past decade to more than 1,200. ''More Western funding flows to rogue regimes now through the capital markets than through the multi-national banks,'' she added, noting that foreign companies should be subject to closer scrutiny by the SEC. Goldman Sachs was aware that CNPC's Sudan connection could prove problematic in the markets, which is why it advised the company to set up a subsidiary, PetroChina, which would be barred from operating outside China itself. But the critics argued that, as a subsidiary, PetroChina's assets could contribute indirectly to CNPC's activities elsewhere. ''The firewall they created between PetroChina and CNPC is illusory at best,'' AFL-CIO secretary-general Richard Trumka told The New York Times last month, ''so money will find its way back into the parent company.'' In addition, labor unions, human rights activists and environmentalists found other reasons within China to bolster their fight against PetroChina and CNPC. CNPC's re-organization is likely to cost more than one million Chinese workers their jobs, an issue which labor unions here have stressed in their campaign. In addition, CNPC's plan to build a natural-gas pipeline from fields in Tibet to the more populous central part of China has drawn fire from environmentalists and human rights activists alike. ''The area includes a fragile, high-altitude ecosystem that has supported a small, hardy population of Tibetan and Mongolian nomads for centuries,'' said ICT's Ackerley. ''Local opposition to natural resource extraction is met with swift and brutal retribution. Moreover, pipeline construction will bring thousands of Chinese into Tibetan and Mongolian lands, and the cost to the environment could be catastrophic,'' he said. (Inter Press Service) | |||||||||
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