Dear Mr. Johnson,
I write to you today from both the status of a person that has actively invested in Fidelity Investment and of a human being that cherishes deeply the natural rights of “life, liberty and pursuit of happiness.” Being citizens of a country that was created on the basis of protecting these very natural rights, we often fail to appreciate the freedoms that we are entitled to, but it is my view and that of many others that while we may not always be able to contribute to bringing these natural rights to those less privileged throughout the world, it is our inherent responsibility to make sure that our actions or decisions do not aid in the hostile denunciation of these rights to other fellow humans.
Fidelity Investments over the past five decades has successfully handled discount brokerage services, retirement services, estate planning, wealth management, securities execution and clearance, life insurance and other investment plans for millions of American families through its broad and trusted expertise in the financial services industry. Once known primarily as a mutual fund company, today Fidelity Investments is one of the most trusted companies nationwide in the financial services industry with more than 21 million investors invested in more than 300 different funds and $1.2 trillion dollars of asset under management. While the company has broadly expanded its services over the years, it has remained true to its original goals of providing quality customer service and constantly innovating through investments in technology.
But a recent investment decision by your company has brought about a serious concern on the part of investors of whether their money is going into funding, as a fellow investor put it, “crimes against humanity.” I take it that you are well aware of the current situation in Sudan. The country is in the midst what may perhaps be the first and hopefully last genocide of the 21st Century. For the past four years, the Sudanese government and its backed militias, the Janjaweed, have killed, raped and forcibly displaced millions of innocent civilians. It is estimated that more than 450,000 people have died as a result of this brutal onslaught and four million people are now affected by the violence. The finances for funding this massive genocide comes overwhelmingly from the oil industry based in Sudan, in which Fidelity Investments has interests. Estimates by experts state that more than 70 to 80 percent of Sudan's oil revenue is invested into its military, in addition to the weapons, money and political backing that it receives from China through its ties with a CNPC, a 100% Chinese government owned corporation. Fidelity's holdings in PetroChina, a subsidiary of Sinopec (CNPC), Sudan’s largest oil partner, are worth about $1.3 billion through the 1,065,007,500 H share equivalents, making it the single largest public investor in PetroChina on the NYSE. Due to its extensive holding in PetroChina, Fidelity Investments is perched in a very unique position to play an active role in helping end the Darfur genocide. But sadly, Fidelity has failed to exert pressure, publicly engage the Sudanese government to bring about changes, or divest its individual holdings even after being engaged by organizations such as Amnesty International and FidelityoutofSudan, an organization devoted solely to pressurizing Fidelity to liquidate its investments in PetroChina.
It has been the view of Fidelity Investment that PetroChina is not involved in CNPC’s tainted relationship with Khartoum, despite overwhelming evidence that proves otherwise. PetroChina is linked to CNPC through a very close and reciprocal relationship that has seen significant management overlap and transfer of assets between the parent and the subsidiary. The evidence of such close ties between PetroChina and CNPC has prompted, to date, 41 colleges and universities, 5 major cities and 10 states to divest out of PetroChina. Harvard University, one of the nation’s premier educational institutions, in its released statement following its divestment from Sudan stated that “There are exceptional cases in which the strong presumption against divestment may be overcome ... Although trustees have a legal and moral obligation to enhance and conserve the university's resources, there are rare occasions when the very nature of a company's business makes it inappropriate for a university to invest in the enterprise.” If the compelling evidence has prompted an institution with over $30 billion dollar in investments to divest out of PetroChina, why hasn’t it prompted Fidelity Investment to adopt a similar course of action and liquidate its assets in PetroChina?
Moreover, instead of engaging in an active dialogue with investors and other involved organizations, Fidelity Investments, despite the situation in Sudan and growing criticism, has gradually increased its holdings in PetroChina. This is not a “smart move” on the part of Fidelity especially considering that its peers in the financial services have been selling their shares in PetroChina during the same period. By actively ignoring cries to divest or increase pressure, Fidelity stands much to lose and little to gain. It is only a matter of time before investors pose the same question as Nikolas Kristof of the New York Times recently posed: “So is your Fidelity account underwriting genocide in Sudan? Is your pension fund helping finance the janjaweed militias that throw babies into bonfires in Darfur and Chad?” Just this past day the local Fidelity office was the scene of protests by members of Amnesty International who, in addition to calling for Fidelity to divest from Sudan, were informing potential investors and current account holders of the immoral profits that they were enjoying, courtesy of Fidelity. Increasingly, as investors are being informed that their money is helping sustain the Darfur genocide, they are opting to take their investments to competitors such as T. Rowe Price, Franklin Templeton Investments, all of whom have either divested or set a deadline to remove funds from companies that are fueling the bloodshed in Sudan. But sadly, this is not the first time people have raised concerns about the impact of Fidelity's investments. In the years before the genocide in Darfur, Fidelity held on to its investments in Talisman Energy, while genocide and large scale slavery spurred public protests and nearly two million people were killed in South Sudan. Even then Fidelity continued its investments while other major investors and financial institutions divested on the grounds of morality and ethics.
Fidelity in response to the thousands of letters and phone calls that have been fielded by investors and campaigners alike has hidden behind statements such as, “We believe the resolution of complex social and political issues must be left to the appropriate authorities of the world that have the responsibility, and capability, to address important matters of this type.” Quite to the contrary, Fidelity has a large role to play in the resolution of the Darfur genocide because it does have the authority, responsibility and capability to address the issues in Sudan. As Ian Davis points out in his essay “The Biggest Contract,” companies that treat social issues as either irritating distractions or simply unjustified vehicles for attack on business are turning a blind eye to impending forces that have the potential fundamentally to alter their strategic future.” While Fidelity recorded more than $13 billion in revenue this past year and currently runs the largest US mutual fund with more than $69 billion in assets, it must acknowledge that there exists an implicit contract between business and society and consequently “social issues are not so much tangential to the business of business as fundamental to it.” Fidelity portfolio managers must look beyond just the “business and financial considerations” if the company is to “secure, for the long term, the invested billion of their shareholders.” Mr. Johnson, if Fidelity is to continue to maintain its financial viability in the future, it must “make sure that social issues and emerging social forces are discussed at the highest levels as part of overall strategic planning.” As part of the effort of addressing the situation in Sudan, instead of continuing to pour funds into a company that plays an active role in sustaining genocide in Darfur, Fidelity should look to other lucrative and untainted investments worldwide. Calvert Funds, a Fidelity competitor with the largest array of socially responsible mutual fund’s in the nation, since divesting out of PetroChina has found other viable investing opportunities that provide comparable returns and at the same time do not overstep the bounds of morality. Not only does Fidelity risk facing further investor backlash as investors become more informed through the recent publicity in print and online media of the implications of Fidelity’s involvement in Sudan, but also these investments in PetroChina are inconsistent with the Fidelity Cares corporate responsibility program and with the reliable and trusted public image that Fidelity projects through its ad campaigns. Through the Fidelity Cares programs, Fidelity Investment supports or is a sponsor of hundreds of civic, charitable, arts and cultural organizations, but its investments in PetroChina is counterproductive to this effort to give back the community. While Fidelity through its various investment plans has helped secure the future of countless families, college students, senior citizens, with its investments in PetroChina is putting the lives of many such families at risk. While Fidelity may engage in dialogue with both Sudan and China to bring about an end to the genocide, a complete divestment out of PetroChina is most viable and effective method to address Darfur genocide. PetroChina’s operations have not benefited the Sudanese people in any way; instead the government has used the steady increases in oil revenues to fund the military to carry out war in Darfur. A campaign of targeted divestment, which makes conscious divestments decision that do not hurt innocent civilians, played a key role in ending apartheid in South Africa and can have similar results in Sudan if properly implemented. If this campaign of divesting campaign is to succeed, the world community needs the support of Fidelity as part of a concerted effort to cut Khartoum’s funding sources.
Mr. Johnson, you are man of great conscience behind a company that make profound impact through its investment choices. The cost of divestment to Fidelity Investments is negligible, but the potential benefits are limitless. By not addressing the situation in Sudan, not only is Fidelity overstepping the bounds of morality by knowingly contributing to the death of thousands but is also breaking, in the words of Ian Davis, an “implicit contract between big business and society.” Fidelity through the minimal sacrifice of divesting would not only restore faith among its investors, but more importantly help get one step closer to putting an end to one of the most brutal and violent chapters of human history. I trust that you would do what is right and needful for you, your shareholders and your stakeholders and take concrete steps to the address the role of Fidelity Investment in Darfur genocide. This is not the time to dwell over the question of financial benefits or past mistakes, but to take immediate and decisive action as human lives are on the line.