Outcome: Omitted by SEC
As BP-Amoco shareholders, we applaud BP’s aims to be a world leader in the energy market, whilst respecting human rights. We support BP’s commitment to the Universal Declaration of Human Rights.
This Resolution raises shareholder concerns about BP’s controversial $578m investment in the PetroChina Initial Public Offering (IPO) which poses a serious threat to BP’s reputation and brand-image. BP has become a shareholder in a company whose activities raise human rights concerns in Tibet and East Turkestan and – through PetroChina’s parent company China National Petroleum Corporation (CNPC) – Sudan. Given the investment in BP’s re-branding, we are concerned that the purchase of PetroChina stock may place BP’s long-term profitability at risk.
We believe that BP should exercise the same diligence in its investments in other energy companies as it does in its own operations. The company should not directly or indirectly fund any activity that it would not be prepared to carry out under its own stated policies. As a shareholder in PetroChina, BP may receive a dividend generated from activities that are at odds with its stated policy commitments.
The flotation of PetroChina stock created controversy in the United States. Human rights and labour concerns, coupled with inadequate disclosure and risk assessment in the company s prospectus, prompted many pension and investment firms to avoid the PetroChina IPO, depressing the share price. A well-supported coalition of interest groups has called on investors to withdraw from PetroChina, which could adversely affect the value of PetroChina stock. We are concerned that BP failed to sufficiently evaluate the financial and non-financial risks associated with this investment prior to purchasing PetroChina stock. Shareholders have raised these concerns with managers since April 2000.
PetroChina s activities in Tibet and East Turkestan
Since China occupied Tibet in 1949, the Tibetan people, their culture and religion have been brutally oppressed. According to the exiled Tibetan government, 1.2m Tibetans have died as a direct or indirect result of China s occupation and 6000 monasteries have been destroyed. East Turkestan (Xinjiang) was annexed by China in 1949 and the Uyghur people experience similar human rights abuses and religious and cultural persecution. Political dissent is ruthlessly suppressed and torture and ill treatment are commonplace.
PetroChina is developing gas reserves in Tibet s Tsaidam Basin and constructing a pipeline across Tibet to Gansu in China. The exiled Tibetan government, led by His Holiness the Dalai Lama, and Tibet supporters oppose these projects and have called on BP to withdraw from PetroChina. A 4,167km East-West pipeline is planned from East Turkestan s Tarim Basin to Shanghai. These projects are part of China s strategy to consolidate political control of the Western Regions . We believe Tibetans and Uyghurs will derive little or no benefit from the exploitation of their resources, which will facilitate population transfer and pose a significant threat to their culture and environment. No known environmental or social impact assessments have been carried out, and the environmental record of existing resource extraction projects in the Tsaidam and Tarim Basins is very poor.
We welcome BP s decision not to participate directly in the Tsaidam Basin projects, but BP has yet to decide whether to participate directly in the East-West pipeline. However, through its stake in PetroChina, BP is inadvertently assisting China to realise her political objectives.
During 2000, shareholders have urged BP to use the company s influence, as the largest foreign shareholder in PetroChina, to have the damaging projects in Tibet cancelled. We support BP s efforts to have a long-term positive influence in China but, since they have been unable to prevent these projects going ahead, we believe the PetroChina investment will be more damaging than beneficial to BP.
China National Petroleum Corporation s activities in Sudan
CNPC, PetroChina s parent company, has been implicated in the deaths and human rights violations of thousands of Sudanese, as documented by Amnesty International, the UN Special Rapporteurs for Sudan and the Harker Report.
CNPC has a 40% share in the Greater Nile Petroleum Operating Company (GNPOC), which has directly and indirectly contributed to the suffering of the Sudanese people. Indirectly, the revenues from GNPOC (at least 40% of which flow to the Sudanese government) have helped strengthen the Khartoum government in its activities against mainly Christian and Animist opposition groups in the South.
More directly, oil developments have been instrumental in human rights violations of those living nearby. The activities of Sudanese security forces in securing the area around the pipeline for oil companies have been well documented; these include forced displacements, aerial bombardments, unlawful killings, rape, abduction and torture. Armed Chinese workers involved in constructing the pipeline have also been implicated in displacement of Sudanese civilians.
The relationship between BP, PetroChina and CNPC
Although they are legally distinct entities, CNPC and PetroChina have close financial links. CNPC retains control and 90% ownership of PetroChina and as such takes 90% of PetroChina s profits. Furthermore, PetroChina inherited $15 billion debt from CNPC, which has freed capital for CNPC.
BP maintains that a “firewall” prevents proceeds from PetroChina being used by CNPC outside China. However, given that capital is fungible by nature, it is impossible to guarantee that PetroChina s inherited debt did not flow from CNPC s Sudanese operations. Nor is it possible to say that revenues from the PetroChina IPO or PetroChina profits, even if earmarked for domestic use by CNPC, could not be instrumental in freeing up capital for international use. We contend that through its investment in PetroChina, BP has effectively enabled the flow of funds into CNPC. This has capitalised the activities of the GNOP, a company instrumental in the human rights abuses of Sudanese people.
As BP-Amoco shareholders we believe that BP deserves its reputation as an industry leader for its environmental and social record. However, we are concerned that association with the human rights issues described above will prove damaging to BP’s reputation and to long-term shareholder value. We call on the company to actualise its support for the principles in the Universal Declaration of Human Rights and apply these to its investments.
THAT the Board of Directors of the Company withdraw from the investment in PetroChina on the grounds that a shareholding in PetroChina and the potential human rights and environmental concerns associated with PetroChina is in contradiction with BP-Amoco s policy commitments on human rights and the environment, and is therefore not in the best long-term financial interests of BP-Amoco.