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Report on Investing in Companies Doing Business in the Sudan


April 19, 2006

As a private institution of higher education Smith College relies significantly on the earnings of its endowment to provide the kind of education for women that its founder wanted, i.e. one equal to the best available anywhere to young men. But by the same token Sophia Smith intended her college to have a moral mission, through which the wrongs of women would “be redressed, their wages adjusted, their weight of influence in reforming the evils of society...greatly increased...”

Since 1979 the Smith Board of Trustees has explicitly acknowledged that the College’s moral mission must also play a role in the investment of its endowment. In its statement on the “Social Responsibility Dimension of Investing the Smith College Endowment,” the Trustees set out to “establish a program and procedures to discharge their investment responsibilities both to the ongoing work of the College and to the society in which that institution seeks to continue to advance toward the goal of academic excellence.”1 The Trustees voiced a note of caution by acknowledging the general difficulty of applying moral criteria to investments in an imperfect world. Nonetheless, they asserted, within a general policy of avoiding perfectionist goals, “we believe it is possible to identify some corporations or industries whose actions or policies do not deserve endorsement by the intellectual community represented by Smith College. We believe that the avoidance of investment in companies in this latter category should be a specific and deliberate part of the investment policy of the College.”

This policy has been formally applied by the Board of Trustees on three occasions since its inception. The first was with respect to investment in South Africa during the 1980s; the second targeted companies producing tobacco products; and the third was aimed at a single company, Talisman Energy, Inc., a Canadian oil company (cf. below).

It is hard to imagine “corporations or industries whose actions or policies do not deserve endorsement by the intellectual community represented by Smith College” more than do those currently providing goods, services, technology and revenues vital to the genocidal policies of the government of the Sudan in the Darfur region. In response to civil unrest in that region, the government in Khartoum has armed and aided Arabic-speaking Darfuri militias, known as Janjaweed, who have murdered, raped, and destroyed the villages of their ethnic African neighbors in this region. In one of his very numerous and widely disseminated articles on this tragic conflict, our internationally honored colleague and Sudan-expert Eric Reeves writes that since 2003, “some 400,000 Darfuris have perished; more than two million have been driven from their homes to squalid and dangerous camps; and the United Nations estimates that altogether roughly four million people in the region need humanitarian assistance.”2 Figures such as these challenge our ability even to imagine the suffering, and clearly represent a moral crisis of enormous proportions.

In July of 2004, by a vote of 422 to zero, the United States House of Representatives, with the Senate concurring, passed a resolution which stated that the violence in Darfur appeared to be particularly directed at a specific group based on their ethnicity and appeared to be systemized, in other words, a case of genocide. In September of that year the Bush administration concurred in that characterization. Attempts have been made to arrange a halt to the massacre, including the efforts of the African Union to provide security in the region. But the government in Khartoum has not kept its promises, and the AU mission, underfunded and outmanned, has not been able to stop the ongoing mayhem.3 The brutal slayings continue, as documented first hand by, among others, the courageous journalist Nicholas D. Kristof.4 In a recent article Kristof presents evidence that young Sudanese Arabs are being enticed into the Janjaweed by the promise of payments of $250, a hefty sum in the Sudan.

And that is where the issue of our responsibilities as investors comes in. Divestment offers the possibility that private organizations in the United States can encourage a policy change in a foreign country, specifically in this case, the end of the genocidal policies of the Sudanese government. The hope is that Sudan-active companies will be motivated to disinvest their assets from the Sudan because these Sudan-active companies fear a large-scale divestment movement will lead to falling stock prices.

The funds expended on this genocidal mission by the government in Khartoum come largely from foreign investment in the relatively new and rapidly expanding Sudanese oil industry.5 Other large European and Asian companies outside the oil sector are providing vital infrastructure to the government (American firms, with a few specific exceptions, have been barred from investment in the Sudan by law since 1997). It is the view of Eric Reeves and others that without this investment and infrastructure, the Khartoum government would find it impossible to continue its policy in Darfur, and would instead be forced to seek a peaceful solution to the regional conflict.

The effectiveness of divestment campaigns is controversial. That individual companies, particularly in the West, are clearly susceptible to stockholder pressure is shown by the case of the Canadian oil company, Talisman. This company was engaged in southern Sudan in exploitation of the oil reserves, control of which was a principal issue in the decades-long civil war between Khartoum and rebels in the south. A vigorous campaign was brought to bear against its stock, and the company eventually decided to sell its interests. In announcing its decision to withdraw from the Sudan in October of 2002, Talisman CEO Jim Buckee admitted that the effects of the divestment campaign on his company’s stock market performance made the move necessary.6 The impact of this decision on the government in Khartoum to seek a negotiated solution is impossible to know for sure, and the Talisman decision was just one of many factors in play at the same time. Be that as it may, it was not long before the negotiations led to a formal peace agreement between Khartoum and the southern rebels.

Thus, aside from the moral imperative not to do clear and grievous harm, there is a possibility that a divestment decision by Smith and others will have both direct impact on the funding of this genocide and call international attention to the humanitarian disaster in Darfur. A number of colleges, universities, and state pension funds have already made the decision to divest from, and bar future investment in, the Sudan. It is safe to assume that in the near future many more will join Harvard, Stanford, Dartmouth, Yale, Amherst, Brown, and the University of California system, as well as state pension funds either prohibiting or restricting investment in the Sudan, such as those of Illinois, New Jersey, Louisiana, Oregon, and Arizona (similar legislation has also been approved in California, and is pending in five additional states).

Having committed itself under a charge from President Christ to a thorough examination of the implication of divestment from companies which substantially and materially aid genocide in Darfur, it is the view of the CIR that Smith should divest from, and ban future investment in, such firms. The Committee will confidently make this recommendation to the Board of Trustees.

Criteria for Selection of Companies

A decision to divest from and ban future direct investment in companies enabling the government of the Sudan to fund its genocidal activities requires a clear statement of criteria used to identify investments that are included in such a decision. The criteria set forth below are based on current information about the link between the current regime in Khartoum and the genocide on-going in the Darfur region of the Sudan. The Committee commits itself to revisiting these criteria periodically and at any time that a report of change in the Sudan merits reconsideration. An independent research firm specializing in global security risk shall be utilized in determining which companies meet this criterion.

All recommendations to divest from or ban specific companies will be examined using the criteria below.


Any company owned by the government of the Sudan. OR


Any company enabling the government of the Sudan to continue its illegal activities, either directly (through its sale of goods or services) or indirectly (through significant royalties, fees, and tax revenues accruing to the government). This would include: operation of manufacturing and other business facilities, extractive related industries and acquisition of mining or drilling rights, provision of utilities and other services.

Exceptions to these criteria:


Companies engaged solely in journalistic activities. OR


Companies engaged solely in producing or providing goods and services of a retail or humanitarian nature.

1. “The Social Responsibility Dimension of Investing the Smith College Endowment: Principles and Policies,” approved by the Board of Trustees, April 28, 1979, revised and approved by the Board of Trustees, October 21, 2005.

2. March 13, 2006 issue of the New Republic Online

3. Eric Reeves, African Union Decision on Darfur Mission Fails the "Rwanda Test," March 15, 2006

4. See for example his recent pieces in the 3/12/06 and the 3/14/06 New York Times. On April 18, 2006 Mr. Kristof won the Pulitzer Prize for commentary: "To Nicholas D. Kristof of the New York Times for his graphic, deeply reported columns that, at personal risk, focused on genocide in Darfur and that gave voice to the voiceless in other parts of the world."

5. Cf. the report of the Allard K. Lowenstein International Human Rights Clinic and The Allard K. Lowenstein International Human Rights Project, Yale Law School, pp. 11 ff.

6. Cf. pp. 15-16 of the IRRC Human Rights report, 2/16/06.

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