HOLES IN THE ‘FIREWALL’

China National Petroleum garnered $2.9 billion in proceeds from the April 2000 initial public offering (IPO) of off-shoot PetroChina.

At that time, PetroChina’s chairman Ma Fucai said that a “firewall” between PetroChina and its parent company would ensure that none of the IPO revenues would go toward funding ventures in Sudan.

But with labor unions and human rights activists protesting the IPO, several major U.S. institutional investors declined to purchase shares.

“We hammered that IPO,” Smith College professor and Sudan activist Eric Reeves said.

“There was no firewall,” Reeves said. He said that PetroChina’s investment banker, Goldman Sachs, filed disclosure papers with the SEC revealing that “a full 10 percent of the IPO proceeds went directly to China National Petroleum Company for use however, wherever they wanted.”

And the parent company retained a 90 percent stake in PetroChina even after the IPO, the Associated Press reported.

Representatives for PetroChina did not answer calls for comment to their offices in Beijing yesterday.

CAMPAIGN ‘TO EXPLODE’

Human rights activists hope that a targeted divestment campaign could cut off Khartoum’s sources of foreign capital and force the Sudanese government to enter peace negotiations.

The U.S. instituted comprehensive economic sanctions against Sudan in 1997. But Rev. Keith Roderick, executive director of the Sudan campaign at Christian Solidarity International, said that the United Nations (UN) will almost certainly not lend its support to an embargo.

As a permanent member of the UN Security Council, China has vowed to veto any attempt to impose economic sanctions on Sudan.

“Short of a blockade of oil shipments from the country or military intervention, which do not appear likely, divestment is one of the few pressure strategies remaining,” Roderick wrote in an e-mail Thursday.